IDENTIFYING THE PROBLEM
At the start of the 1980s the economic vitality of the state of Victoria was compromised by a range of problems associated with the rising cost of industrial accidents and diseases (estimated nationally to be double the cost of more widely published road accidents). Many of the funds established to pay compensation benefits to injured employees were in financial trouble (see Office of the Insurance Commissioner of Australia 1979, 1983 in Considine 1991). Moreover, the legal system was failing in its ability to efficiently resolve work-injury disputes. Lawyers were widely accused of prolonging disputes, seeking inappropriate settlements, and often being in league with either the trade unions or the employers (Considine 1991 p 21). Finally, the healthcare system was also failing to manage the complexities of work-related injuries and diseases effectively. Consistently, for the same injury, work-injured employees were more costly and achieved slower recovery (see, for example, Caramona et al. 1998) than did patients whose injury was not covered by workers compensation.
This chapter analyses a range of problems associated with two no-fault compensation policies adopted by the state Australian Labor Party government of the day. Both policies are notable for being inadequately implemented. We also describe the consequences of state government policy on the return-to-work outcomes achieved by those receiving benefits and services to support the return to work of those injured at work or in a transport accident.
In terms of health planning and policy, the focus of the chapter is at the operational, rather than the policy formulation, level. The focus is on the specific activities to be undertaken to achieve the policy adopted or social reform desired, and the resources required for effective implementation. Thus, this chapter aims to elucidate the capacity of the service delivery system to produce service outputs (rehabilitation outcomes) in line with the rehabilitation policies adopted by the relevant government or governmental authority.
Dealing with problems of policy implementation also requires effective monitoring of key outcomes – in this case, return-to-work achievements. As seen below, such evaluation revealed no demonstrable improvement to post-injury return-to-work rates when the clients receiving compensation benefits were compared with those on the less generous benefits of government invalid pensions.
The focus of this chapter is deliberately limited. First, the chapter uses ‘return to work’ as an index of ‘successful’ rehabilitation, and thus ignores information about such important matters as quality of life and community reintegration post-injury. Second, the chapter is primarily concerned with policy developments in Victoria, although comparisons with other states are made. The rationale for the focus on Victoria, rather than on other jurisdictions, is provided below.
THE POLICY CONTEXT
Before detailing the policies and return-to-work achievements in Victoria, two broader issues need to be addressed so that the significance of the chapter’s focus on vocational rehabilitation can be properly appreciated. The first is the nexus between vocational reestablishment and effective rehabilitation, and the second, the health benefits of employment.
The salience of vocational goals within rehabilitation
A long line of rehabilitation authorities have specified the vocational domain as essential in the effective rehabilitation of those with chronic conditions or impairments (see Rusk 1949, Britell 1991, Yarkony 1991). One reason that vocational services are prominent within rehabilitation is because it is essentially historically based. In many Western nations, including the United States and Australia, the original legislative basis for rehabilitation services provided services to defined groups, such as the occupationally displaced or returning members of armed forces whose careers had been disrupted by war service. Rehabilitation services to these groups initially had clear and primary vocational goals. Thus Neff in 1971 wrote that, largely because of a societal emphasis on gainful employment as a condition of full citizenship, in the United States “‘rehabilitation” and “vocational rehabilitation” were virtually synonymous terms’ (Neff 1971 p 113).
While the place of work-related services has declined in prominence over the ensuing 20 years (see Murphy 1991), the centrality of work in the rehabilitation process has continued to be stressed by writers in the areas of rehabilitation counselling and rehabilitation medicine or ‘physiatry’. Physiatry is the branch of medicine that uses physical therapy and mechanical apparatus in the diagnosis, prevention and treatment of bodily disorders. Britell clearly presented her view of this:
It is our responsibility to support rehabilitation to its completion. If our patients fail to attain successful employment we have not adequately carried out that responsibility.
