Workers Compensation: a Closer Look

ByABC News
March 19, 2007, 4:07 PM

March 20, 2007 — -- Every so often the American conscience becomes aware of the struggle that those who seek help from our national disability system confront. The plight of our disabled American veterans, horrifying to all of us, makes this one of those times.

While our reflex is to blame the agents of the state, the real culprits are the rules under which these agents operate -- the rules for disability determination.

Distinguishing the worthy injured from the unworthy injured has been a sore point in Western societies for millennia. Leaving the task to charity, to families, the rich or religious orders has an uneven historical record.

A century ago, the government of Prussia set the precedent with social legislation designed to provide for all who were physically challenged.

In nearly all resource-advantaged countries, there is a three-tiered approach to who should receive assistance in response to the claim of work incapacity.

The worker who is injured at work is the most worthy, and therefore should be compensated for any loss of wage-earning capacity. Financial compensation to this degree is the principal of workers compensation insurance, a principal that has been largely adopted by the Veterans Administration.

The disability award scale for the Social Security administration is not keyed to wage replacement but to subsistence income.

So how does one administer a wage replacement scheme?

The simplest way to quantify how much work is left in the injured worker/veteran is to ask, "Given your injury, what do you think you can still do and how much do you think you can still earn?"

The basic premise of the original German system prohibited this simple solution. The implication was that the injured (or diseased) worker would overestimate or overstate the disability. There had to be a better way.