The sleeper issue in health care reform: the threat to workers' compensation.

The national health care reform debate raises important issues about the effect of federal legislation restructuring health care delivery on state workers' compensation systems. Workers' compensation is the oldest and most successful no-fault insurance system in the country, providing comprehensive medical benefits as well as cash income support, rehabilitation, and burial benefits for work-related injuries and illnesses. The U.S. workers' compensation system is decentralized, with states having primary legislative, administrative, and operational responsibility for their individual programs. Over the years, there has been sporadic Congressional interest in enacting federal workers' compensation standards and even more limited support for establishing a broad-based national workers' compensation program. No such legislation has advanced very far in Congress on a stand-alone basis. This strong state tradition is threatened by federal health care reform. The Clinton Administration initially favored "merging" the medical component of workers' compensation into the yet-to-be-defined federal health care system. While none of the Congressional bills go that far, provisions in several of the measures considered by Congress would interfere with state workers' compensation laws and, set the stage for eventual merger. Even without a direct assault on workers' compensation, health care reform is likely to change the broader health care delivery system in ways that affect workers' compensation. This Article examines the potential effects of national health care reform legislation on workers' compensation. It begins with an overview of existing state workers' compensation systems, focusing on issues that are central to the national health care reform debate. It next discusses political developments to date and analyzes the treatment of workers' compensation by the four major health care bills approved by Congressional committees. Finally, it considers the out-