The health benefits of employment
Scientific support for the claimed health benefits of employment for the overwhelming majority of individuals is now substantial (see Murphy & Athanasou 1999, McKee et al. 2005). The impact on an individual’s general health and well-being of a move from unemployment to employment is, on average, associated with an effect size of 0.51. The impact of a loss of employment, while significant, is of less magnitude (0.33). The theoretical explanations for these observed effects are less clear. Many theories have been advanced, largely by social psychologists, but no dominant theory has emerged. For those involved in rehabilitation, however, the facts are clear: most employees deteriorate in mental and physical health when they lose their job; and most unemployed persons’ health improves on the gaining of a job. The importance of these facts for those involved in occupational or workers compensation rehabilitation lies in the problems that start to occur when an injured employee is away from the workplace for more than a few weeks. Problems such as depression and disruption of social relationships regularly emerge. If these are not attended to by health professionals involved in occupational rehabilitation, then a relatively minor injury can lead to prolonged periods of work absence, with reducing chances of a successful long-term outcome, such as a stable return to the pre-injury job or suitable alternative.
Most health and rehabilitation professionals are ignorant of the importance of employment in facilitating individual adjustment and community integration. Further, even if they understand the general importance of employment, they generally lack knowledge of the social psychology of work groups and are not skilled in techniques to elicit cooperation from co-workers in the design of a suitable return-to-work plan for particular injured employees (see Murphy et al. 1997a). Additional deficits include a lack of expertise in techniques to facilitate effective job seeking if a new job is required, and in techniques to assist the maintenance of employment gained post-injury. The authors have observed little change to the situation described by Murphy in 1991 as a situation of minimal overlap between the fields of rehabilitation and vocational or organisational behaviour. The service delivery problems caused by such a lack of overlap are serious enough in general rehabilitation, but they are a major impediment to the delivery of effective occupational rehabilitation services. Effective services are those that lead to the overwhelming majority of injured employees returning to work in a timely and satisfactory manner.
WORKERS COMPENSATION POLICY AND POST-INJURY RETURN-TO-WORK ACHIEVEMENTS
The contemporary policy debate about the aims of workers compensation and the benefits, including health and rehabilitation services, available to Australians injured at work started in the years leading up to the Victorian Government’s changes to workers compensation arrangements contained in the 1985 Accident Compensation Act. This legislation ushered in a string of similar ‘no-fault’ workers compensation schemes across the nation. The key players, their goals and their tactics have been well described by Considine (1991). What the Act and subsequent legislation have achieved in terms of optimal return-to-work rates is less clear.
The 1985 Victorian WorkCare scheme
The workers compensation and rehabilitation scheme known as WorkCare was established by the Victorian Government Occupational Health and Safety Act 1985 and involved the creation of a state government authority – the Accident Compensation Commission. This agency was to be responsible for premium collection and benefit allocations, and the establishment of the Victorian Accident and Rehabilitation Council (VARC) whose centres would provide services for up to 40,000 injured or ill workers per year. Politically, the new Act was broadly acceptable because it promised reduced premium costs for employers and guaranteed generous weekly benefits for injured employees regardless of the ‘cause’ of the work-related accident or illness. Significantly, in the negotiations leading to finalisation of the bill, rehabilitation was not to be compulsory, notwithstanding the commitment to rehabilitation established by the creation of the VARC centres.
The economic and operational problems of the WorkCare scheme have been well described elsewhere (see Considine 1991, Rowe 1988), but some of the characteristics of the scheme relevant to its contributions to optimal return-to-work outcomes are as follows:
- There was a lack of agreement regarding the meaning of ‘rehabilitation’ and, thus, for the determination of services to be provided. While employers regarded rehabilitation as services to facilitate a timely return to work, ideally to the same job even if modified to suit the injured employee, the unions had a more social view of rehabilitation. Unions regarded rehabilitation as services for injured workers that would help them overcome or adjust to their injuries and if necessary foster the development of new skills. The unions believed that those whose injuries prevented a return to work would need some form of social rehabilitation. This lack of agreement on the key characteristics of effective rehabilitation led to many services being provided (for example, pain-related treatments) that were not linked to an injured employee’s increased work capacity. Many rehabilitation service plans were approved by VARC which included no workplace visits or input from the employer or local workplace representatives.
