Workers' Compensation Reform is Half a Loaf

By Loretta Macktal, Executive Assistant to the Vice President, Government Relations

Capitol Update, Sept. 12, 2003 Share this on FacebookTweet thisEmail this to a friend

The conference committee was charged with overhauling the broken workers' compensation system to reduce skyrocketing costs of insurance. The system is extremely costly, rife with waste, abuse, over utilization of services, litigation, and, ironically, provides only relatively low benefits for injured workers.

At best the report coming out of the conference committee is a half-way measure. Much more work must be done. CMTA is disappointed that the conference committee did not review and reform each and every cost-driver in the system to get every cent possible in savings. Employers and workers deserve no less.

It is not surprising that the committee didn't get more than half-way, for two reasons:

The first is that the work was done in a hurry in the last weeks of the session. Of course, there is no justification for this delay as the crisis has been growing for years. Legislators knew reforms were needed when WC benefits were increased in 2002, but that bill was rammed through over employer's objections with cosmetic reforms that did not deliver any savings.

The second reason is political. The benefactors of a broken and litigious system are not eager to give up their golden eggs. The applicant-attorneys have allied with the labor unions to thwart reforms that would reduce litigation and indemnity costs, particularly in the area of disability awards. In the current report, this alliance dictated terms to ensure attorney's involvement even if an employer and union wanted to agree on an alternative dispute resolution program. Democrat party legislators, the majority in each house, have so far refused to stand up to this potent political combination.

The jury is still out on whether the one-time and ongoing year to year savings in the bill will prevent a January increase of 12% and roll back the 7% increase of last July, as advertised by the authors. Even if it does, many employers have seen their premiums double in the last three years and are demanding more reductions. Prices could start creeping up again due to the as yet un-reformed cost drivers.

The legislators on the conference committee and Insurance Commissioner Garamendi agree that more work must be done. Let's hold them to that.
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