Illinois’ dysfunctional workers’ compensation system blamed for swollen public-sector operating costs

A new study, backed by the Illinois Policy Institute, suggests that the cost of workers’ compensation to Illinois taxpayers is at least $1 billion a year. The total includes at least $727 million/year attributable to local governments and school districts, and an estimated $255 million/year for the State of Illinois. The study was released on Wednesday, April 5.

Workers’ compensation costs are paid by taxpayers as the employers of the thousands of Illinois public sector personnel, including school and university personnel. Under existing law, most employers must cover their employees with workers’ compensation insurance to reflect the actuarial future costs of the employment-related health challenges they may face in the future while employed.

The Illinois workers’ compensation system costs more, per employee, than the systems operated in most other U.S. states. Republicans this year are redoubling their call for overall workers’ compensation reform to move Illinois’ system closer to nationwide standards. Reforms include changes to fees and awards, caps on wage reimbursement rates, work-duty changes to reduce the time that a workers’ comp patient has to wait before going back to work, and changes in workers’ comp pharmaceutical practice to discourage the workers’ comp patients from being prescribed opiate painkillers. Implementing a family of reforms of this type could reduce the cost of workers’ comp to Illinois taxpayers by as much as $300 million/year.

The current Illinois workers’ comp system is set up in complex ways to ensure what are thought to be adequate compensation levels for injured workers, the medical care providers who provide care to persons injured on the job, advocacy personnel (including lawyers) who represent parties in workers’ compensation claim disputes, and the insurance firms that sell workers’ compensation insurance. Opponents of workers’ comp reform tend to blame one or more of these four compensated parties, rather than advocating reforms to the whole system.

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