Workers Compensation Reform Past and Present: An Analysis of Issues and Changes in Benefits

Abstract

This research uses national data to analyze the effects of two cycles of workers compensation reform. One, during the 1970s, raised benefits for injured workers. The second, in the 1990s, was aimed at cutting workers' compensation costs. The research decomposes workers compen sation costs into variables directly controlled by legislatures, and vari ables that legislatures have no control over, to more easily analyze the direction that each reform took. The central finding of this research is that reforms of the nineties primarily effected medical care and access to the system. Consequently, they were not a direct reaction to the reform movement initiated by the National Commission in the early seventies. The economic recession of 1990-1991 appears to have been the primary economic motive that contributed to the timing of reform. These results indicate that workers compensation, because it is administered by the states, can be weakened in response to national economic events such as health care crisis and recessions. These types of events can create the conditions for a race to the bottom by states around workers compensa tion.