What if there was only one grocer in Washington State? Read more for a funny take on a not-so-funny problem.
MYTH vs. FACT
Tuesday July 20, 2010
The labor unions and trial lawyers who are funding the campaign against I-1082 are desperately trying to conceal the truth about Washington’s failing workers’ compensation system. Here are the REAL facts about their mythical claims:
MYTH: Under I-1082, workers’ compensation insurers would be exempted from all consumer protection laws and the voter-approved Insurance Fair Conduct Act, which enables policyholders to seek relief in a court of law if their claims are unreasonably denied by their insurance companies or their insurance company violates regulations governing unfair claims settlement practices.
FACT: Any business in Washington may be subject to a claim under our state’s Consumer Protection Act for an unfair or deceptive business act or practice, and our state courts have shown no reluctance to liberally apply the CPA to insurance companies. No provision of I-1082 exempts “industrial insurance insurers” from anything. Rather, it subjects such insurers to the regulatory authority of the Office of Insurance Commissioner and gives the OIC significant rulemaking authority over the criteria for issuance of a certificate of authority. To the extent that people believe “industrial insurance insurers” should be regulated further or subject to other state consumer protection laws, that is a matter that can be taken up in the joint legislative task force (where that point of view is represented) and hashed out in the Legislature through the necessary implementing legislation.
MYTH: The median time an injured worker is off the job in Washington is 40 days, which compares favorably to the national average of 45 days, according to the National Council on Compensation Insurance.
FACT: The average days an injured worker who misses work is off work is over nine months, and that represents an astonishing 98 percent of the cost of the system. Claims within the median – that self-execute on their own as the worker gets back to work — represent two percent of the cost of the system. It’s the long term cases that are bankrupting the system. It may be good for trial lawyers to drag these cases out, but it is bad for workers and bad for the system.
MYTH: The provision of I-1082 that eliminates the employee contribution to workers’ compensation premiums will hit small businesses hard. According to a memo to its members, the Association of Washington Business admitted “This will increase costs for some employers”
FACT: Organized labor has for years railed against the employee portion of the workers’ comp premium, for which Washington is alone among all states, but now that this tax would be eliminated, resulting in a $315 million tax break (in 2010 premium dollars) to working families, big labor opposes it, citing its impact on businesses. While it’s nice to finally have labor unions and trial lawyers express profound concern for the labor costs of employers, a trend we hope will pick up and transfer over to other public policy areas, nevertheless the fact remains that without choices and options, employers’ costs are going to go up dramatically over the next several years to stabilize the state fund. The same AWB that pointed out to its members the obvious fact that picking up the full premium will raise costs (in the near term) for some employers has also strongly endorsed the initiative after an overwhelmingly positive vote of its over 7,000 predominately small businesses. In addition, I-1082 is supported by the National Federation of Independent Business, the nation’s leading small business organization, and nearly every legitimate business and trade organization in the state.
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The Time is Right for a Competitive Option in Workers’ Compensation
We’re out of step with the rest of the nation
Map - One of only 4 states in U.S. where state has monopoly on workers’ compensation. In 46 other states, employers can buy workers’ compensation from private insurers.
Washington is one of only 4 states where the government has a monopoly on workers’ compensation. In 46 other states, employers can buy workers’ compensation from private insurers.
* Washington is one of only four states with a government monopoly that forbids private competition for industrial insurance coverage.
* While workers’ comp taxes are falling around the country, Washington is one of only a handful of states increasing taxes this year. Oregon has not increased rates in 20 years – and employers there are actually experiencing rate decreases in 2010.
* Washington has the second-highest cost per employee for workers’ compensation. We provide the third most generous benefit package in the nation. There’s no such thing as a high-benefit/low-cost system.
Our costs are too high
Graph - But Administration Costs Up
Administration Costs Up 82% in 10 Years
* Workers’ compensation tax rates are more than 50% higher than they were ten years ago.
* The Department of Labor & Industries’ administrative costs have increased 82% from 1999 – 2009.
* Although some studies claim to show Washington has comparatively low workers’ compensation costs, the Department admits they have intentionally adopted inadequate rates ~ and now the system is facing insolvency.
Our system is inefficient – and failing!
Time Loss Duration by State
Time Loss Duration by State, 40% increase since 2001
* In Washington, the average injured worker with a time-loss claim misses 270 days of work – more than twice the national average. Oregon’s average time loss rate is about 70 days.
* Since 1990, claims have dropped by 52% – but costs keep rising.
* We have the highest pension rate in the nation. More than 50% of injured workers are likely to receive a pension from L&I if they’ve been off work more than two years. In fact, pension rates have increased more than 300% since 1996.
* A recent report from the State Auditor says our state’s Accident Fund faces a 74.4 percent chance of insolvency within two years. Within five years, the chance is 90%.
Employers need more choices
Five years ago, the West Virginia legislature passed a bill to transition their government-run workers’ compensation system into a competitive market. The result?
* claim protests have fallen 68 percent
* the overall appeals process has been streamlined resulting in claims disputes being resolved in a shorter period of time
* claimants have received better claim management by claims adjusters having fewer claims to manage
* overall premiums have dropped 30 percent, or more than $150 million
* 198 different workers’ compensation insurance companies have filed rates and forms
* More than 90 percent of all claims are ruled upon within 30 days.
If the goal of workers’ compensation is to assist injured workers in the best way possible while maintaining a competitive business environment, shouldn’t we look at examples where both are apparently taking place?
It’s time for Washington to Get Competitive.
