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Increasing Claims for Soft Tissue Injuries in Workers' Compensation: Cost Shifting and Moral Hazard

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  • Butler, Richard J
  • Durbin, David L
  • Helvacian, Nurhan M

Abstract

During the last decade, the distribution of workers compensation claims has exhibited a marked shift towards soft tissue injuries such as sprains, stains, and low back claims. There are three possible explanations for this trend: (1) safety incentives induced by workers compensation or OSHA may have reduced other, traumatic claims; (2) the movement away from heavy manufacturing and the 1980 construction recession may have changed the underlying risk of a workplace injury; and (3) there has been moral hazard behavior on the part of workers and health care providers. Using a new data source and estimation framework, we find evidence that moral hazard response explains most of the 30% increase in the proportion of soft tissue injuries during the 1980s. Copyright 1996 by Kluwer Academic Publishers

Suggested Citation

  • Butler, Richard J & Durbin, David L & Helvacian, Nurhan M, 1996. "Increasing Claims for Soft Tissue Injuries in Workers' Compensation: Cost Shifting and Moral Hazard," Journal of Risk and Uncertainty, Springer, vol. 13(1), pages 73-87, July.
    • Handle: RePEc:kap:jrisku:v:13:y:1996:i:1:p:73-87
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    Cited by:

    1. Moral De Blas, Alfonso & Martín-Román, Ángel & Rodríguez Caballero, Juan Carlos, 2013. "El papel de las ETTs en la reducción del riesgo moral asociado al seguro por accidentes de trabajo: El caso de España/The Role of the TWAs in the Reduction of Moral Hazard in Workplace Accident Insura," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 31, pages 497-522, Septiembr.
    2. Askenazy, Philippe, 2006. "Some determinants of reporting workplace accidents in France: The role of labour contract," CEPREMAP Working Papers (Docweb) 0603, CEPREMAP.
    3. Carolyn L. Kerrigan & E. Dale Collins & H. Myra Kim & Paul L. Schnur & Edwin Wilkins & Bruce Cunningham & Julie Lowery, 2002. "Reduction Mammaplasty: Defining Medical Necessity," Medical Decision Making, , vol. 22(3), pages 208-217, June.
    4. Sebastian Soika, 2018. "Moral Hazard and Advantageous Selection in Private Disability Insurance," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 43(1), pages 97-125, January.
    5. Fortin, Bernard & Lanoie, Paul, 1998. "Effects of Workers' Compensation: A Survey," Cahiers de recherche 9816, Université Laval - Département d'économique.
    6. Hunsoo Kim & W. Jean Kwon, 2006. "A Multi‐Line Insurance Fraud Recognition System: A Government‐Led Approach in Korea," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 9(2), pages 131-147, September.
    7. Brian Richman & Sharon Tennyson, 2022. "The effects of state legal environments on automobile insurance claims and compensation: Evidence from the Royal Globe doctrine," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 25(4), pages 491-513, December.
    8. Michele Campolieti, 2002. "Moral Hazard and Disability Insurance: On the Incidence of Hard-to-Diagnose Medical Conditions in the Canada/Quebec Pension Plan Disability Program," Canadian Public Policy, University of Toronto Press, vol. 28(3), pages 419-441, September.
    9. Michele Campolieti, 2002. "The recurrence of occupational injuries: estimates from a zero inflated count model," Applied Economics Letters, Taylor & Francis Journals, vol. 9(9), pages 595-600.
    10. Georges Dionne, 2012. "The Empirical Measure of Information Problems with Emphasis on Insurance Fraud and Dynamic Data," Cahiers de recherche 1233, CIRPEE.
    11. Michele Campolieti & John N. Lavis, 2000. "Disability Expenditures in Canada, 1970-1996: Trends, Reform Efforts and a Path for the Future," Canadian Public Policy, University of Toronto Press, vol. 26(2), pages 241-164, June.
    12. Krueger, Alan B. & Meyer, Bruce D., 2002. "Labor supply effects of social insurance," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 33, pages 2327-2392, Elsevier.
    13. Tan, Ken Seng & Wei, Pengyu & Wei, Wei & Zhuang, Sheng Chao, 2020. "Optimal dynamic reinsurance policies under a generalized Denneberg’s absolute deviation principle," European Journal of Operational Research, Elsevier, vol. 282(1), pages 345-362.
    14. Ángel Martín-Román & Alfonso Moral, 2017. "A methodological proposal to evaluate the cost of duration moral hazard in workplace accident insurance," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 18(9), pages 1181-1198, December.
    15. Dionne, Georges & Gagne, Robert, 2002. "Replacement Cost Endorsement and Opportunistic Fraud in Automobile Insurance," Journal of Risk and Uncertainty, Springer, vol. 24(3), pages 213-230, May.
    16. Georges Dionne & Robert Gagné, 2001. "Deductible Contracts Against Fraudulent Claims: Evidence From Automobile Insurance," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 290-301, May.
    17. Hansen, Benjamin & Nguyen, Tuan & Waddell, Glen R., 2017. "Benefit Generosity and Injury Duration: Quasi-Experimental Evidence from Regression Kinks," IZA Discussion Papers 10621, Institute of Labor Economics (IZA).
    18. Geetha M. Waehrer & Ted R. Miller, 2003. "Restricted Work, Workers’ Compensation, and Days Away from Work," Journal of Human Resources, University of Wisconsin Press, vol. 38(4).
    19. Stijn Viaene & Guido Dedene, 2004. "Insurance Fraud: Issues and Challenges," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 29(2), pages 313-333, April.
    20. Moral De Blas, Alfonso & Martín Román, Ángel & Rodríguez Caballero, Juan Carlos, 2010. "La antigüedad y las diferencias de esfuerzo entre trabajadores de distintas zonas geográficas: un estudio de los accidentes de trabajo/Seniority and Relative Effort Exercised by Workers from Different," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 28, pages 201(20á)-20, Abril.
    21. Bande, Roberto & López-Mourelo, Elva, 2014. "The spatial distribution of workplace accidents in Spain: assessing the role of workplace inspections," MPRA Paper 56767, University Library of Munich, Germany.

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