The Effort to Rehabilitate Workers' Compensation PETER S. BARTH, PHD
Abstract: State workers' compensation laws have been subjected to criticism since their inception; pressure to change them is now increasing. Most of the current challenge arises from dissatisfaction with the level of benefnts available to disabled workers or their survivors, and, to a lesser degree, with the extent of program coverage. In response to this challenge, changes will occur that may range from reform-simply raising benefit levels and extending coverage-to program redesign, implying major-structural revisions or abolishment of the system. For several reasons, including public apathy, the role of interest groups, and experience with other social insurance programs, it seems likely that basic
structural shifts will not occur in the near future. While the criticism of these state laws is widespread, the problems can be dealt with in the existing framework. One area, however, could conceivably arouse sufficient public and legislative interest to upset this forecast. If it develops that the system is excluding large numbers of individuals disabled or killed by occupational diseases, workers' compensation laws could be placed in jeopardy. While evidence on this is scarce, it is clear that the current system compensates only a small number of serious cases of disability arising from occupational diseases. (Am J. Public Health 66:553557, 197§)
Introduction
addressed is one of program reform or redesign it is important to point out that efforts to modify the structure of these state programs have been exerted for decades without apparent success. The few fundamental changes that have occurred developed in the relative infancy of these laws, e.g., the provision of medical and rehabilitation benefits, the coverage of occupational diseases, and the inclusion of survivors' benefits. Structural rigidity characterizes other social insurance programs as well. In the case of unemployment insurance laws or the orjFinal old-age portion of our Social Security Act, the changes that have occurred historically have been incremental ones, largely in terms of expanded coverage, and cannot be characterized as fundamental or structural modifications. Thus, the odds are extremely high that next year's social insurance laws will look very much like they do today. Despite these characterizations of stability there are some grounds to support the contention that fundamental changes may soon occur. The reasons for such shifts and the form they may take are explored here.
As a society we have an extravagant tendency to allow old law to decay in our midst as the environment changes. Instead of making necessary adjustments and reforms within the old institution, we usually find it easier to superimpose additional institutions or leave the matter in a state of neglect until some genuine impasse forces hasty action in an atmosphere of crisis. This is a wasteful social process and weakens our own potential. The limit to our realization of the future is the degree to which we fail to understand the present.'
The striking aspect of this perceptive observation is not that the Somers wrote it in connection with their analysis of workers' compensation, but that their volume is now more than two decades old and that the workers' compensation system to which they alluded is still virtually intact. Indeed, the same furdamental criticisms of the state laws can be found in earlier works such as that by Reed2 or in the more recent report of the National Commission on State Work. men's Compensation Laws.3 Those issues that have troubled the critics of the system for most of its history have remained qualitatively unchanged, despite the passage of more than two generations. The purpose of this paper is not to explain the remarkable staying power of the compensation system, but to comment on the future of the system. Since the specific question Address repript requests to Dr. Peter S. Barth, Head, Department of Economrjs, University of Connecticut, Storrs, CT 06268. This paper, submitted to the Journal on November 6, 1975, was re-
vised and accepted for publication March 3, 1976.
AJPH June, 1976, Vol. 66, No. 6
Sources of Change While there has always been criticism of some sort directed at the workers' compensation programs, the evidence suggests that intensity of criticism has increased substantially in recent years. First, legislative attempts to force change upon the existing systems are burgeoning. These incldue the dramatic Coal Mine Health and Safety Act of 1969, Section 27 of OSHA creating the National Commission on 553
BARTH
State Workmen's Compensation, the legislation proposed by Senator Robert Taft4 to deal with respiratory diseases and by Senators Harrison Williams and Jacob Javits in the 93rd and 94th Congress,5 as well as others. A less direct but more dramatic bit of evidence can be found in the testimony presented before the National Commission during its public hearings.6 If one reads both the prepared statements as well as the subsequent exchanges with the Commissioners, one observes that virtually every single witness acknowledged the presence of serious problems within the system. Even its staunchest supporters readily accepted the prevalence of significant faults. The Commissioners could describe the laws as ". . . in general neither adequate nor equitable"7 despite their acknowledged position as "workmen's compensation's best friends."8 Some of the increased federal activity involving workers' compensation may be understood in the larger context of federal-state relations in the 1970's. The author does not question the view that a reaction has set into the legislative surge associated with the programs of the Great Society, resulting in some shifts of decision-making from the federal level to the states. Nevertheless, concurrently, a substantial redirection of power toward Washington has also occurred or is underway. This is reflected in the seemingly unrelated areas of occupational safety and health, unemployment insurance, environmental standards, pensions, automobile insurance, and other areas long controlled by the states. In such a context, an emerging federal role in workers' compensation would be neither a unique nor surprising development. While the sources of discontent regarding workers' compensation laws are varied, there seems to be little question regarding the principal grievances. Here, too, it is instructive to examine the substantial body of testimony before the Commission. By far the most commonly cited area of displeasure was the level of compensation available to injured workers. In most case,s the immediate problem was the maximum imposed on indemnity payments to workers or eligible survivors. The extent to which this is the dominant problem today in workers' compensation can be measured by examining the 19 recommendations which the National Commission designated as "essential." Nine of these deal only with the adequacy of cash benefits; six of the remaining ten deal expressly with the extension of coverage to all workers and also reflect the other concern most frequently expressed during the public hearings. The primary thrust for change largely relates to two somewhat non-revolutionary principlesthat an increasing proportion of workers be covered by existing laws, and that the size of benefits be increased. A final observation regarding the sources of pressure for change may indicate the direction that the system will ultimately take. Possibly as a consequence of the complexity of the existing laws and their administration, the subject continues to receive virtually no public attention. Clamor for change emanates almost exclusively from the involved interest groups. The media give the subject virtually no attention. The typical student can expect to spend 12 to 16 years at school and never encounter the subject. Few books and almost no articles in popular journals deal with it. Thus, while 554
the interest groups may believe or behave otherwise, the field is essentially a very closed one. This has several implications. First, unless matters change, we can set the boundaries on possible changes in the system by the clear positions already articulated by the parties involved. Second, it becomes extremely risky to predict what course the compensation area will take should something develop to stir the public's attention since we have virtually no experience to work with here. A final corollary of the lack of public awareness is that attempts to substantially amend the laws will be subject to frequent delays and postponements as matters of wider current attention push them aside.
