May 27, 2015
Options to Work Comp: Public Policy Analysis
by Bill Minick
Analysis of the Texas workers' compensation system shows that, as a matter of public policy, "opt-out" programs make sense.
For more than 100 years, Texas has allowed most private employers the option of either purchasing workers’ compensation insurance or developing their own system of injured employee care. Today, 33% of all Texas employers have exercised their option and “nonsubscribe” from the state workers’ compensation system. This paper focuses on public policy that has provided Texas the most successful occupational injury management system in the U.S. – a dual system represented by both traditional workers’ compensation and an option.
Following a brief discussion of the need for options to workers’ compensation and the main components of the Texas Option, foundational public policy is examined. Then, this paper breaks new ground by detailing the size and superior performance of the Texas Option compared with Texas workers’ compensation. Data is provided regarding fewer lost time claims, faster return to work, fewer claim denials, fewer disputed claims, savings on state government expense and lower employer costs. These same public policies and claim results undergird the “Oklahoma Option” legislation that became effective in 2014 and are informing and advancing option legislation now in Tennessee and other states.
This paper will not focus on option program feasibility analysis, design, implementation or funding for a particular employer. This paper also will not provide a detailed analysis of negligence liability exposures or how to administer a nonsubscriber claim. Resources on those subjects are available upon request.