Posted at 11:45 a.m., Tuesday, May 22, 2001

Workers comp costs continue to fall

By Glenn Scott
Advertiser Staff Writer

Total benefits for workers compensation dropped by 9.6 percent in Hawai'i in 1999 as the state continued the fifth year of a pattern of declining costs for businesses, according to a national study.

In a report released today by the National Academy of Social Insurance, researchers said workers compensation benefits fell from a total of $233.5 million in 1998 to $211.1 in 1999, the last year for which costs have been calculated.

Rutgers University professor John Burton Jr., chairman of the academy study, said the strong economy led to a decline in workers compensation costs and benefits, relative to wages. He said other important causes include a reduction in accidents, more active management of medical care, more efficient return-to-work programs and tightened eligibility for workers.

The 1999 decline occurred even as Hawai'i's work force grew by 0.8 percent and wages rose by 3.4 percent, the academy said. As a result, the formula for benefits paid as a percentage of payroll also fell from 1.64 percent in 1998 to 1.43 percent in 1999.

On the national level, the dollar benefits and costs rose for the second straight year. In 1999 benefit payments rose by 2.5 percent to 43.4 billion, from $42.3 billion in 1998.

Total costs to employers nationally reached $54.6 percent in 1999, from $52.8 billion a year earlier.

However, workers comp benefit payments fell relative to wages nationwide for the seventh year in a row, the academy noted, as benefits have dropped by a cumulative 38 percent since the peak in 1992. The healthy national economy in 1999 translated into a 2.5 percent increase in workers, to 120.9 percent.