The cost of compensating asbestos victims under the Occupational Disease Compensation Act of 1983

Our plain-English summary of The cost of compensating asbestos victims under the Occupational Disease Compensation Act of 1983, by F.B. Siskind (Risk Analysis, 1987).

The study

• Author: F.B. Siskind
• Journal: Risk Analysis
• Published: 1987;7(1):59-69
• Cited by: 4 articles, as counted by NIH iCite
• Read it: PubMed · Publisher
• In J-M's library: Johns-Manville's company medical library held a copy (J-M no. 000358).

Abstract

The potentially huge financial liability due to asbestos product suits and the resulting filings for reorganization in bankruptcy by Manville, UNR Industries, Inc., and Amatex, has become a major public policy concern. In response to the problem several bills have been introduced in the Congress to provide compensation for asbestos (and other occupational disease) victims. This paper estimates the cost of compensating asbestos victims under the provisions of the "Occupational Disease Compensation Act of 1983," introduced by Congressman George Miller. Utilizing fatality projections from studies by Enterline, Selikoff, and Walker, and assumptions regarding likely claims filing and success rates, duration and degree of disability, and medical expenses, first year costs for this legislation are estimated to range from a low of $131 million to a high of $ billion. Present value cost estimates at a 2% real discount rate range from $3 billion to $56 billion. The paper also estimates the impact of possible modifications to the compensation provisions of the legislation. Reducing medical payments by the amount received from medicare would lower costs by 3-4%. Providing survivors with a 3-year lump sum benefit rather than a 5-year lump sum payment would save 20-25% as would offsetting the 5-year lump sum by expected social security old age and disability benefits. Combining all of these changes would reduce costs by almost 50%.

In plain English

This was a cost estimate, not a medical study. It estimated the cost of compensating asbestos victims and survivors under the proposed “Occupational Disease Compensation Act of 1983” (the Miller Bill). The bill presumed eligibility strongly for asbestosis and mesothelioma, weakly for lung cancer, and not for other diseases. Estimates used three earlier death projections (Enterline, Selikoff, Walker), each with low and high assumptions. Estimated successful claims ranged from 28,000 (Walker, low) to 540,000 (Selikoff, high). First-year (1985) costs ranged from $131 million to $1.9 billion. The 1985 present value ranged from $3 to $56 billion at a 2% real discount rate, and about $2 to $30 billion at a 10% real rate. Using Selikoff projections, three changes were tested. A 3-year survivor lump sum instead of 5-year, or a Social Security offset, would each cut costs about 20-25%. A Medicare offset would cut them 3-4%; all changes together, almost 50%. The author concluded that half or more of costs would come from lung cancers in the exposed population not caused by asbestos. The author called these rough estimates.

We wrote this plain-English summary from the full article with the help of AI, and a second AI model checked each sentence against the article. It is not the authors' wording; the abstract and the article are their own account.

What the study did and found

• Design: Economic cost-estimation (projection) study of proposed compensation legislation
• Who was studied: Projected U.S. asbestos victims and survivors who would claim under the 1983 Miller Bill. Victim numbers were taken from three earlier fatality projections (Enterline, Selikoff, Walker). The law was assumed to take effect January 1, 1985.
• Exposure: Occupational asbestos exposure, with no fiber types specified. Diseases covered were mesothelioma, asbestosis, lung cancer, and gastrointestinal and other cancers, each with different eligibility presumptions under the bill.
• Main results:
  • Total successful claims: low estimates were 28,000 (Walker) versus 229,000 (Selikoff); high estimates were 54,000 (Walker) versus 540,000 (Selikoff).
  • A majority of successful claims were projected to come from lung cancer victims whose disease was not caused by asbestos exposure.
  • First-year (1985) costs ranged from $131 million (low assumptions, Walker data) to $1.9 billion (high assumptions, Selikoff data).
  • 1985 present value cost at a 2% real discount rate ranged from $3 billion to $56 billion.
  • 1985 present value cost at the 10% federal real discount rate ranged from about $2 billion (low assumptions, Walker) to about $30 billion (high assumptions, Selikoff).
  • The cost effects of the possible modifications were calculated using the Selikoff fatality projections.
  • Reducing medical benefits by Medicare payments would reduce costs by only 3-4%.
  • A 3-year lump sum for survivors, or offsetting expected Social Security old age and disability benefits, would each reduce costs by about 20-25%.
  • Combining all of the modifications would reduce costs by almost 50%.
• The authors' conclusion: The author concluded that half or more of the bill's costs would be attributable to lung cancers in the asbestos-exposed population that were not caused by asbestos.
• Limitations the authors state:
  • Severe data problems required many assumptions.
  • The estimates should be considered rough estimates.
  • Claim filing and success rates from other programs and studies cannot be directly applied to workers covered by the bill.
  • The estimates were not adjusted for the bill's offsets for benefits received under state workers' compensation programs or the Longshore Act.

Topics

The National Library of Medicine indexes this study under subjects our site covers: Asbestosis.

Medical terms in this study, explained in our Lexicon: Occupational Disease.

Related studies

• Asbestos-related occupational cancers compensated under the Industrial Accident Compensation Insurance in Korea — Y.S. Ahn, S.K. Kang (2009)
• Justice for asbestos victims and the politics of compensation: the French experience — A. Thébaud-Mony (2003)
• James Hardie asbestos victims compensation summary — Australian Council of Trade Unions (2008)
• Asbestos disease and compensation — R.E. Sweeney, B. Castleman (1979)
• Compensation, radiographic changes, and survival in applicants for asbestosis compensation — W.O. Cookson, A.W. Musk, et al. (1985)
• Asbestos law: victims' rights and industry's reaction — K. Asch (1979)

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