Reform vs. Redesign Reform is characterized here as changes that move the system closer to accomplishing its stated purposes without altering its essential structure. Thus, in the event that such reforms occurred, one would find the following characteristics retained, leaving the current structure unshaken: * The exclusive remedy * The no-fault principle * The provision of medical and rehabilitation services * Employer responsibility for costs through the existing insurance mechanisms * The maintenance of "the arising out of, and in the course of" test * Indemnity payments for death, for permanent or temporary disability, partial or total in nature. Reform, then, can take several different shapes. 'Arrayed along a continuum, the least dramatic kind of change would simply have the states upgrade existing laws by extending coverage, raising benefit levels, eliminating delays in administration, and reducing program costs. A variety of groups have been working with the states to accomplish this kind of mild reform. The Interdepartmental Task Force on Workers' Compensation is one such vehicle inasmuch as a staff of field representatives has this precise charge given it. The National Commission clearly opted for such a temperate approach also, since it argued for a grace period of at least three years for the states. While stronger measures were to be taken if the states did not put their houses into order, the Commission's clear preference was to avoid more substantial steps for some time in the hope of retaining the prevailing
mechanism. More substantial reform has been proposed by those who would involve the federal government directly in existing programs. Typically, this would involve some guidelines or standards that Washington would articulate, to be carried out under state administration. Virtually all of the representatives of organized labor in their testimony before the National Commission endorsed the reform approach. This is the basis for the almost sole dissent appearing in the Commission's Report; the two labor Commissioners urged an immediate movement toward adopting some federal standards. The bill proposed by Senators Williams and Javits in 1975, S.2018,9 amounts to reform of this sort. At the other end of the continuum from the "least dis-
A5JPH June, 1976, Vol. 66, No. 6
WORKERS' COMPENSATION
ruptive" is one that retains most of the existing practices but replaces state administration with a federal one. Existing models for such reform could include either the Longshoremen's and Harbor Workers' Compensation Act or the Federal Employees' Compensation Act.10 Such reform would obviate the need for continually pressuring recalcitrant states to liberalize their laws by simply replacing them. One of the advantages of a uniform national law is the elimination of prevailing, gross discrepancies across states in the treatment of disabled workers or their survivors. Undoubtedly, the most profound difference between this kind of reform and the one involving federal standards would be the disruption of the careers of some state administrators; others, no doubt, would be willing to exchange lost state offices for federal positions. The most solid opposition to this approach to reform derives from the fact that no interest group and virtually no individuals support it. While such a model might yet develop following the precedents set by the Black Lung Law, it may be precisely that experience which drains support from its wider application to the entire workers' compensation area. As the alternative to reform, redesign would involve changes in the fundamental character of compensation as it has existed unaltered in most states for over half a century. While redesign could conceivably take infinite variations, the likeliest format can be phrased in terms of the three goals of the existing program as expressed by its "best friends", the National Commission: an adequate income maintenance program, a mechanism to induce the provision of a healthful and safe working environment, and the availability to disabled workers of medical and rehabilitation services. Two additional expressed goals-broad coverage of workers, injuries and diseases, and an effective delivery system-are actually constraints. Since no one, I believe, has challenged the desirability of these goals it seems reasonable to suppose that redesign could not occur if these ends are not met by some mechanism or other. While no governmental program currently guarantees the provision of medical and rehabilitation services to disabled workers, a number of the forms of national health insurance that are currently being debated by the U.S. Congress could replace the need for this element of existing compensation schemes. Additionally, millions of workers and their families already receive substantial protection through privately purchased medical and hospitalization insurance (often achieved by collective bargaining). Thus, this particular goal of the existing scheme may become redundant shortly, and already coexists with a potential alternative. The ultimate question here must be the amount of medical and rehabilitation benefits available under the alternative programs as well as the need for deductibles. Conceivably, workers' compensation could give way to a system where employers take responsibility to supplement all medical costs incurred by their workers that are borne directly by a national health scheme or existing insurance plans. While the goal of improved health and safety conditions in the workplace is a laudable one, there are several important unknowns to be considered in redesigning the present scheme. First, to what extent has the Occupational Safety AJPH June, 1976, Vol. 66, No. 6
