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U.S. lawmakers ask for federal oversight of workers' compensation

Our last two posts focused on detrimental changes to workers' compensation laws and policies in various states. In recent years, more than 30 states have enacted changes that make it more difficult for injured workers to qualify for workers' compensation and have lowered benefits for those who do qualify.

Two states have gone so far as to allow employers to opt out of state-run workers' compensation and implement their own plans instead. Many of these alternative programs save companies money by giving them far more control over how, when and if injury claims get compensated.

In response to this disturbing trend, some U.S. legislators are seeking more federal oversight. According to news sources, 10 prominent Democrats in the House and Senate have asked the Department of Labor to bring back a practice it ended in 2004 (because of budget cuts). Understanding this practice requires a brief history lesson.

The Occupational Health and Safety Act created a presidential commission in 1972. That commission yielded a set of about 19 minimum standards that workers' compensation programs should meet in every state. Although the standards were not mandatory, nearly all states complied with them. And until 2004, the Labor Department tracked compliance.

The federal government and taxpayers have a financial interest in making sure that state workers' compensation plans are providing adequate coverage. Otherwise, medical care expenses and related costs get shifted to workers themselves as well as programs like Medicare, Medicaid and Social Security Disability Insurance.

As you can imagine, federal oversight (on any given issue) comes with its own potential problems. But without some sort of intervention, the gutting of workers' compensation plans could continue spread across the country.

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