Richard S. Davis, coordinator of the Washington Alliance for a Competitive Economy, looks at that question in this morning's column, reflecting on Monday's announcement by the Department of Labor & Industries that workers comp taxes would go up by an average 7.6 percent, or $117 million, next year.
Davis makes some important points:
The proposal is well below the 19.4 percent increase actuaries estimate is needed for the state fund to break even. If nothing changes, the department’s contingency reserve would have to make up the $150 million gap. Ideally, the department says, a stronger economy and improvements in claims management will reduce the need to tap reserves.
You can’t operate at a loss for long without raising serious sustainability concerns — either another rate hike or a dangerous dip in reserves should the economy backslide before it rebounds.
Unemployment is high and rising. The premium hike makes it more expensive to retain and hire workers, prolonging joblessness.
The employer community has already began to build a bipartisan coalition of legislative leaders to look at some common sense reforms that will help curb that 19.4 percent rise in costs without materially changing or reducing the benefits injured workers can seek under our expensive system.
But Davis also sees the prospect of groups also calling for private competition in the state workers' comp marketplace. Adding to the numerous ways our system is a national outlier, we are one of only four states where such competition is forbidden. And the last two monopoly state systems that privatized -- Nevada and West Virginia -- have had unimagined success in controlling costs and reducing premiums.
He concludes:
Rising premiums put jobs at risk. Policy reform is critically important to getting benefit costs under control. But, as experience elsewhere demonstrates, market forces are producing better outcomes for workers and employers. Don’t expect the call for choice and competition to disappear anytime soon.
