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Medical costs in workers' compensation insurance: comment.

Leigh JP; Ward MM
J Health Econ 1997 Oct; 16(5):619-622
This comments concerns an earlier published paper written by Baker and Krueger (Medical Costs in Workers' Compensation Insurance, J. Health Econ. 14(5):531-549, 1995) dealing with medical costs related to workers compensation (WC) insurance. The original paper offered two explanations for the higher medical charges for injuries and illnesses to patients covered by WC than for patients not covered by WC insurance: better or more intensive services, and price discrimination against WC patients, exploiting the system. The authors of this comment propose a third suggestion, which questions the amount of price discrimination that takes place. The relatively high charges for WC patients may reflect a compensating wage to physicians and other health care providers for agreeing to treat WC patients. Such cases are regarded in the medical profession as being especially burdensome due to the amount of paperwork and litigation that frequently comes with them. The WC system presents several problems for physicians including the problem of credibility of the patient, the colossal amount of paperwork, the added responsibilities of understanding WC law, rendering judgments that have profound effects on patient lives, being on call to provide testimony, and the risk of being sued for malpractice. In any given location, only a few physicians specialize in WC cases. This bifurcated market structure is the result of the substantial fixed costs associated with learning WC law, becoming familiar with the reports required, improving report writing skills, learning how to spot bogus claims, and more. Due to the additional burden associated with WC patients, physicians may charge more for the same service.
NIOSH-Grant; Grants-other; Health-care-personnel; Physicians; Surgeons; Medical-treatment; Regulations; Legislation; Accident-analysis; Author Keywords: Compensating wage; Market structure
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Journal Article
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Journal of Health Economics
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Pacific Institute for Research and Evaluation, Landover, Maryland
Page last reviewed: September 2, 2020
Content source: National Institute for Occupational Safety and Health Education and Information Division