A bill that would bring badly needed reform to Washington's workers' compensation system had its first reading this morning and was referred to the House Commerce & Labor Committee.
AWB members are calling on lawmakers to give the bill a hearing.
House Bill 2950, sponsored by Rep. Jeff Morris, D-Mount Vernon, and co-sponsored by a bipartisan mix of six other legislators, will apparently face strong opposition from the state's labor community.
But the bill would not diminish protection or care for injured workers. Rather, it would lower the cost of the state's industrial insurance system through a number of targeted changes, including:
- authorizing voluntary medical provider networks
- allowing voluntary settlement agreements
- changing the definition of occupational diseases to make sure it only covers conditions that are primarily work-related.
All three reforms are described in a new policy brief by the Washington Research Council, which concludes: "Such opportunities can relieve significant and unnecessary cost burdens without reducing injured workers' benefits."
Washington has done a good job of improving workplace safety. The number of annual claims filed since 1990 has dropped 55 percent.
But the state has fallen short when it comes to controlling expenses.
According to an analysis by Conning Asset Management ordered by the state Department of Labor & Industries, as of 2008 the state was paying out $1.61 in benefits for every $1 in premium it brought in. When you factor in the cost of administering those benefits, L&I spends $1.81 for every $1 in premium.
Fortunately, given the size of its holdings, the state is able to offset part of that loss with investment income. But even cutting the loss by 45 percent with investment income, L&I still spends $1.36 on benefits and administration for every $1 of premium.
That's not sustainable.
And it should be alarming to business owners who already are paying for the imbalance -- and could end up paying much more in years to come
Workers' comp insurance rates are going up an average 7.6 percent this year, but in order to remain solvent, the accident fund portion of the state's workers' comp system would actually need a 33 percent increase, according to an audit commissioned by the state Auditor's Office.
That's well above the 4.5 percent hike that fund will receive this year as part of the 2010 rate increase.
State officials are loathe to raise rates at the level needed to keep up with expenses because they know it would hurt businesses that are struggling to emerge from the recession.
But things cannot continue this way indefinitely. Unless lawmakers makes some changes soon, the system could soon become insolvent.
HB 2950 is a good start.