and Health Act of 1970 obviated the need for compensation to accomplish this goal? Clearly, if OSHA achieves its expressed and primary purpose, this aspect of the workers' compensation program becomes superfluous and thereby an unnecessary component of a redesigned or replacement scheme. The novelty of OSHA and the absence of good evaluative data thus far, prevent all but the most heroic from passing judgment on the program's effectiveness. Further, the issue would not seem to be OSHA's five-year history, but its long range impact. The second critical unknown is whether the current program of workers' compensation is in fact accomplishing its health and safety goal. The National Commission agnostically reported ". . . the lack of clear evidence to support the theory that the present insurance pricing system reduces accident frequency." II The third unknown is the systemic changes that have induced employers to become more safety conscious over time, apart from both OSHA and workers' compensation. The increasing importance of specifically trained workers, the costliness of down-time in the presence of highly capital intensive production processes, the increasing proportion of labor costs that are correctly considered as fixed and not variable, together with the emergence of the issue of health and safety in collective bargaining all suggest that accident and illness rates could have been expected to decline over the long run and will continue to do so. The final goal that a redesigned program must supplant is that of income maintenance for disabled workers or their survivors. Several alternatives exist to achieve this end. An obvious focal point is the Social Security System which already provides cash payments to workers who are permanently and totally disabled or to survivors. Yet, to match benefits under some prevailing state programs, the Social Security law would have to be modified at least to (a) widen its coverage; (b) relax its definitions of permanent and total disability; (c) allow covered workers to be eligible immediately upon being employed; and (d) assure that cash benefits are at least as high as those now paid. Several puzzling issues arise with this kind of redesigned scheme. First, temporary disability would need to be dealt with in some supplementary fashion. Temporary disability insurance schemes could operate for the five months before Social Security payments began. Employers can be expected to vigorously resist such a change, since it would presumably provide insured income maintenance for all workers even in the event of non work-related disability, for up to five months and at levels equal to or greater than workers' compensation provides. While New Zealand has opted for a 24 hour per day accident insurance scheme to replace workers' compensation, it is interesting to observe that this protection excludes coverage of occupational diseases.'2 A second puzzle arises over the issue of liability and fault. Since employees now contribute 50 per cent of Social Security premiums to cover themselves, removal of workers' compensation reopens the question of the exclusive remedy. Does redesign imply a return to the law of torts? If so, the strengths and weaknesses of the alternative approach will be forgotten in the intense debate that will surely dominate its consideration. Would the courts allow workers to 555
BARTH
continue to contribute to Social Security but deny them the right to sue for liability in the event of disability? Thirdly, the currently vexatious issue of partial disability does not disappear by replacing the existing system unless the question is resolved by permitting a return to liability actions. Alternatively, the Social Security system might administer a partial disability compensation scheme, but this seems problematic for several reasons. For example, would this mean the provision of benefits even if the disability was not caused at work? I have no grounds for believing that the problems existing in the handling of permanent partial disability will be easier to solve whether the program is administered by the Social Security Administration or in the courts.
Some Conclusions and a Warning Much of the current discontent regarding workers' compensation programs reflects the inadequacy of benefit levels and, to a lesser extent, the continuing inability of states to provide coverage to virtually all workers. Either of these changes can readily be accommodated within the existing framework and there is no reason to suppose that a basic restructuring will guarantee that these problems-essentially ones of inadequate resources-are satisfactorily resolved. Over the next 5 to 15 years it seems likely that sufficient incremental improvements in benefits and coverage will occur, thereby undermining more far-reaching efforts to redesign the system. Supporting the ietention of the present approach is the massive public disinterest wn ith it. This will allow the parameters of the changes to be set by the involved interest groups, and because none of them have opted for more than the most temperate of reforms, it is difficult to visualize anything more disruptive developing. While major developments in federal health schemes and in occupational safety and health will impinge on workers' compensation, a replacement for workers' compensation still depends essentially on an income maintenance program, and one that is far more generous than the welfare alternatives currently being explored. There is one extremely important qualifier that must be made to the above forecast. If public attention does become aroused enough to make the subject of workers' compensation a significant political issue, the collective role of the involved interest groups may be submerged by political pressures. In that case, any type of reform or redesign might occur. Are there any circumstances under which such attention could be brought to this long neglected and obscure subject? In my view, the increasing public reaction to the deterioration of our environment could spill over to the occupational health field. As the public becomes more agitated about the quality of air, water, food, and the like, it will insist that occupational diseases be prevented or adequately compensated when they have not been avoided. Combined with such concerns about the environment is the progress being made by medical science in identifying new health hazards in the workplace, thereby increasing the public's awareness that a problem exists. Suspicions that some widely used sub556
stances are carcinogenic in humans are more frequently voiced, and appropriate alarm is being raised about the accelerating introduction of new substances and new processes by industry. Some observers will argue that the compensation system can readily deal with the occupational disease issue and that the states are already coping with it. Evidence on these points is scant. If one examines workers' compensation data for fatalities alone, the nature of the issue becomes clear. Wisconsin is one of the few states for which occupational disease data exist. For the four most recent years where data exist, there were only seven cases closed involving occupational disease fatalities. For the same period, there were 17 fatalities from occupational diseases reported to the Wisconsin Commission-an average of 4.25 per year.'3 This figure represents only cases for workers covered under the state act and it does not include any fatalities from heart disease. Yet, by a crude extrapolation, based on Wisconsin's share of the U.S. population at the time of the 1970 census, one could calculate that reported fatality cases for all states