PRESS RELEASE: New York State Experiences Nation’s Largest Increase in Workers’ Compensation Costs as a Share of Covered Payroll

WASHINGTON, D.C. – New York state experienced the largest annual increase in workers’ compensation costs as a share of covered payroll among all 50 states in 2016, according to a new report from the National Academy of Social Insurance (the Academy). New York was one of only ten states to experience an increase in workers’ compensation costs as a share of payroll between 2015 and 2016.

Workers’ compensation costs to New York employers increased from $1.43 per $100 of covered payroll in 2015 to $1.50 in 2016, a 4.9 percent increase compared to an average decrease of 2.3 percent nationally. In the other nine states which experienced higher costs in 2016, the average increase was less than $0.03 per $100 of payroll.

The Academy’s report, Workers’ Compensation: Benefits, Costs, and Coverage, also highlights five-year changes in workers’ compensation costs from 2012 to 2016. While New York followed national cost trends in the first few years of the period, since 2014 the state has diverged from the country, seeing costs as a share of payroll increase in 2015 and 2016 (Figure 1). By 2016, workers’ compensation costs to New York employers were $0.24 higher per $100 of covered payroll than the national average.

Between 2012 and 2016, the average cost of lost-time claims in New York increased faster than the state’s average weekly wage (New York State Insurance Rating Board, 2016 State of the System Report). “Lost-time claims account for the vast majority of workers’ compensation costs in any state,” said Marjorie Baldwin, Professor of Economics at Arizona State University. “The increasing severity of lost-time claims in New York was likely a major factor contributing to the increase in workers’ compensation costs over the period.”

New York was also one of only ten states in 2016 to experience an increase in workers’ compensation benefits paid as a share of covered payroll. Benefits paid to injured workers and their health care providers increased by 2.1 percent in New York, or $0.02 per $100 of covered payroll. In contrast, the U.S. as a whole saw benefits as a share of payroll decrease by an average of 3.6 percent, or $0.03 per $100 of payroll.

Despite the uptick, benefits as a share of covered payroll in New York were lower in 2016 than in 2012. Nationwide, however, the decline in benefits as a share of payroll has been much steeper. In New York, benefits decreased by 5.8 percent over the five-year period, from $1.04 per $100 of covered payroll in 2012, to $0.98 in 2016 (Figure 2). Across the country, benefits decreased by 15.6 percent on average, from $0.96 to $0.81 per $100 of payroll.

New York also differs from most other jurisdictions in the share of benefits paid for injured workers’ medical care. Nationwide, medical benefits (paid to health care providers) and cash benefits (paid to injured workers) accounted for approximately equal shares of total benefits paid in 2016. In New York, however, medical benefits accounted for only 34 percent of total benefits paid. The proportion of total benefits going to medical care in New York was among the lowest in the nation.

“New York has transformed workers’ compensation for the better in recent years,” said a spokeswoman for the New York State Workers’ Compensation Board. “Insurance premiums were cut 11.7 percent in 2018 and 4.5 percent the year before. Along with the rate decrease, 90 percent of first benefits are now paid within legal timeframes and 82 percent of injury reports are received on time, so employers now see vastly improved insurer performance, too.”

Figure 1. Workers’ Compensation Costs per $100 of Covered Payroll, 2012-2016: New York State vs. U.S. Average (non-federal)

Figure 2. Workers’ Compensation Benefits per $100 of Covered Payroll, 2012-2016: New York State vs. U.S. Average (non-federal)

Workers’ Compensation: Benefits, Costs, and Coverage (2016 data) is the 21^st in an annual series. The report provides the only comprehensive data on workers’ compensation benefits, costs, and coverage, for the nation, the states, the District of Columbia, and federal programs.

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