The income umbrella (AP photo/Charles Dharapak)

The U.S. short-term disability (STD) insurance market seems like it exists in a regulatory middle earth between the anarchy of, say, an understanding that Bloods or Crips will back each other up in an emergency and the Freudian holodeck of the major medical insurance market.

STD plans aren’t as vulnerable to ups and downs in interest rates as long-term disability (LTD) plans, and they aren’t as vulnerable to policymakers looking for a media-friendly policymaking project.

State regulators impose plenty of benefits mandates and other regulatory requirements on writers of disability insurance, but no one treats disability insurance as a magic wand that can heal all of the wounds caused by poverty, moral rot, and the fact that the Neighbor Kid always had a better bike than you had and it just wasn’t fair.

Unum (NYSE:UNM) recently sent me a press release about short-term disability (STD) claims for maternity leave, and it struck me that maybe STD is a good model for how medium-big, fairly predictable health-related claims work in a moderately regulated U.S. insurance program.

Someday, when the dust surrounding the initial implementation (or lack of implementation) of the Patient Protection and Affordable Care Act (PPACA) clears, policymakers will set about designing “PPACA World II.” Maybe “PPACA World: The Version That Works Better.”

Maybe the PPACA World II designers could get some ideas from STD World.

Unum found when it conducted a survey that about 30 percent of working women ages 45 and younger are in a work-based STD plan.

About 27 percent of of Unum’s group STD claims and 17 percent of the voluntary STD plan claims are maternity-related, but government survey figures show that only about 10 percent of women who take maternity leave file for STD benefits.

Roughly one-quarter of the women who get paid maternity leave use STD benefits to cover the cost of their leave.

The typical Unum STD maternity claim paid lasts about six to seven weeks.

Hazy thoughts about what these figures might mean:

1. Maybe the grim truth is that the percentage of workers who generate enough obvious measurable economic value to get good benefits for medium-big health events is closer to 30 percent than 100 percent.

If there are actually a lot more good, hard-working, productive workers who produce enough value that they are also good candidates for having rich benefits, maybe policymakers ought to figure out ways to make that value more useful and obvious to employers.

2. If only one-third of women with Unum STD maternity-leave benefits use the benefits, maybe that means many women and their employers are, essentially, using self-insurance to cover the cost of about two-thirds of the potentially covered maternity leaves.

That may mean that a lot of women are too tired, confused and scared of rocking the boat to file STD claims when they could file STD claims, which might be a bad thing.

But, on the other hand: I don’t see hordes of people declaring bankruptcy or losing their homes because they have babies.

Maybe the STD maternity-leave claims experience suggests that there is plenty of room to ask the kinds of workers who now have “good benefits” to pay a higher percentage of their medical costs out of pocket.

3. The famous problems with group disability benefits are that employers are afraid workers will use the benefits to take comfy paid time off, and workers who need the benefits are afraid they will get fired for using needed benefits.

Maybe one of the messages here is that part of keeping a market alive without sending a stream of angry, uninsurable, photogenic consumers to state and federal legislators involves figuring out how to balance risk-management needs against consumer-protection needs. 

When, for example, every worker can qualify for one level of STD benefits, and healthier can qualify for a better or cheaper level of benefits, maybe the availability of the lower tier of benefits protects insurers’ ability to offer the higher tier without facing too much regulatory fuss. 

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