That's the topic of this week's syndicated column by AWB president Don Brunell, reflecting on last week's announcement of a proposed 7.6 percent average increase in workers' comp taxes next year. From the column:
The encouraging news — if you can call it that — is that the rate increase could have been much steeper. In its announcement, L&I officials indicated that the high costs of our state’s workers’ comp system are expected to rise 19.4 percent next year.
Still, the pain of any tax increase, particularly right now, is difficult for employers to absorb. Remember, workers’ comp rates just don’t apply to business and industry, they apply to any employer — hospital, school, college or local government — that buys its insurance from the state....
During good times, the program’s weaknesses were masked by income from investing the state workers’ comp fund. But in bad times, that investment income has vanished, exposing the system’s fatal flaws.
The state can dip into the fund’s reserves to prop up the system temporarily. But after years of nibbling at the edges of the problem, some say it is time to consider fundamental changes in Washington’s workers’ compensation system.
Competition reduces costs and improves quality. But Washington is one of only four states with a state monopoly of workers’ comp insurance. Except for 375 large self-insured businesses, all employers are required to purchase their insurance from the government. About half the remaining states allow private insurers to compete with the government program.
Over the last 10 years, Nevada and West Virginia privatized their failing state monopolies. According to the Council of State Governments, privatizing Nevada’s workers’ comp system erased a $2 billion liability. In just three years, West Virginia’s privatized system cut the state’s $3.2 billion unfunded liability by 40 percent. Last March, the state’s insurance commissioner reported that “…treatment of injured workers has improved and rates have been reduced over 30 percent.”
Washington should join with 90 percent of the nation that allows private-sector competition in order to reduce costs and improve service in our workers’ comp program.In addition, some common-sense reforms L&I and the Legislature should pursue next session include creating a settlement option for complex or long-term claims as an alternative to pensions. Washington is one of six states that don’t allow final settlement agreements.
As they say, read the whole thing.