would be 195, for covered employees in an average year between 1970-1973. Data for New York State also exist through 1971.'4 In that year, 61 fatalities from occupational diseases (again excluding heart disease) were closed. Extrapolating again, for 1971, using New York State's share of the total U.S. population in 1970, one can estimate 677 deaths, nationally, among those workers covered by the compensation system. New York, like Wisconsin, has an earned reputation as a progressive state so that, based either on system coverage or on the handling of claims, this figure should not be an understatement of the extent to which such claims are being compensated nationally. While there are substantial discrepancies between the extrapolated estimates from the two states, their difference seems minuscule when compared to estimates of fatalities from occupational diseases that range into the tens of thousands per year. Such striking disparities continue when one examines OSHA's data on occupational fatalities,'5 and then learns that NIOSH personnel still believe that occupational diseases claim thousands of lives annually.'6 These observations point up a potential problem of very large proportions ready to spring out at the compensation system and suggest that the days of public disinterest may soon pass. Even now some signs are beginning to appear. Correspondence indicates that an active public interest group is attempting to rally widespread support in South Carolina where, it is alleged, only one worker has ever successfully filed a compensation claim for byssinosis. 17 Obviously, a critical problem area exists for those diseases with long periods of latency. The difficulty involves both the recognition and proof that the disease is traced to an occupational exposure. These problems may well be insoluble but there can no longer be any doubt that extensive delays between exposure and manifestation are significant. Concern seems warranted about the future ability of the workers' compensation system to sustain its current function. Not only is the potential problem immense for the insurance industry, the results could be catastrophic for some AJPH June, 1976, Vol. 66, No. 6
WORKERS' COMPENSATION
self-insurers. Where the relevant employer has passed out of existence, different kinds of burdens would occur. This scenario may never develop or may not occur before another generation passes. Should it ever happen, however, it will be the ultimate test of the fundamental viability of workers' compensation. It is certain that the public would force the matter into political arenas that previously had never seriously challenged the system. Not only would some of the involved interest groups deviate from their long-term policies regarding compensation, their influence to shape its future would be reduced. Reform, in contrast to redesign, would no longer be a feasible option.
REFERENCES 1. Somers, H. M. and Somers, A. R. Workmen's Compensation. New York: John Wiley & Sons, 1954, pp. (IX-X). 2. Reede, A. H. Adequacy of Workmen's Compensation. Cambridge: Harvard U. Press, 1947. 3. The Report of the National Commission on State Workmen's Compensation Laws. Washington, DC: Government Printing Office, 1972. 4. U.S. Congress, Senate S.1029, Respiratory Disease Benefits Act. 93rd Congress, I st Session, 1973. 5. U.S. Congress, Senate S.2008, A Bill to Strengthen State Workers' Compensation Programs, and for Other Purposes. 93rd Congress, Ist Session, 1973, and U.S. Congress, Senate S.2018, A Bill to Strengthen State Workers' Compensation Programs, and for Other Purposes. 94th Congress, Ist Session, 1975. 6. Unpublished Transcripts of Testimony Presented at Public Hearings of the National Commission on State Workmen's Compensation Laws, 1971-72.
7. The Report of the National Commission..., op. cit.. p. 25. 8. The Report of the National Commission.. op. cit., p. 130. 9. U.S. Congress, Senate S.2018, A Bill to Strengthen State Workers' Compensation Programs, and for Other Purposes. 94th Congress, I st Session, 1975. 10. Public Law 69-803 (March 4, 1927), Longshoremen's and Harbor Workers' Compensation Act, 44 Stat. 1424, and Public Law 60-176 (May 30, 1908), Federal Employees' Compensation Acts, 35 Stat. 556. 11. The Report of the National Commission..., op. cit., p. 98. 12. See William Fleischman, New Approaches to the Personal Injury Problem from New Zealand: The Woodhouse Commission Report & Legislation, pp. 483-498, in Supplemental Studies for the National Commission on State Workmen's Compensation Laws, Vol. III. Washington, DC: Government Printing Office, 1973. 13. Reports of the Wisconsin Workmen's Compensation Division, 1974. See Table 191.73, Compensable Occupation Disease Cases Settled-1936-1973, and "Trends in Occupational Disease Cases Reported Under the Workmen's Compensation Act of
Wisconsin. 14. Compensated Cases Closed, 1971, Research & Statistics Bulletin #27, New York Workmen's Compensation Board, pp 71-72. 15. See, for example, BLS Reports Results of Occupational Injuries and Illnesses for 1974. NEWS, U.S. Department of Labor, 75647, Nov. 18, 1975. 16. NIOSH has estimated that ... there may be as many as 100,000 deaths per year from occupationally caused diseases." The President's Report on Occupational Safety and Health Washington, D.C.: Government Printing Office, 1972, p. 111. Subsequently, my interviews of NIOSH staff indicate that they believe this earlier estimate could be a correct one. 17. Personal Correspondence with Frank Blechman, Project Coordinator, Southern Institute for Occupational Health, Oct. 21, 1975.
National Conference on Cancer Research and Clinical Investigation Set for September A National Conference on Cancer Research and Clinical Investigation will be co-sponsored by the American Cancer Society and the National Cancer Institute, September 20-22, at the Chase-Park Plaza Hotel, St. Louis, MO. The Conference will present important developments in basic cancer research and demonstrate the relationship of this work to clinical investigation. The synthesis of these new developments will be examined in the rapidly expanding experience with combined therapy. Sessions are open to all members and students of the medical and dental professions. This Continuing Medical Education offering meets the criteria for 15 hours of credit in Category I for the Physician's Recognition Award of the American Medical Association. The program is also acceptable for 15 elective hours by the American Academy of Family Physicians and CME hours in Category II-D by the American Osteopathic Association. For further information please write: Sidney L. Arje, MD, American Cancer Society, 777 Third Avenue, New York, NY 410017.
