Nicole Rice

Workers' Compensation overhaul saves California money, study finds

By Nicole Rice, Policy Director, Government Relations

Capitol Update, Dec. 2, 2016

Last week, the highly respected Workers’ Compensation Insurance Rating Bureau (WCIRB) conducted a comprehensive study of a major overhaul of the system enacted by Governor Brown and the Legislature four years ago.  The results surprisingly show greater savings than the benefit costs.

In 2012 employers and unions, with insurers’ support, forged a deal to raise cash payments to workers with “permanent partial” disabilities, the most expensive payouts, and offset their cost by tightening medical care and eligibility for benefits.  When enacted, the calculations were purported to have raised benefits by $740 million a year and reduced costs by a like amount. However, the WCIRB report, released last week, says the savings have outpaced costs by $1.3 billion. For employers who already pay nearly twice the national average – the nation’s highest workers’ compensation insurance premiums as a percentage of payroll – that is very good news for California employers.  However, the findings do present a political challenge for those stakeholders looking to revisit the 2012 deal.

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