- Health professionals and their employing organisations had little understanding of the world of work, and few established the working relationships with employers and unions that would be necessary if rehabilitation was to contribute to lowering workers compensation costs. This was essential if WorkCare was to be financially viable, since employer premiums had been substantially lowered. At the technical level, few health professionals had any training in the analysis of work performance and thus had little understanding of the ways that workplace factors contributed, either positively of negatively, to the ‘on the job’ productivity of any individual employee. Thus the average health professional, whether employed in private practice or in a health or rehabilitation organisation, had little understanding of how to engage organisational members to create individual return-to-work plans that would enable the injured worker to minimise work absence, a factor known to lead to depressed affect and other sequelae, and a key driver of high work-injury costs.
- The VARC, as an organisation, was motivated by clearly articulated welfare values. Many of its staff were recruited from human service professions and viewed their role as providing every support to injured workers. As the proportion of employees receiving benefits, especially those receiving benefits for more than 6 months, increased, VARC came under increased pressure. While there were many contributors to increased claims’ costs, including particularly over-servicing by some health and rehabilitation organisations, the availability of generous income maintenance (80% of regular pre-injury earnings), with no requirement for assessment by rehabilitation professionals, obviously made it more attractive for some to fraudulently claim to be injured or unable to work because of pain. Additionally, the availability of generous income maintenance reduced the pressure on those with chronic ill-health to continue to work in roles they found unsatisfactory.
- Health professionals and their employing organisations had little understanding of the world of work, and few established the working relationships with employers and unions that would be necessary if rehabilitation was to contribute to lowering workers compensation costs. This was essential if WorkCare was to be financially viable, since employer premiums had been substantially lowered. At the technical level, few health professionals had any training in the analysis of work performance and thus had little understanding of the ways that workplace factors contributed, either positively of negatively, to the ‘on the job’ productivity of any individual employee. Thus the average health professional, whether employed in private practice or in a health or rehabilitation organisation, had little understanding of how to engage organisational members to create individual return-to-work plans that would enable the injured worker to minimise work absence, a factor known to lead to depressed affect and other sequelae, and a key driver of high work-injury costs.
The problem of the ‘leaking bucket’
From the first months of implementation it was clear that it would be difficult for the WorkCare scheme to meet its financial targets (see Considine 1991 p 91). Various Victorian Government initiatives were proposed in an April 1986 set of amendments to the scheme (Accident Compensation (Amendment) Bill, 1986) and later that year a formal review of the scheme was undertaken by the Department of Management and Budget (DMB). That review identified two persistent causes of cost pressures. First, the number of claims was higher than expected and second, more importantly, recipients were staying on benefits longer than expected. The implications of these events for the financial viability of WorkCare were obvious. Weekly wage replacement benefits were the major component in calculation of the cost of long-term claims. The bulk of the DMB’s suggestions concerned procedures to reduce the number of workers still on benefits after 6 months. The specific amendments were contained in the Accident Compensation (Amendment) Bill 1987. These amendments gave new powers to the Accident Compensation Commission to terminate benefits where workers were not engaged in rehabilitation or actively seeking work.
The perilous financial situation of an unfunded WorkCare liability—estimated at around $2.7 billion—forced the Victorian Labor Government to agree to a joint committee of both houses to be chaired by a government parliamentarian, Barry Rowe (Rowe 1988). Although the Rowe Committee was required by the government to make its first concern the issue of insurance industry contributions to WorkCare costs, the committee made a number of clear determinations about the quality of rehabilitation service provision. These are central to this chapter’s focus on the effects of workers compensation policy on the return to work of injured employees.
In section 5.4, the committee reported on the ‘Return-to-work performance of the rehabilitation system’. In reviewing the low return-to-work rates achieved (43.8%) when injured workers received rehabilitation through an approved WorkCare rehabilitation provider, the committee explicitly called for ‘A greater vocational emphasis for WorkCare Rehabilitation’ (see Rowe 1988, section 5.4.2). The observations of the committee about the predicted capacity of WorkCare rehabilitation to achieve high return-to-work rates among the group of work-injured people for whom a rehabilitation plan was raised, were clear:
All providers of rehabilitation services in Victoria are required by contract to focus on vocational rehabilitation outcomes. It appears, however, that the weighting given to vocational rehabilitation has not been sufficient. There appears to be a number of reasons for this. One important factor is the medically-orientated training and experience of most of those providing rehabilitation services … Another factor has been the tendency of rehabilitation to proceed without a satisfactory degree of contact with, and involvement of, the worker’s employer.Stay updated, free articles. Join our Telegram channel
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