AJPH June, 1976, Vol. 66, No. 6
557
Abstract: State workers' compensation laws have been subjected to criticism since their inception; pressure to change them is now increasing. Most of the current challenge arises from dissatisfaction with the level of benefnts available to disabled workers or their survivors, and, to a lesser degree, with the extent of program coverage. In response to this challenge, changes will occur that may range from reform-simply raising benefit levels and extending coverage-to program redesign, implying major-structural revisions or abolishment of the system. For several reasons, including public apathy, the role of interest groups, and experience with other social insurance programs, it seems likely that basic
structural shifts will not occur in the near future. While the criticism of these state laws is widespread, the problems can be dealt with in the existing framework. One area, however, could conceivably arouse sufficient public and legislative interest to upset this forecast. If it develops that the system is excluding large numbers of individuals disabled or killed by occupational diseases, workers' compensation laws could be placed in jeopardy. While evidence on this is scarce, it is clear that the current system compensates only a small number of serious cases of disability arising from occupational diseases. (Am J. Public Health 66:553557, 197§)
Introduction
addressed is one of program reform or redesign it is important to point out that efforts to modify the structure of these state programs have been exerted for decades without apparent success. The few fundamental changes that have occurred developed in the relative infancy of these laws, e.g., the provision of medical and rehabilitation benefits, the coverage of occupational diseases, and the inclusion of survivors' benefits. Structural rigidity characterizes other social insurance programs as well. In the case of unemployment insurance laws or the orjFinal old-age portion of our Social Security Act, the changes that have occurred historically have been incremental ones, largely in terms of expanded coverage, and cannot be characterized as fundamental or structural modifications. Thus, the odds are extremely high that next year's social insurance laws will look very much like they do today. Despite these characterizations of stability there are some grounds to support the contention that fundamental changes may soon occur. The reasons for such shifts and the form they may take are explored here.
As a society we have an extravagant tendency to allow old law to decay in our midst as the environment changes. Instead of making necessary adjustments and reforms within the old institution, we usually find it easier to superimpose additional institutions or leave the matter in a state of neglect until some genuine impasse forces hasty action in an atmosphere of crisis. This is a wasteful social process and weakens our own potential. The limit to our realization of the future is the degree to which we fail to understand the present.'
The striking aspect of this perceptive observation is not that the Somers wrote it in connection with their analysis of workers' compensation, but that their volume is now more than two decades old and that the workers' compensation system to which they alluded is still virtually intact. Indeed, the same furdamental criticisms of the state laws can be found in earlier works such as that by Reed2 or in the more recent report of the National Commission on State Work. men's Compensation Laws.3 Those issues that have troubled the critics of the system for most of its history have remained qualitatively unchanged, despite the passage of more than two generations. The purpose of this paper is not to explain the remarkable staying power of the compensation system, but to comment on the future of the system. Since the specific question Address repript requests to Dr. Peter S. Barth, Head, Department of Economrjs, University of Connecticut, Storrs, CT 06268. This paper, submitted to the Journal on November 6, 1975, was re-
vised and accepted for publication March 3, 1976.
AJPH June, 1976, Vol. 66, No. 6
Sources of Change While there has always been criticism of some sort directed at the workers' compensation programs, the evidence suggests that intensity of criticism has increased substantially in recent years. First, legislative attempts to force change upon the existing systems are burgeoning. These incldue the dramatic Coal Mine Health and Safety Act of 1969, Section 27 of OSHA creating the National Commission on 553
BARTH
State Workmen's Compensation, the legislation proposed by Senator Robert Taft4 to deal with respiratory diseases and by Senators Harrison Williams and Jacob Javits in the 93rd and 94th Congress,5 as well as others. A less direct but more dramatic bit of evidence can be found in the testimony presented before the National Commission during its public hearings.6 If one reads both the prepared statements as well as the subsequent exchanges with the Commissioners, one observes that virtually every single witness acknowledged the presence of serious problems within the system. Even its staunchest supporters readily accepted the prevalence of significant faults. The Commissioners could describe the laws as ". . . in general neither adequate nor equitable"7 despite their acknowledged position as "workmen's compensation's best friends."8 Some of the increased federal activity involving workers' compensation may be understood in the larger context of federal-state relations in the 1970's. The author does not question the view that a reaction has set into the legislative surge associated with the programs of the Great Society, resulting in some shifts of decision-making from the federal level to the states. Nevertheless, concurrently, a substantial redirection of power toward Washington has also occurred or is underway. This is reflected in the seemingly unrelated areas of occupational safety and health, unemployment insurance, environmental standards, pensions, automobile insurance, and other areas long controlled by the states. In such a context, an emerging federal role in workers' compensation would be neither a unique nor surprising development. While the sources of discontent regarding workers' compensation laws are varied, there seems to be little question regarding the principal grievances. Here, too, it is instructive to examine the substantial body of testimony before the Commission. By far the most commonly cited area of displeasure was the level of compensation available to injured workers. In most case,s the immediate problem was the maximum imposed on indemnity payments to workers or eligible survivors. The extent to which this is the dominant problem today in workers' compensation can be measured by examining the 19 recommendations which the National Commission designated as "essential." Nine of these deal only with the adequacy of cash benefits; six of the remaining ten deal expressly with the extension of coverage to all workers and also reflect the other concern most frequently expressed during the public hearings. The primary thrust for change largely relates to two somewhat non-revolutionary principlesthat an increasing proportion of workers be covered by existing laws, and that the size of benefits be increased. A final observation regarding the sources of pressure for change may indicate the direction that the system will ultimately take. Possibly as a consequence of the complexity of the existing laws and their administration, the subject continues to receive virtually no public attention. Clamor for change emanates almost exclusively from the involved interest groups. The media give the subject virtually no attention. The typical student can expect to spend 12 to 16 years at school and never encounter the subject. Few books and almost no articles in popular journals deal with it. Thus, while 554
the interest groups may believe or behave otherwise, the field is essentially a very closed one. This has several implications. First, unless matters change, we can set the boundaries on possible changes in the system by the clear positions already articulated by the parties involved. Second, it becomes extremely risky to predict what course the compensation area will take should something develop to stir the public's attention since we have virtually no experience to work with here. A final corollary of the lack of public awareness is that attempts to substantially amend the laws will be subject to frequent delays and postponements as matters of wider current attention push them aside.
