Toronto • May 28-29, 2010 • Student Day and Workshops: May 27
Paper: Comparative benefits adequacy and equity of three Canadian workers’ compensation programs for long-term disability
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Session : 12. Long-duration disability episodes
Day/Time: Saturday at 11:15
Room: St. Patrick Room, 3rd Floor
Objectives:
In this study we compare three Canadian workers’ compensation programs for long-term disability. The two objectives of the study are: 1) To determine the earnings losses of workers’ compensation claimants sustaining a permanent impairment from a work accident; and 2) To compare the adequacy and equity of benefits proved by the three distinct programs.
Methods:
The three long-term disability programs under investigation were: 1) The Ontario program from prior to 1990, which was an impairment-based program; 2) The Ontario program from 1990 though to 1997, which was a loss of earnings capacity program; and 3)The British Columbia program in existence till June 2002, which was a bifurcated program that provided the higher of an impairment-based benefit or a loss of earnings capacity benefit. The study is based on a linkage of workers’ compensation administrative claims data from each of the programs with individual tax information contained in Statistics Canada’s Longitudinal Administrative Databank. A matched cohort-control method was used to identify labour-market earnings losses of claimants and to assess the adequacy and equity of benefits provided by each program. Analyses of earnings recovery and earnings replacement rates considered labour-market earnings and benefits receipt over a ten-year period post accident.
Results:
In each of the three programs, approximately a quarter of the sample recovered less than 25% of their control-counterpart earnings through labour-market activity, and approximately half recovered more than 75%. Few had mid-range earnings recovery in the entire sample and in each impairment brackets. In terms of benefits adequacy, the bifurcated program provided the highest average earnings replacement rates, with all impairment brackets achieving substantially more than 90% of control counterpart earnings. An analysis of the quartile distribution of earnings replacement rates also indicated that more claimants in the bifurcated program fared better than the other two programs.
Conclusions:
Earnings replacement rate findings indicate that, on average, the three programs are mostly adequate, with the bifurcated program providing the highest replacement rates and the most favorable distribution of replacement rates. The finding that labour-market earnings recovery is polarized in the entire sample and within each impairment bracket suggest that earnings recovery is an almost all or almost nothing phenomenon for most claimants. Even low levels of impairment can be associated with large earnings losses, suggesting the need to consider each case individually since a one size fits all approach may not adequately meet the needs of all claimants.
