How the Economy is Shaping Workers’ Compensation

The changing workforce and evolving economy continue to shape the workers’ compensation industry. As economic conditions shift, workers’ compensation leaders are closely monitoring the trends that influence costs and the future of work. Reports show that although the U.S. economy remained resilient in 2025, driven largely by consumer spending, economic performance varied significantly from state to state.

The National Council on Compensation Insurance (NCCI) recently released fresh insights on workers’ compensation, medical inflation, and pharmacy trends. Here are the key takeaways every risk manager, insurer, and healthcare provider should know:

• Opioid Reductions Keep Driving Drug Cost Declines: Prescription drug costs per claim continue to benefit from long-term declines in opioid prescribing—down from 1 in 4 claims a decade ago to about 1 in 16 claims today.

While traditional opioid prescriptions have plummeted, topical analgesics (such as lidocaine, high-concentration diclofenac, and methyl salicylate formulations) and customized compounded medications now represent over 20% of total workers’ comp pharmacy spend. Managed care programs are increasingly deploying step-therapy and clinical utilization reviews to manage high Average Wholesale Prices (AWPs) on these products

• Emerging Pharmacy Cost Drivers: While overall prescription drug prices saw early-year declines, spending on topical treatments and specialized medical supplies continues to rise.
• In 2026, price growth for medical equipment and durable supplies has outpaced general medical service inflation, influenced by supply chain shifts and trade policy/tariff pressures on imported healthcare products.

Effective pharmacy management and monitoring utilization trends remain critical strategies for managing claim severity as broader economic uncertainties linger. Looking ahead, technological innovation is expected to continue transforming the workplace. For nearly 200 years, advancements in technology have reshaped how people work, and today’s emerging technologies are expected to further expand relationship-driven industries, according to industry reports.

Read the full NCCI article: HERE