Last week the National Academy of Social Insurance (NASI) released its annual report on workers’ compensation benefits, coverage, and costs across states. For 2015 (there’s a two-year lag), Washington’s benefit costs were $788.62 per covered worker. This was the highest in the country, followed by California ($751.70) and Alaska ($719.93). Although Washington’s benefit costs have been the highest in the country since 2008, they have been declining since 2010, when they reached $865.67 per worker.
Benefit costs as a percent of covered wages in Washington were 1.40 percent in 2015, the fourth highest in the country.
We consider benefit costs to be the best measure of the worker’s compensation system’s costs as well as the most straightforward way to compare costs across states, as we explain in this report.
Additionally, since 2012, the NASI report has included a section on employer costs. As the 2017 report explains, they add up the premiums and deductibles paid, benefits and costs paid by self-insured employers, and assessments for special funds. This is not meant to serve as a comparison of costs across states because it does not control for differences in industry mix.
Washington is the only state in which workers are statutorily required to pay a portion of workers’ compensation premiums. This always seems to trip people up when considering the costs of the system. The 2012 through 2016 NASI reports included only the portion of costs paid by employers in Washington and ignored the portion nominally paid by employees.
The 2017 report includes the employee portion. This is a good change. It’s not clear how many employers actually deduct the employee share from paychecks—they don’t have to. (See here for more on this.) By excluding the costs nominally paid by employees, NASI was understating the cost of Washington’s system. Indeed, the 2016 report (which excluded the employee portion) showed that employer costs in Washington were $1.34 per $100 of covered wages in 2014. The 2017 report (including the employee portion) shows that employer costs in Washington were $1.65 per $100 of covered wages in 2014.
Although this measure of costs shouldn’t be used to make state comparisons, now that it includes the statutory employee portion, perhaps it could be a useful data point in looking at Washington’s costs over time. The 2017 report shows that employer costs in Washington were $1.65 per $100 of covered wages in 2015, down from $1.80 per $100 of covered wages in 2011.