THE ILLUSION OF EFFICIENCY IN WORKERS-COMPENSATION REFORM

In this article, Professor Martha T. McCluskey challenges the major re forms in workers' compensation that have developed in the past decade, as well as the economic theory underpinning those theories. In respon se to widespread perceptions that rising workers' compensation insuran ce costs had reached crisis levels by the late 1980s and early 1990s, most states have enacted substantial restrictions on benefits for inju red workers. Professor McClusky, analyzes these benefit cutbacks as pa rt of a broader pattern of retrenchment of social welfare programs, an d criticizes the predominant economic efficiency rationale for this re trenchment. Professor McCluskey argues that the distinction central to much of contemporary law and policy-the opposition between efficiency and redistribution-is illusory. She maintains that, although efficien cy principles are commonly used to explain recent benefit cutbacks as neutral economic measures aimed at minimizing resources for the good o f all, these efficiency principles inevitably incorporate political an d moral judgments about the proper redistribution of resources. Accord ing to Professor McCluskey, the rhetoric about restoring an ''efficien t'' balance between workers and employers through workers' compensatio n reforms instead masks the fact that those reforms serve to redistrib ute resources away from workers toward employers and insurers. Profess or McCluskey next challenges the conventional assumption that high cos ts of workers' compensation are a. problem of uncertainty caused by fo ur types of workplace injuries considered difficult to fit within the workers' compensation paradigm: occupational disease, cumulative traum a injuries, soft-tissue injuries, and mental stress claims. Professor McCluskey argues that the uncertainty typically associated with these injuries does nor arise because these injuries are more ''subjective'' than the paradigmatic industrial machine accident, but because of the inherent subjectivity of the principles of the workers' compensation ''bargain'' itself. Accordingly, she argues that restrictions on certa in ''subjective'' injuries will not promote efficiency by reducing unc ertainty, but will redistribute that uncertainty and its costs. Survey ing the major legislative reform measures containing workers' compensa tion costs, Professor McCluskey shows how each reform fails to provide an ''efficient'' resolution to the distributive conflicts inherent in . workers' compensation. In her conclusion Professor McCluskey explain s that, although economic analysis claims to make tough choices among competing needs (benefits versus jobs) based on rigorous cost-benefit calculations, instead it tends to beg the tougher question of why such hard choices are necessary, and for whom. She then, examines some app roaches that attempt to shift the focus of efficiency analysis from ma ximizing scarce resources to removing the constraints which make those resouces scarce. Using the example of loss prevention strategies in w orkers' compensation, Professor McCluskey asserts that such a shift in focus fails to escape the underlying distributive questions of who sh ould bear the costs of work accidents. Finally, Professor McCluskey co nsiders the value judgments obscured by the predominant focus on the s upposedly neutral workers' compensation ''bargain'' and the economic e fficiency principles it represents, concluding that the debate over wo rkers' compensation costs should instead focus on these moral and poli tical questions about the proper distribution of power between workers , employers, and others.