May 31, 2020

California Evaluates Potential Cost Impact of COVID-19 Presumptions

May 31st: WCIRB Issues Updated Report with May Data

The Workers’ Compensation Insurance Rating Bureau (WCIRB) of California published a new report evaluating the potential workers’ compensation claims costs arising from Executive Order N-62-20, which created a sweeping COVID-19 presumption for all employees, not just first responders and healthcare workers, or those deemed essential.

Reflecting the stipulations of the Executive Order, this report makes estimations based on the receival of a positive diagnosis of COVID-19 during specific dates.

These cost estimates are based on WCIRB data including statistical reports, aggregate financial data calls, and medical transaction data, as well as external data from the American Community Survey (ACS), the California Division of Workers’ Compensation (DWC) Official Medical Fee Schedule, and various published studies on COVID-19 incidence rates and medical treatment patterns and costs.

Highlighted estimates of the report include:

  • WCIRB estimates that the cost of COVID-19 claims in workers’ comp will range from $600 million to $2 billion, with a mid-range estimate of $1.2 billion
  • The mid-range estimate comprises 7% of the $18.3 billion estimate annual cost of workers’ comp claims in the system prior to the pandemic
  • Among healthcare workers and first responders, estimated costs range from $300 million to $1.2 million
  • Among other workers, estimated costs range from $300 million to $800 million
  • Mid-range estimates for mild COVID-19 claims with no hospitalization are 25,400, with estimated costs of $70 million
  • Mid-range estimates for severe COVID-19 claims with non-ICU hospitalization are 3,200, with estimated costs of $330 million
  • Mid-range estimates for critical COVID-19 claims with ICU are 800, with estimated costs of $220 million

Mid-range estimates for fatal COVID-19 claims are 1,600, with estimated costs of $610 million

April 21st

The California Workers’ Compensation Insurance Rating Bureau (WCIRB) issued a new report on the potential cost impact of COVID-19 presumptions provided to essential critical infrastructure (ECI) workers in California as defined by Governor Gavin Newsom’s Executive Order N-33-20.

Cost estimates are based on WCIRB data including unit statistical reports, aggregate financial data calls and medical transaction data. Additional data include external data from the American Community Survey (ACS), the Division of Workers’ Compensation (DWC) Official Medical Fee Schedule, and a number of published studies on COVID-19 incidence rates and medical treatment patterns and costs. This report assumes all symptomatic ECI workers with COVID-19 file a compensable workers’ comp claim.

While the cost impact of COVID-19 claims will vary significantly, the WCIRB estimates the annual cost of COVID-19 claims for ECI workers under a conclusive presumption to range from $2.2 billion to $33.6 billion, with an approximate mid-range estimate of $11.2 billion, or 61% of the annual estimated cost of the total workers’ comp system prior to the pandemic.

The report separates ECI workers into two categories; ECI Group 1 includes healthcare workers and first responders, and ECI Group 2, which includes all other essential workers.

ECI Group 1 has an estimated claim-filing rate of 4% to 60%. The higher-end estimate of 60% is based on illness rates for healthcare workers in Wuhan, China, the initial epicenter of the outbreak. Estimated costs for these claims range from $1.2 billion to $18.1 billion. WCIRB estimates that first responders and healthcare workers face a five-time higher rate of filing COVID-19 claims than other essential workers.

ECI Group 2 has an estimated claim-filing rate of 0.8% to 12%, with estimated costs ranging from $1 billion to $15.6 billion.

Utilizing their mid-range estimate, the WCIRB calculates the following types of COVID-19 claims as follows:

  • 472,900 total claims
  • 378,300 mild claims that require no hospitalization
  • 70,900 severe claims that require hospitalization without ICU
  • 20,300 critical claims that require ICU hospitalization without deaths
  • 3,300 death claims

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