INCENTIVE EFFECTS OF WORKERS COMPENSATION BENEFITS - A LITERATURE SYNTHESIS

Increasingly, the health care community and public policymakers are re cognizing the role of economic and psychosocial factors in disability in addition to their traditional attention to environmental, physical, and somatic influences on health and illness. In particular, current discussions of health reform include serious consideration of the inte gration of workers' compensation and health plan benefits. This articl e synthesizes what is known regarding one important aspect of health p olicy: the effects on disability behavior of changes in workers' compe nsation benefits. The best available literature reveals that an increa se of 10 percent in workers' compensation benefits is related to a 1 t o 11 percent increase in the frequency of workers' compensation claims and a 2 to 11 percent increase in duration per claim. The article exa mines the sensitivity of these parameter estimates to differences in r esearch design and proposes an idealized study methodology that, the a uthors hope, would improve the precision of estimates of the incentive effects of workers' compensation payments.