Workers' Compensation: Rx for Policy Reform

Policy Reports | Welfare

No. 287
Wednesday, September 13, 2006
by N. Michael Helvacian


“Employers and employees should be able to write simple and enforceable contracts for benefits.”

The proposed changes in workers' compensation are designed to promote greater efficiency and improve workers' welfare under workers' compensation systems.  Efficiency is promoted when public policy allows employers and employees to write simple and enforceable contracts for workers' compensation benefits as they currently do for wages and other employee benefits.  Begun in an era when employee benefits were a rarity, current workers' compensation laws and regulations impede such contractual arrangements. These proposals would also deregulate insurance rates and products so that employers and employees could realize full gains from promoting efficiency.  Rewards of efficiency would accrue to employers as lower insurance costs, and to employees as higher wages and choice of benefits that they value most.

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