Reform vs. Redesign Reform is characterized here as changes that move the system closer to accomplishing its stated purposes without altering its essential structure. Thus, in the event that such reforms occurred, one would find the following characteristics retained, leaving the current structure unshaken: * The exclusive remedy * The no-fault principle * The provision of medical and rehabilitation services * Employer responsibility for costs through the existing insurance mechanisms * The maintenance of "the arising out of, and in the course of" test * Indemnity payments for death, for permanent or temporary disability, partial or total in nature. Reform, then, can take several different shapes. 'Arrayed along a continuum, the least dramatic kind of change would simply have the states upgrade existing laws by extending coverage, raising benefit levels, eliminating delays in administration, and reducing program costs. A variety of groups have been working with the states to accomplish this kind of mild reform. The Interdepartmental Task Force on Workers' Compensation is one such vehicle inasmuch as a staff of field representatives has this precise charge given it. The National Commission clearly opted for such a temperate approach also, since it argued for a grace period of at least three years for the states. While stronger measures were to be taken if the states did not put their houses into order, the Commission's clear preference was to avoid more substantial steps for some time in the hope of retaining the prevailing
mechanism. More substantial reform has been proposed by those who would involve the federal government directly in existing programs. Typically, this would involve some guidelines or standards that Washington would articulate, to be carried out under state administration. Virtually all of the representatives of organized labor in their testimony before the National Commission endorsed the reform approach. This is the basis for the almost sole dissent appearing in the Commission's Report; the two labor Commissioners urged an immediate movement toward adopting some federal standards. The bill proposed by Senators Williams and Javits in 1975, S.2018,9 amounts to reform of this sort. At the other end of the continuum from the "least dis-
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ruptive" is one that retains most of the existing practices but replaces state administration with a federal one. Existing models for such reform could include either the Longshoremen's and Harbor Workers' Compensation Act or the Federal Employees' Compensation Act.10 Such reform would obviate the need for continually pressuring recalcitrant states to liberalize their laws by simply replacing them. One of the advantages of a uniform national law is the elimination of prevailing, gross discrepancies across states in the treatment of disabled workers or their survivors. Undoubtedly, the most profound difference between this kind of reform and the one involving federal standards would be the disruption of the careers of some state administrators; others, no doubt, would be willing to exchange lost state offices for federal positions. The most solid opposition to this approach to reform derives from the fact that no interest group and virtually no individuals support it. While such a model might yet develop following the precedents set by the Black Lung Law, it may be precisely that experience which drains support from its wider application to the entire workers' compensation area. As the alternative to reform, redesign would involve changes in the fundamental character of compensation as it has existed unaltered in most states for over half a century. While redesign could conceivably take infinite variations, the likeliest format can be phrased in terms of the three goals of the existing program as expressed by its "best friends", the National Commission: an adequate income maintenance program, a mechanism to induce the provision of a healthful and safe working environment, and the availability to disabled workers of medical and rehabilitation services. Two additional expressed goals-broad coverage of workers, injuries and diseases, and an effective delivery system-are actually constraints. Since no one, I believe, has challenged the desirability of these goals it seems reasonable to suppose that redesign could not occur if these ends are not met by some mechanism or other. While no governmental program currently guarantees the provision of medical and rehabilitation services to disabled workers, a number of the forms of national health insurance that are currently being debated by the U.S. Congress could replace the need for this element of existing compensation schemes. Additionally, millions of workers and their families already receive substantial protection through privately purchased medical and hospitalization insurance (often achieved by collective bargaining). Thus, this particular goal of the existing scheme may become redundant shortly, and already coexists with a potential alternative. The ultimate question here must be the amount of medical and rehabilitation benefits available under the alternative programs as well as the need for deductibles. Conceivably, workers' compensation could give way to a system where employers take responsibility to supplement all medical costs incurred by their workers that are borne directly by a national health scheme or existing insurance plans. While the goal of improved health and safety conditions in the workplace is a laudable one, there are several important unknowns to be considered in redesigning the present scheme. First, to what extent has the Occupational Safety AJPH June, 1976, Vol. 66, No. 6
and Health Act of 1970 obviated the need for compensation to accomplish this goal? Clearly, if OSHA achieves its expressed and primary purpose, this aspect of the workers' compensation program becomes superfluous and thereby an unnecessary component of a redesigned or replacement scheme. The novelty of OSHA and the absence of good evaluative data thus far, prevent all but the most heroic from passing judgment on the program's effectiveness. Further, the issue would not seem to be OSHA's five-year history, but its long range impact. The second critical unknown is whether the current program of workers' compensation is in fact accomplishing its health and safety goal. The National Commission agnostically reported ". . . the lack of clear evidence to support the theory that the present insurance pricing system reduces accident frequency." II The third unknown is the systemic changes that have induced employers to become more safety conscious over time, apart from both OSHA and workers' compensation. The increasing