Statement About Reform of State Workers' Compensation Systems

WHEN the first State workers' compensation laws were enacted more than 60 years ago, they were viewed as a major social reform. They were expected:

--to replace a substantial part of the income lost through work-related disability or death;

--to encourage safe and healthful workplaces; and,

--to provide medical care, rehabilitation, and, whenever possible, reemployment for those who became injured or ill in the course of their work.

Furthermore, they were expected to accomplish these goals efficiently and with a minimum of controversy.

In succeeding years, workers' compensation legislation was enacted by all the .States, and coverage and benefits were expanded.

But today it has become clear that the evolution of the State workers' compensation systems has been too slow to continue to meet the needs of the intended beneficiaries. These systems have not kept pace with the times, and the original goals of workers' compensation are yet to be fully achieved.

Many of the flaws in the present systems were documented by the National Commission on State Workmen's Compensation Laws. The Commission's report set forth a long list of recommendations for improvement. It also prompted a flurry of legislative activity in the States and no doubt will continue to inspire further reforms.

To accelerate these reforms and to evaluate the progress of the States, I have directed the Secretaries of Labor, Commerce, and Health, Education, and Welfare, and the Federal Insurance Administrator within the Department of Housing and Urban Development to organize a new Federal task force on workers' compensation which will include a capable and well-informed technical assistance team. As a starting point, this task force will assist States in the following areas:

--the extension of compensation coverage to all workers;

--improvement in coverage of occupational diseases and the development of less burdensome evidentiary requirements;

--elimination of unreasonable limits on medical and rehabilitation expenditures; and,

--correction of technical or legal limitations which prevent workers from gaining eligibility for workers' compensation benefits because of varying jurisdictional requirements.

Immediate improvement is needed in benefits, particularly for those workers permanently and totally disabled who now receive benefits below the poverty line. Moreover, workers who are permanently disabled and the families of workers who die from work-related injury or illness should be protected from gradual impoverishment by the rising cost of living.

At the end of 1975, an evaluation of State progress toward these objectives will be made by the task force and will be transmitted to the Congress and the States. Based on this evaluation as well as subsequent studies and materials submitted by concerned groups and individuals, I intend to make further recommendations for State, and possibly Federal, actions which seem appropriate.

There is clearly a need to take a long look at the whole system of workers' compensation. Fundamental questions have been raised as to whether that system as presently designed can achieve the goals of-equity and efficiency which were set forth six decades ago.

One key question is whether the present systems provide adequate incentives for reducing hazards--both accidents and diseases--in the work environment. It is raised by the continuing need to improve workplace safety, which has resulted in several major pieces of legislation during this Administration, including the Coal Mine Health and Safety Act (1969), the Construction Safety Act (1969), and the historic Occupational Safety and Health Act (1970). Another question is whether disabled workers are rehabilitated and reemployed to the maximum extent possible. There is some evidence that improved programs might result in much smaller proportions of permanently disabled workers. Thirdly, it is open to question whether benefits are delivered promptly, efficiently, and equitably. There is evidence that the delivery system may be too expensive, may pay too much for small claims and too little for large, and may be too slow in delivery of benefits.

We do not know the answers to these questions, but we must find them. The answers are essential to the protection and well-being of American workers. It would be foolhardy to attempt to design an ideal system to meet the goals of workers' compensation without knowing what these answers are.

Therefore, I have also directed that the new task force, with the participation of concerned Federal agencies, initiate a major, carefully planned research program that will focus on finding the answers to these major questions. This research program will also address the need for a data system to provide relevant, reliable, and comparable data with which to assess and improve the management of workers' compensation on a continuing basis.

In summary, I am setting in motion an accelerated process of improvement in State workers' compensation systems, supported by Federal technical assistance and carefully monitored and evaluated by the interagency task force. Concurrently, a major research effort will be undertaken to analyze fundamental issues and to develop policy options that come closer to attaining the goals of workers' compensation. I hope this approach will begin an intensive, cooperative, and continuing effort by all levels of government to better serve the welfare of all American workers.