When we created our GESOP (Gibson Employee Stock Ownership Plan) at the end of 2010, we had several goals in mind:

The Indiana General Assembly passed and Gov. Pence has signed into law HB 1320, which introduces a fee schedule into Indiana’s workers’ compensation statute. Over 25 states have enacted fee schedule legislation since the mid-1990s to impose a limit or cap on medical reimbursement. Insurers generally favor fee schedules while medical providers generally oppose it. Indiana will now have a schedule set at 200% of Medicare reimbursement levels.

Prior to this passing, Indiana had relied on a “usual and customary” method, which had many pitfalls. Both the Workers’ Compensation Research Institute (WCRI) and theNational Council on Compensation Insurance (NCCI) have published studies showing how, overall, “usual and customary” states had higher comparable medical costs and higher rates of increases in cost.

The Indiana General Assembly passed and Gov. Pence has signed into law HB 1320, which introduces a fee schedule into Indiana’s workers’ compensation statute. Over 25 states have enacted fee schedule legislation since the mid-1990s to impose a limit or cap on medical reimbursement. Insurers generally favor fee schedules while medical providers generally oppose it. Indiana will now have a schedule set at 200% of Medicare reimbursement levels.

Prior to this passing, Indiana had relied on a “usual and customary” method, which had many pitfalls. Both the Workers’ Compensation Research Institute (WCRI) and theNational Council on Compensation Insurance (NCCI) have published studies showing how, overall, “usual and customary” states had higher comparable medical costs and higher rates of increases in cost.

1. Insurer investment returns

The financial crisis of 2008 caused insurers to write down their investment portfolios and reallocate seeking higher returns. However, with a prevalence of low-yielding investments, attractive returns were not possible. Furthermore, credit quality impaired insurer’s massive corporate bonds holdings. For insurers with an international footprint there was also the impact of the sovereign debt crisis in Europe and the drain on surplus caused by 2011 delivering one of the worst worldwide catastrophic loss years on record. Interest rates on 10-year treasury notes have been following a downward trend for over a decade and are now at all-time record lows. Since roughly 80% of the property-casualty industry’s bond/cash investments are in 10-year or shorter durations, most insurer portfolios will have low-yielding bonds for years to come. In addition, the recession reduced demand for workers’ comp (demand = payroll).

1. Insurer investment returns

The financial crisis of 2008 caused insurers to write down their investment portfolios and reallocate seeking higher returns. However, with a prevalence of low-yielding investments, attractive returns were not possible. Furthermore, credit quality impaired insurer’s massive corporate bonds holdings. For insurers with an international footprint there was also the impact of the sovereign debt crisis in Europe and the drain on surplus caused by 2011 delivering one of the worst worldwide catastrophic loss years on record. Interest rates on 10-year treasury notes have been following a downward trend for over a decade and are now at all-time record lows. Since roughly 80% of the property-casualty industry’s bond/cash investments are in 10-year or shorter durations, most insurer portfolios will have low-yielding bonds for years to come. In addition, the recession reduced demand for workers’ comp (demand = payroll).

Unhealthy, unproductive, unengaged employees are among an employer’s largest strategic risks. Employers have seen this in health insurance rates for years. Now, the workers’ compensation insurers are starting to pay attention. Workers’ compensation insurers are coming to the realization that safety programs aren’t enough. Yes, these programs are necessary and beneficial, but they don’t address the health and wellness of each individual employee and often fail to impact employee engagement focusing instead on physical hazards (e.g. machine guarding). Insurers recognize the changing demographic of today’s employees: an aging workforce that’s retiring at an older age and more likely to be overweight. This is leading to comorbid health issues like hypertension, diabetes, and high cholesterol. Taken together, these elements have the makings of a perfect storm.

Imagine this scenario: Mary is in the supply room getting a box of paper. It falls on and injures her foot. Her employer sends an incident report to their workers’ compensation carrier. A few days later, Mary’s foot is still bothering her with an ulcer forming at the impact site. Mary gets medical treatment, but the ulcer won’t heal. Fast-forward a few months to the possibility of Mary losing her foot - a complication of untreated diabetes. Of course, this is an extreme example, but it’s one that’s becoming a trend.

As Health Care Reform is implemented, the debate continues on two fronts: (1) is the law truly going to impact costs and (2) how will the millions of Americans who are currently uninsured impact provider access? While these two topics have dominated the discussion, there has been little discussion on how health literacy will impact both.

Whenever we encounter a particularly shocking piece of news, we tend to assume the worst. When the videos of the West Fertilizer Co. explosion appeared on YouTube and the news of the devastation was carried across the country, it caused many people to make some wild assumptions. The fact that it occurred in the same week as the tragic events at the Boston Marathon, led many to assume some kind of connection between the two tragedies.

On Thursday the Internal Revenue Service issued Revenue Procedure 2013-25, heralding changes to health savings account contributions for individuals and families for 2014. As well as this, employee out-of-pocket expenses are also set to change. These changes are to reflect the changes in the cost of living.

No one ever thought the implementation of Health Care Reform would be easy. Even fervent supporters of the law admit that things are going worse than expected.