Final answer:
A state covering the total cost of injuries or illnesses without using insurance premiums is implementing a self-funded workers' compensation plan. It contrasts with traditional workers' compensation insurance where employers pay into state-run funds.
Step-by-step explanation:
When a state pays the total cost of any injuries or illnesses when they occur instead of paying insurance premiums for workers' compensation, this approach is referred to as self-funded. In a self-funded workers' compensation plan, employers bear the financial risk of providing healthcare benefits to their employees. Instead of paying a fixed premium to an insurance carrier, which in turn assumes the risk, the employer pays for individual claims out-of-pocket as they are incurred. This is different from traditional workman's compensation insurance, where employers are legally required to pay into funds, typically managed at the state level, that cover benefits to workers in case of job-related injuries. Other common methods to ensure that injuries don't impose undue financial burdens on workers include deductibles, copayments, and coinsurance, which are aimed at reducing moral hazard by requiring the injured party to share a portion of the costs.