The American healthcare system is approaching a breaking point that will have profound implications for employers and workers' compensation insurers. As healthcare costs spiral out of control and insurance becomes increasingly unaffordable, a growing number of workers are entering the workplace with untreated medical conditions that will significantly amplify the severity and cost of work-related injuries.
The Affordability Crisis is Real
Recent data reveal that healthcare premiums have increased by 97% and deductibles have surged by 128% over the past two decades, while wages have grown by only 65%. The result? One in three Americans now carries medical debt, and more than half worry they'll fall into debt any time they use the healthcare system.
Nearly 7 in 10 voters believe healthcare is not affordable today, and this perception reflects lived reality. Forty-five percent of voters report struggling to afford at least one ordinary medical expense, with dental care being the most common.
The Dangerous Cycle of Delayed Care
When healthcare becomes unaffordable, people make predictable choices: they delay care, skip medications, and avoid preventive treatment. Over half of voters are concerned about going into medical debt when they use medical services, and 35% have had to skip or delay medical care in the last year due to fears about debt.
This isn't just about inconvenience—it's about deteriorating health. Conditions like diabetes, hypertension, obesity, musculoskeletal disorders, and mental health issues go undiagnosed and untreated. These conditions don't disappear; they worsen silently until a triggering event brings them to the surface.
The Workers' Compensation Time Bomb
Here's where this healthcare crisis becomes an employer's problem: when that triggering event happens at work, the employer bears the full cost of treatment—not just for the workplace injury, but for all the underlying conditions that complicate recovery.
Under the legal doctrine known as "taking the worker as you find them" (or the "eggshell plaintiff" rule), employers are responsible for all consequences of a workplace injury, even if the worker's pre-existing conditions make the injury more severe. A simple slip and fall that might cause a minor sprain in a healthy worker can result in a catastrophic injury requiring surgery and prolonged disability in a worker with untreated osteoporosis or uncontrolled diabetes.
Consider these scenarios:
The Undiagnosed Diabetic: A warehouse worker with years of untreated diabetes suffers a minor laceration at work. What should be a simple wound becomes a non-healing ulcer requiring months of wound care, possibly amputation, and extended disability—all compensable under workers' compensation.
The Hypertension Case: An employee with untreated high blood pressure experiences a workplace stressor and suffers a stroke. The lack of prior medical management doesn't shield the employer from liability for what becomes a catastrophic claim.
The Chronic Pain Patient: A worker with years of untreated back problems lifts a box at work. The resulting injury requires extensive surgery that might have been preventable with earlier intervention. The employer's workers' comp pays for it all.
The Mental Health Factor: Mental health services are notoriously lacking in the current system. Workers with untreated anxiety, depression, or PTSD are more susceptible to workplace injuries and have significantly delayed recovery times when injuries occur.
The Cost Implications
The financial impact on workers' compensation systems will be substantial:
- Higher claim severity: Injuries complicated by untreated comorbidities require more extensive treatment
- Longer recovery times: Workers with poor baseline health take longer to return to work
- Increased permanency ratings: Underlying conditions contribute to permanent impairment assessments
- More litigation: Disputes over causation and apportionment will increase
- Delayed reporting: Workers may not seek immediate treatment, allowing injuries to worsen
A System Failing on Both Ends
Eighty-four percent of voters believe that having health insurance should protect people from medical debt, yet 74% think health insurance is "mostly failing" in providing that protection. When health insurance fails to keep workers healthy, workers' compensation becomes the safety net of last resort—an expensive and inefficient outcome for everyone involved.
The current policy approach, which has relied on privatization, higher deductibles, and managed competition for over 40 years, has demonstrably failed to control costs or improve access.
What This Means Going Forward
Employers and workers' compensation insurers should prepare for:
- Rising claim costs: As more workers enter the workplace with untreated conditions, average claim severity will increase significantly
- More complex claims: Expect longer, more complicated claims involving multiple body systems and chronic conditions
- Underwriting challenges: Traditional experience modification calculations may not adequately account for this systemic shift in worker health status
- Prevention limitations: Even robust workplace safety programs can't prevent injuries exacerbated by poor baseline health
- Legal complications: Disputes over pre-existing conditions and apportionment will require sophisticated claims management
The Broader Implications
The solution requires directly tackling prices, eliminating middlemen, breaking up healthcare behemoths, and returning ownership of care delivery to clinicians and communities. Without systemic reform, employers will increasingly bear the financial burden of a failing healthcare system through their workers' compensation programs.
Key Takeaways
1. The Healthcare Affordability Crisis is Worsening: With premiums up 97%, deductibles up 128%, and wages up only 65%, healthcare is increasingly out of reach for average workers, leading to delayed and foregone care.
2. Untreated Conditions Are Accumulating: More than half of workers worry about medical debt when seeking care, causing them to skip treatment for conditions that will worsen over time and create serious comorbidities.
3. Employers "Take Workers As They Find Them": Under established legal doctrine, employers are liable for all consequences of workplace injuries, even when pre-existing conditions significantly complicate or worsen outcomes.
4. Workers' Comp Claims Will Become More Severe and Costly: As workers enter the workplace with more untreated conditions, routine workplace injuries will increasingly trigger catastrophic claims requiring extensive treatment for both the injury and underlying conditions.
5. The Current System is Unsustainable: Workers' compensation cannot function as the healthcare safety net of last resort—systemic healthcare reform is needed to prevent a crisis in workplace injury costs.
6. Proactive Intervention is Critical: Employers should consider enhanced wellness programs, health screenings, and strategies to improve access to primary care, though these measures alone cannot solve the systemic problem.
7. This Problem Transcends Politics: Across party lines, voters recognize the healthcare system is broken and want protections from medical debt—this is an issue that affects all workers and all employers regardless of political affiliation.
The intersection of healthcare affordability and workers' compensation represents one of the most significant emerging risks facing American employers. As the healthcare system continues to fail in its basic function of keeping people healthy, workers' compensation systems will bear an increasing share of the burden—transforming what should be a workplace injury system into a de facto healthcare provider for America's most vulnerable workers.
Recommended Citation: Gelman, Jon L., Healthcare Crisis Threatens Workers' Compensation (November 12, 2025). Workers ' Compensation, 11/12/2025, https://workers-compensation.blogspot.com/2025/11/healthcare-crisis-threatens-workers.html, Available at SSRN: https://ssrn.com/abstract=5748331 or http://dx.doi.org/10.2139/ssrn.5748331
Blog: Workers' Compensation
LinkedIn: JonGelman
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© 2025 Jon L Gelman. All rights reserved.
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