importance of specifically trained workers, the costliness of down-time in the presence of highly capital intensive production processes, the increasing proportion of labor costs that are correctly considered as fixed and not variable, together with the emergence of the issue of health and safety in collective bargaining all suggest that accident and illness rates could have been expected to decline over the long run and will continue to do so. The final goal that a redesigned program must supplant is that of income maintenance for disabled workers or their survivors. Several alternatives exist to achieve this end. An obvious focal point is the Social Security System which already provides cash payments to workers who are permanently and totally disabled or to survivors. Yet, to match benefits under some prevailing state programs, the Social Security law would have to be modified at least to (a) widen its coverage; (b) relax its definitions of permanent and total disability; (c) allow covered workers to be eligible immediately upon being employed; and (d) assure that cash benefits are at least as high as those now paid. Several puzzling issues arise with this kind of redesigned scheme. First, temporary disability would need to be dealt with in some supplementary fashion. Temporary disability insurance schemes could operate for the five months before Social Security payments began. Employers can be expected to vigorously resist such a change, since it would presumably provide insured income maintenance for all workers even in the event of non work-related disability, for up to five months and at levels equal to or greater than workers' compensation provides. While New Zealand has opted for a 24 hour per day accident insurance scheme to replace workers' compensation, it is interesting to observe that this protection excludes coverage of occupational diseases.'2 A second puzzle arises over the issue of liability and fault. Since employees now contribute 50 per cent of Social Security premiums to cover themselves, removal of workers' compensation reopens the question of the exclusive remedy. Does redesign imply a return to the law of torts? If so, the strengths and weaknesses of the alternative approach will be forgotten in the intense debate that will surely dominate its consideration. Would the courts allow workers to 555
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continue to contribute to Social Security but deny them the right to sue for liability in the event of disability? Thirdly, the currently vexatious issue of partial disability does not disappear by replacing the existing system unless the question is resolved by permitting a return to liability actions. Alternatively, the Social Security system might administer a partial disability compensation scheme, but this seems problematic for several reasons. For example, would this mean the provision of benefits even if the disability was not caused at work? I have no grounds for believing that the problems existing in the handling of permanent partial disability will be easier to solve whether the program is administered by the Social Security Administration or in the courts.
Some Conclusions and a Warning Much of the current discontent regarding workers' compensation programs reflects the inadequacy of benefit levels and, to a lesser extent, the continuing inability of states to provide coverage to virtually all workers. Either of these changes can readily be accommodated within the existing framework and there is no reason to suppose that a basic restructuring will guarantee that these problems-essentially ones of inadequate resources-are satisfactorily resolved. Over the next 5 to 15 years it seems likely that sufficient incremental improvements in benefits and coverage will occur, thereby undermining more far-reaching efforts to redesign the system. Supporting the ietention of the present approach is the massive public disinterest wn ith it. This will allow the parameters of the changes to be set by the involved interest groups, and because none of them have opted for more than the most temperate of reforms, it is difficult to visualize anything more disruptive developing. While major developments in federal health schemes and in occupational safety and health will impinge on workers' compensation, a replacement for workers' compensation still depends essentially on an income maintenance program, and one that is far more generous than the welfare alternatives currently being explored. There is one extremely important qualifier that must be made to the above forecast. If public attention does become aroused enough to make the subject of workers' compensation a significant political issue, the collective role of the involved interest groups may be submerged by political pressures. In that case, any type of reform or redesign might occur. Are there any circumstances under which such attention could be brought to this long neglected and obscure subject? In my view, the increasing public reaction to the deterioration of our environment could spill over to the occupational health field. As the public becomes more agitated about the quality of air, water, food, and the like, it will insist that occupational diseases be prevented or adequately compensated when they have not been avoided. Combined with such concerns about the environment is the progress being made by medical science in identifying new health hazards in the workplace, thereby increasing the public's awareness that a problem exists. Suspicions that some widely used sub556
stances are carcinogenic in humans are more frequently voiced, and appropriate alarm is being raised about the accelerating introduction of new substances and new processes by industry. Some observers will argue that the compensation system can readily deal with the occupational disease issue and that the states are already coping with it. Evidence on these points is scant. If one examines workers' compensation data for fatalities alone, the nature of the issue becomes clear. Wisconsin is one of the few states for which occupational disease data exist. For the four most recent years where data exist, there were only seven cases closed involving occupational disease fatalities. For the same period, there were 17 fatalities from occupational diseases reported to the Wisconsin Commission-an average of 4.25 per year.'3 This figure represents only cases for workers covered under the state act and it does not include any fatalities from heart disease. Yet, by a crude extrapolation, based on Wisconsin's share of the U.S. population at the time of the 1970 census, one could calculate that reported fatality cases for all states would be 195, for covered employees in an