GAO: Federal Workers Comp Programs Exceed Estimated Costs

April 3, 2008
A new GAO report analyzing the structure and cost of four federal compensation programs for workers injured by harmful substances revealed that these programs were expanded beyond their original scope to cover additional medical conditions, increase benefits and expand eligibility categories. For example, the Black Lung Program – a temporary program for disabled coal miners – paid $41 billion in benefits, more than 13 times initial estimates of $3 billion.

The study, which also analyzed the Vaccine Injury Compensation Program (VICP), the Radiation Exposure Compensation Program (RECP) and the Energy Employees Occupational Illness Compensation Program (EEOICP), was conducted in light of recent legislative proposals to expand the benefits provided by the September 11th Victim Compensation Fund of 2001. GAO’s analysis aimed to determine if expanding the fund would be beneficial.

GAO found that as the federal role for these four programs increased and eligibility expanded, so have the costs, as demonstrated by the Black Lung program. RECP also exceeded its initial estimate by about $247 million. In addition, the annual administrative costs for the programs for fiscal year 2004 ranged from approximately $3 million for RECP to about $89.5 million for EEOICP.

The Black Lung Program and RECP exceeded their initial costs because they were expanded to include additional categories of claimants.

The GAO report also determined that the number of claims filed for three of the programs significantly exceeded initial estimates. In addition, program structure, including the approval process and the extent to which claimants and payers were allowed to appeal claim decisions in the courts, affected the length of time it took to finalize claims and compensate eligible claimants.

For example, it can take years to approve some EEOICP claims because one of the agencies involved in the approval process is required to undergo a lengthy process to determine the levels of radiation to which claimants were exposed.

For the full report, go to http://www.gao.gov/new.items/d08628t.pdf.

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