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

Richard J Butler, David L Durbin and Nurhan M Helvacian

Journal of Risk and Uncertainty, 1996, vol. 13, issue 1, 73-87

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

Date: 1996
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