EXECUTIVE SAYS CLINTON PROPOSAL WILL RAISE COMP COSTS SIGNIFICANTLY

EXECUTIVE SAYS CLINTON PROPOSAL WILL RAISE COMP COSTS SIGNIFICANTLY

The president of Liberty Mutual Insurance Group told risk managers here Tuesday that the Clinton administration's health-reform plan will significantly boost the cost of workers compensation insurance.

Industry officials are worried about signals from the administration that a revamped health-care system will strip property and casualty insurers of any influence over the cost of providing medical services to people covered under workers compensation and auto insurance policies. The insurers are concerned they will be asked to continue paying lost wages without adequate control over how the money is spent.The administration is expected to release its health-care reform legislation in the coming weeks.

"The appeal of this proposal to the administration appears to be in its academic neatness, wrapping everything into one tidy intellectual package that accounts for everything except the reality of the workers compensation system," Edmund F. Kelly, Liberty Mutual's president and chief operating officer, told risk managers from dozens of Fortune 1,000 companies attending a conference here.

Mr. Kelly said businesses and insurers needed to band together to ensure that the workers compensation system is not split apart and left vulnerable to runaway costs.

The administration falsely believes that shifting control of the medical portion of workers compensation insurance from the insurers to the proposed health system will save billions of dollars, Mr. Kelly said.

"Health plans would have little incentive to aggressively treat occupational injuries, maximize medical improvement, reduce duration of disability and hasten return to work," Mr. Kelly said.

"You know - and we know - through considerable years of experience that getting injured employees healthy and back to work requires a complex set of interdependent activities," Mr. Kelly told the risk managers. "Activities such as pre-accident planning, managed care, rehabilitation and return-to-work programs all need to be considered and fit together to ensure a cost effective and satisfying outcome."

Other insurers also are opposing the administration's ideas on revamping the workers compensation system.

Julie Rochman, a spokeswoman with the Alliance of American Insurers, said, ''He (Mr. Kelly) offers very basic and compelling arguments why a total merger would be harmful to the insurance industry, workers and American business. What he is describing are the very real consequences of destroying the workers compensation system. That is exactly what would happen under the merger approach."