Does Increased Access to Health Insurance Impact Claims for Workers' Compensation? Evidence from Massachusetts Health Care Reform

A long-standing question in the public economics literature is whether Workers’ Compensation (WC) insurance is covering the medical cost of non work-related injuries for uninsured workers. Prior evidence examining this question is mixed.

We use data on Emergency Department (ED) discharges in Massachusetts, New Jersey, Maryland, and Vermont from 2004 through 2008 to estimate the impact of Massachusetts health care reform on the likelihood an ED discharge was billed to WC. We may observe the reform impacting ED discharges through two channels: the site of medical care (ED versus other locations), and the propensity to claim WC, conditional on being treated in the ED. For previously uninsured individuals, the reform likely decreased the cost of a physician’s visit, relative to an ED visit. Indeed, preliminary results confirm a decrease in ED visits consistent with newly insured individuals seeking care in other settings (e.g., doctor’s offices, urgent care facilities).

We then examine whether Massachusetts health care reform impacted an individual’s incentive to list WC as the primary payer, conditional on being treated in the ED. Preliminary evidence shows modest reductions consistent with a reform-induced decline in WC claims. These findings are consistent with WC covering medical costs for uninsured workers in Massachusetts prior to the reform. However, back of the envelope calculations suggest potential savings to employers are relatively small (between $1 and $2 million per year).