Journal of Risk and Uncertainty

, Volume 15, Issue 3, pp 259-269

First online:

Workers' Compensation Costs When Maximum Benefits Change

  • Richard J. ButlerAffiliated withC. Arthur Williams, Jr. Professor of Insurance, University of Minnesota
  • , B. Delworth GardnerAffiliated withProfessor of Economics Emeritus, Brigham Young University
  • , Harold H. GardnerAffiliated withOptions & Choices, Inc.

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“Natural experiment” studies of benefit utilization in workers' compensation have used changes in statutory maximum payments to estimate claim duration elasticities. These studies so far have been limited to using insurance claims data rather than information on individual workers. The result is a failure to estimate changes in claim frequency or the average costs per worker as maximums change. This is the first natural experiment study to analyze changes in both the frequency and severity of workers' compensation claims using data from a single large U.S. employer. In addition, the utilization response to benefit decreases as well as benefit increases is examined.

Workers' compensation natural experiment claims frequency