Workers’ Comp Talks Continue

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

Capitol Update, March 22, 2004 Share this on FacebookTweet thisEmail this to a friend

The Workers’ Compensation Insurance Rating Bureau's recent revision of the cost of employee benefits for 2004 from $24.9 billion to $17.9 billion will not save employers $7 billion in premiums. It's also not expected to result in any new rate reductions. It's now time to get back to the real work of reforming the workers’ compensation program.

The momentary distraction over the revision to these cost estimates probably contributed to rumors that Governor Schwarzenegger was about to cut a workers’ compensation deal. He revised his original demand for 50 percent in savings down to 25-30 percent of workers’ compensation costs in response to the Bureau's recalculation of costs.

However, neither the governor or his staff have signed off on a comp reform bill. Moreover, to reinforce his point that any workers’ compensation reform legislation must provide substantial savings, the governor recently contributed about $1 million to the workers’ compensation initiative campaign. This leaves no doubt that he is serious and committed to significantly reducing workers’ compensation costs. If the Legislature cannot pass a bill that does that, then he will turn to the ballot.

All of the discussions on workers’ compensation reform by the big five (Legislative leaders and the Governor), their staff, organized labor and employer representatives are held in private sessions. The discussions focus on the administration's sponsored bills, ABx4 1 (Abel Maldonado, R-Santa Maria) and SBx4 3 (Charles Poochigian, R-Fresno).

The March 1st deadline set by the Governor to pass major workers’ compensation reform legislation passed and proponents of the workers’ compensation initiative began to collect signatures on March 3rd for the November 2004 ballot. Sponsors of the initiatives have until April 16th to collect about 600,000 signatures. However, if the Legislature acts to pass workers’ compensation reform by that date, we understand that the signatures would not be turned in and the measure would not be placed on the ballot.

There is another very important date to remember. According to Insurance Commissioner John Garamendi, if legislation is passed and signed by March 31st, employers would be able to reap the benefit of any premium savings as early as July 1st instead of January 1st, 2005 on new policies or policy renewals effective July 1, 2004. Given the high cost of workers’ compensation insurance, any early reduction would be helpful.
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