Measuring the screening effects of evidentiary standards: Evidence from workers’ compensation claims

• In Event: Regulation, Access, and Efficiency in Health Care Markets

Abstract

Measuring the screening effects of evidentiary standards: Evidence from workers’ compensation claims

We study whether higher evidentiary standards can improve the targeting efficiency of welfare programs. We identify these effects by examining the state workers’ compensation reforms that adopted various presumptions against workers’ eligibility for benefits and shifted the burden of persuasion to workers seeking benefits. First, we find that the reforms lead to a 26.9% reduction in indemnity benefit payments, with the largest effects among workers with difficult-to-diagnose injuries, such as strain injuries and injuries to the upper extremities or trunk. Second, despite insignificant effects on overall medical spending, the reforms significantly reduced spending on physical therapy and other miscellaneous medical care by 10% and 20% respectively. Third, we find little evidence that these reforms negatively affect workers’ health, either overall or across subgroups. Overall, the findings indicate that these state-level policies might have effectively improved the efficiency by reducing benefit payouts to less needy workers.

We study whether higher evidentiary standards can improve the targeting efficiency of welfare programs. We identify these effects by examining the state workers’ compensation reforms that adopted various presumptions against workers’ eligibility for benefits and shifted the burden of persuasion to workers seeking benefits. First, we find that the reforms lead to a 26.9% reduction in indemnity benefit payments, with the largest effects among workers with difficult-to-diagnose injuries, such as strain injuries and injuries to the upper extremities or trunk. Second, despite insignificant effects on overall medical spending, the reforms significantly reduced spending on physical therapy and other miscellaneous medical care by 10% and 20% respectively. Third, we find little evidence that these reforms negatively affect workers’ health, either overall or across subgroups. Overall, the findings indicate that these state-level policies might have effectively improved the efficiency by reducing benefit payouts to less needy workers.

Author

• Tony LoSasso, University of Wisconsin-Madison
  Presenting Author