Stakeholders have asked for an update of the WC Medical Share of Losses, originally shared during Annual Insights Symposium (AIS) 2024 and AIS 2025.
Key Findings
- The preliminary medical share for AY 2025 remains 53%, which is unchanged from AY 2024.
- At a high level, the metric generally appears flat over at least the last two decades.
- By zooming in and adjusting the scale, however, more variation in the share can be observed.
- Specifically, the medical share has declined from its peak of 56.6% in AY 2016.
What’s Causing This Decline?
The answer is in the underlying medical and indemnity losses.
When ultimate losses are indexed to 2016, the widening gap between medical and indemnity losses shows that indemnity losses are growing at a faster rate than medical losses. This is consistent with NCCI measures showing that wages have outpaced medical inflation in recent years.
Looking ahead, projections for wage growth from the US Bureau of Labor Statistics and projections for medical price growth from the Centers for Medicare & Medicaid Services suggest this pattern will continue.
What About 2026?
The estimate for Accident Year 2026 is still developing.
However, if wages continue to grow faster than medical prices, the medical share of losses could remain similar to AYs 2024–2025 or even potentially decrease.
The Big Picture
For all NCCI states combined, most costs each year stem from medical benefits.
On the surface, the medical share of losses seems generally consistent over time. However, a deeper look reveals indemnity losses have been growing more quickly than medical losses in the most recent accident years.
Read the full article: Asked & Answered, and stay tuned for a new topic next month.
