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The Texas Workers’ Compensation Model Works


By Mia Garza McCord, President. March 1, 2021

As the committees begin meeting in the halls of the Texas State Capitol this week, you will hear of many “Needs Improvement” areas for the state. While the COVID-19 Pandemic and the recent statewide blackouts will undoubtedly be front and center of policy discussion, there are many areas where the state has excelled. One such system is the Texas model of workers’ compensation.


The Texas model of workers’ comp is the gold standard nationally, as we boast some of the lowest costs to employers in the country while having better medical outcomes and faster return to work for our employees than almost any other state. The Texas system is a factor in many employers’ decisions to move their companies to Texas.


Workers’ compensation in Texas has a unique history, dating back more than 100 years. In the early 20th century, Texas had little need for a workers’ compensation system when the economy was mostly comprised of farming and ranching. A House Committee On Business & Industry Report to the 79th Legislature explains how the Texas economy evolved to one in need of worker protection:

Things began to change in 1901 when oil was struck at Spindletop, just south of Beaumont, Texas. The result was the largest gusher the world had ever seen, spurting a steady stream of oil over 100 feet high. Other major oilfields, discovered shortly after Spindletop, produced even greater amounts, and oil provided the catalyst for spectacular economic growth throughout Texas. The work required to bring in a well was quite hazardous, but the pay was good, and men flocked to the oilfields for jobs. For the first time in its history, Texas needed a politically acceptable means of protecting a large number of workers from industrial accidents. As a result, Texas enacted its first workers' compensation law in 1913.

Four years later, the United States Supreme Court held that states could legally require employers to provide workers’ compensation. Texas reformed its workers’ compensation laws in 1917, but did not mandate that employers provide coverage. Today, Texas is the only state in the nation that still offers employers a choice in this regard.


Texas’ system works precisely because workers’ compensation coverage is not mandatory for employers. They have choices on how they want to cover their employees, and that competition between insurance products leads to innovation in the market. This healthy competition and freedom of choice for employers helps drive down costs, incentivizes workplace safety and results in better benefits and medical care for countless injured workers. Over the past 30 years, we have seen employers respond to changes in the market, and we are seeing this pattern of private market innovation, again, in real time.


In fact, last year, members of the Association for Responsible Alternatives to Workers’ Compensation (ARAWC) launched an innovative, private market designation recognizing Texas employers with injury benefit programs that meet 10 key industry standards. It’s a simple, no-cost, online designation called a “Qualified Compensation Alternative for Recovering Employees” (QCARE). QCARE demonstrates that employers provide quality injury benefit coverage for Texas workers and their families as an alternative to workers’ compensation. And many of the State’s top retailers, grocers, healthcare providers, restaurants, and transportation companies are members of ARAWC and have now received the QCARE designation. Approximately 400,000 Texas workers are already covered by QCARE-designated injury benefit programs. ARAWC’s QCARE initiative demonstrates how the Texas worker’s compensation model is unique and successful. The Texas Legislature should continue to let it thrive.