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workers compensation overview (United States of America)
Workers Compensation (WC) is the oldest social insurance system in the United States of America, predating the Social Security, Medicare, and Medicaid programs by decades.
As more and more Americans took industrial jobs in the early 1900s the frequency and severity of US work injuries became unacceptable to society.
Injured workers often had to sue their employers to recover medical expenses, lost wages, and loss of future earning capacity. Needless to say, this had a chilling effect on the employer/employee relationship. Workers lost most of these cases under the laws of that time, and, as a result, serious injuries routinely left them and their families destitute, completely dependent on extended family and charity.
When workers did win these lawsuits, employers often paid unexpectedly large verdicts. The difficulty predicting the ultimate cost of employee injuries disrupted business development and sometimes limited employment opportunities for workers.
Beginning in 1911, each US state enacted its own workers' compensation program modeled on those already in place in England and Germany. At the heart of all these WC programs is the "compensation bargain," a legislative compromise where injured workers gave up most rights to sue their employers for pain and suffering in exchange for faster, more predictable benefits. In turn, employers gave up the right to reduce the amounts paid for these injuries because of the workers' own fault.
In contrast to many countries, most US WC systems are administered at the state level, with no federal oversight. There are at least 55 distinctly separate WC systems in the USA, and workers compensation benefits can vary substantially from state to state.
While WC systems have never fully compensated injured workers, they seek to balance the interests of workers and employers. Today most WC programs cover medical expenses without any deductible or co-payment; replace a significant percentage of lost wages; and provide some compensation for loss of earning capacity or, alternatively, offer vocational rehabilitation to reduce future loss of earnings. When workers are fatally injured, their survivors can receive funeral benefits as well as wage-replacement benefits.
With few exceptions, state laws require employers today to provide WC benefits. Most meet this obligation by purchasing insurance from one of more than 1200 commercial insurers or a state-sponsored WC insurance fund.
Workers compensation programs, at least in theory, are designed to be self-executing programs that resolve disputes informally. Nearly a century since the first was enacted, however, most WC systems continue to increase in complexity due to legislative and other legal developments.
While far from perfect, WC continues to work. Since its inception, no alternative to it has ever seriously been considered in the USA.
Ironically, the political tradeoffs at WC's core offer the brightest promise for future improvements-- enhancements that will come to WC systems only as workers and employers negotiate compromises that legislators can enact.
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