Health Care Reform and Workers’ Compensation: Evidence from Massachusetts

Abstract

The authors provide evidence of important spillover effects of comprehensive health care reform on workers’ compensation (WC) that are likely to reduce WC costs. Using data on more than 20 million emergency room (ER) discharges in Massachusetts and three comparison states, they find that Massachusetts health care reform caused a 6.2 to 8.2% decrease in the per capita number of ER discharges billed to WC. The authors document heterogeneity in the impacts of the reform, shedding light on the mechanisms generating the overall decline in ER discharges billed to WC. Results indicate a larger decrease in WC claiming for weekday admissions than for weekend admissions and for harder-to-verify musculoskeletal discharges than for wounds. The decline in WC discharges is driven both by injured workers increasingly seeking care outside of the ER and by changes in the propensity to bill WC for a given ER discharge.