average year between 1970-1973. Data for New York State also exist through 1971.'4 In that year, 61 fatalities from occupational diseases (again excluding heart disease) were closed. Extrapolating again, for 1971, using New York State's share of the total U.S. population in 1970, one can estimate 677 deaths, nationally, among those workers covered by the compensation system. New York, like Wisconsin, has an earned reputation as a progressive state so that, based either on system coverage or on the handling of claims, this figure should not be an understatement of the extent to which such claims are being compensated nationally. While there are substantial discrepancies between the extrapolated estimates from the two states, their difference seems minuscule when compared to estimates of fatalities from occupational diseases that range into the tens of thousands per year. Such striking disparities continue when one examines OSHA's data on occupational fatalities,'5 and then learns that NIOSH personnel still believe that occupational diseases claim thousands of lives annually.'6 These observations point up a potential problem of very large proportions ready to spring out at the compensation system and suggest that the days of public disinterest may soon pass. Even now some signs are beginning to appear. Correspondence indicates that an active public interest group is attempting to rally widespread support in South Carolina where, it is alleged, only one worker has ever successfully filed a compensation claim for byssinosis. 17 Obviously, a critical problem area exists for those diseases with long periods of latency. The difficulty involves both the recognition and proof that the disease is traced to an occupational exposure. These problems may well be insoluble but there can no longer be any doubt that extensive delays between exposure and manifestation are significant. Concern seems warranted about the future ability of the workers' compensation system to sustain its current function. Not only is the potential problem immense for the insurance industry, the results could be catastrophic for some AJPH June, 1976, Vol. 66, No. 6
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self-insurers. Where the relevant employer has passed out of existence, different kinds of burdens would occur. This scenario may never develop or may not occur before another generation passes. Should it ever happen, however, it will be the ultimate test of the fundamental viability of workers' compensation. It is certain that the public would force the matter into political arenas that previously had never seriously challenged the system. Not only would some of the involved interest groups deviate from their long-term policies regarding compensation, their influence to shape its future would be reduced. Reform, in contrast to redesign, would no longer be a feasible option.
REFERENCES 1. Somers, H. M. and Somers, A. R. Workmen's Compensation. New York: John Wiley & Sons, 1954, pp. (IX-X). 2. Reede, A. H. Adequacy of Workmen's Compensation. Cambridge: Harvard U. Press, 1947. 3. The Report of the National Commission on State Workmen's Compensation Laws. Washington, DC: Government Printing Office, 1972. 4. U.S. Congress, Senate S.1029, Respiratory Disease Benefits Act. 93rd Congress, I st Session, 1973. 5. U.S. Congress, Senate S.2008, A Bill to Strengthen State Workers' Compensation Programs, and for Other Purposes. 93rd Congress, Ist Session, 1973, and U.S. Congress, Senate S.2018, A Bill to Strengthen State Workers' Compensation Programs, and for Other Purposes. 94th Congress, Ist Session, 1975. 6. Unpublished Transcripts of Testimony Presented at Public Hearings of the National Commission on State Workmen's Compensation Laws, 1971-72.
7. The Report of the National Commission..., op. cit.. p. 25. 8. The Report of the National Commission.. op. cit., p. 130. 9. U.S. Congress, Senate S.2018, A Bill to Strengthen State Workers' Compensation Programs, and for Other Purposes. 94th Congress, I st Session, 1975. 10. Public Law 69-803 (March 4, 1927), Longshoremen's and Harbor Workers' Compensation Act, 44 Stat. 1424, and Public Law 60-176 (May 30, 1908), Federal Employees' Compensation Acts, 35 Stat. 556. 11. The Report of the National Commission..., op. cit., p. 98. 12. See William Fleischman, New Approaches to the Personal Injury Problem from New Zealand: The Woodhouse Commission Report & Legislation, pp. 483-498, in Supplemental Studies for the National Commission on State Workmen's Compensation Laws, Vol. III. Washington, DC: Government Printing Office, 1973. 13. Reports of the Wisconsin Workmen's Compensation Division, 1974. See Table 191.73, Compensable Occupation Disease Cases Settled-1936-1973, and "Trends in Occupational Disease Cases Reported Under the Workmen's Compensation Act of
Wisconsin. 14. Compensated Cases Closed, 1971, Research & Statistics Bulletin #27, New York Workmen's Compensation Board, pp 71-72. 15. See, for example, BLS Reports Results of Occupational Injuries and Illnesses for 1974. NEWS, U.S. Department of Labor, 75647, Nov. 18, 1975. 16. NIOSH has estimated that ... there may be as many as 100,000 deaths per year from occupationally caused diseases." The President's Report on Occupational Safety and Health Washington, D.C.: Government Printing Office, 1972, p. 111. Subsequently, my interviews of NIOSH staff indicate that they believe this earlier estimate could be a correct one. 17. Personal Correspondence with Frank Blechman, Project Coordinator, Southern Institute for Occupational Health, Oct. 21, 1975.
National Conference on Cancer Research and Clinical Investigation Set for September A National Conference on Cancer Research and Clinical Investigation will be co-sponsored by the American Cancer Society and the National Cancer Institute, September 20-22, at the Chase-Park Plaza Hotel, St. Louis, MO. The Conference will present important developments in basic cancer research and demonstrate the relationship of this work to clinical investigation. The synthesis of these new developments will be examined in the rapidly expanding experience with combined therapy. Sessions are open to all members and students of the medical and dental professions. This Continuing Medical Education offering meets the criteria for 15 hours of credit in Category I for the Physician's Recognition Award of the American Medical Association. The program is also acceptable for 15 elective hours by the American Academy of Family Physicians and CME hours in Category II-D by the American Osteopathic Association. For further information please write: Sidney L. Arje, MD, American Cancer Society, 777 Third Avenue, New York, NY 410017.
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