Does Higher Cost-sharing of Employer-provided Health Insurance Plans Impact Workers’ Compensation Claiming?

In the recent decade, cost-sharing of health insurance plans increased substantially. The share of insured workers in plans with a general annual deductible has increased from 55% in 2006 to 81% in 2015, as have the average deductible amounts for covered workers in plans with deductibles from $584 in 2006 to $1,318 in 2015 (as reported by the Kaiser Family Foundation). In this analysis, we investigate the responsiveness of injured workers to changes in cost-sharing burden of their health insurance plans when deciding whether to file a workers’ compensation (WC) claim or not. Previous literature offers abundant evidence that a sizable proportion of injured workers with work-related injuries does not file for WC coverage. These substantial non participation rates suggest that WC filing is not free and associated with the following costs: employer discouragement of filing for WC benefits, stigma and loss of bonuses/overtime pay, reduction in income, upfront costs of the filing process including medical costs with uncertain prospects for reimbursement. However, in the environment of growing deductibles and other out-of-pocket payments, workers may find zero out-of-pocket coverage of medical expenses, provided by WC more appealing and may be more willing to bear the filing costs associated WC claiming. In our analysis, we explore the effect of higher cost-sharing burden on decision to file for WC coverage, while controlling for various injury, worker and employment characteristics as well as firm-specific effects. We were able to isolate the worker’s financial incentives to file for WC from the firm effects, by using variation in the annual remaining cost-sharing burden at the time of the injury across workers employed in the same organization. We find positive and statistically significant effect of higher cost-sharing on decision to file for WC coverage. This analysis relies on workers’ compensation and group health medical data coming from a large commercial national database, Truven MarketScan® for years between 2008 and 2014. It includes individuals employed by mostly large employers and insured or administered by one of approximately 100 group health plans. It also provides a wealth of information on the benefit design of the individual group health plans, including information on in and out of network deductible amounts, co-payments, coinsurance amounts, and out of pocket maximum payments.