Minn. Comp Costs Rose 18% Between 2000-2002

September 9, 2004

The number of paid workers’ compensation claims fell 15 percent relative to the number of employees from 2000 to 2002, according to a newly released Workers’ Compensation System Report (PDF) from the Minnesota Department of Labor and Industry (DLI).

However, the workers’ compensation system’s cost per $100 of payroll rose 18 percent during the same two-year period. The report estimates the cost rose to $1.58 per $100 of payroll in 2002 from $1.34 in 2000.
The report analyzes data and trends in claims, costs and other features of the state’s workers’ compensation system up to 2002, the most current year for which data is available.

Historically, the amount of indemnity (wage-loss) benefits paid was always more than the amount of medical benefits. Now, more medical benefits are being paid. Adjusted for average wage growth, average indemnity benefits per insured claim rose 27 percent from 1998 to 2001; average medical benefits per claim rose 32 percent.

An increase in medical costs from 1997 to 2002 resulted primarily from outpatient facility services (32 percent of total increase), radiology (18 percent), drugs (16 percent), and surgery and anesthesia (15 percent). Shifts toward more expensive services were a major reason for the increase for radiology and surgery and anesthesia.

Other findings include:

—The total cost of workers’ compensation in 2002 was an estimated $1.32 billion, up from $1.17 billion in 2001 (not adjusted for inflation);

—There were 6.8 paid claims per 100 full-time workers in 2002, down from the 2000 rate of 8.0. The 2002 rate consists of 1.4 cash-benefit claims and 5.4 medical-only claims per 100 full-time workers. Claim rates fell during most of the 1990s;

—The average number of weeks of cash benefits per claim increased 28 percent from 1998 to 2002;

—About 22 percent of cash-benefit recipients injured in 2002 received vocational rehabilitation services, an increase from 15 percent in 1997.

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