We urge Spokane-area businesses and residents to support Initiative 1082 in this year’s general election.
The initiative would allow private insurance companies to offer workers’ compensation policies in our state in competition with the Washington state Department of Labor and Industries. Washington is one of just four states where private insurers are prohibited from writing such policies, but any bureaucracy can benefit from competition, and that includes L&I.
L&I often comes in for criticism, but some of the fixes to problems in our state’s workers’ compensation system require action by elected officeholders, and they have been unwilling to take it. One example is Washington’s highest-in-the-nation rate of awarding lifetime permanent disability pensions.
In a 2008 study for L&I, the Upjohn Institute, which called such pensions “very expensive,” said they’re granted to about seven per 100,000 workers nationally, but “the incidence in Washington state is four to eight times that rate.” The institute said the state would award less than 200 pensions a year if it granted them at the national rate, but it awarded 1,557 in fiscal 2007, 1,109 in fiscal 2008, and 1,612 in fiscal 2009.
L&I spokeswoman Elaine Fischer says, “Our state does have the highest pension rate. Other states have a mechanism to settle these claims. Our state doesn’t have that.”
During the last legislative session, employers asked the Legislature to approve the use of one such mechanism—allowing workers to settle claims voluntarily—along with other reforms, but the Legislature wouldn’t give the proposed reforms a hearing, says Dave Kaplan, executive director of the Washington Self-Insurers Association. Kaplan says the reforms were “common sense, middle-of-the-road things. When you can’t even get a hearing on them, at some point, you say, ‘Enough.’”
Another frustration for employers is an increasingly expensive supplemental pension fund that provides money for cost-of-living-adjustments (COLAs) for injured workers who have pensions or are receiving wage-replacement benefits through L&I’s time-loss program. Kaplan says that some self-insured employers now pay more into the COLAs fund than they pay for their own claims. That’s unfair. I-1082 proponents believe that by allowing competition, the initiative would force the state system to improve its performance.
I-1082 isn’t perfect. If it passes, a task force would have to iron out numerous uncertainties, and it would raise temporarily some businesses’ costs because they no longer could deduct half of the medical-aid portion of workers’ comp insurance premiums from employees’ paychecks. The No on 1082 campaign, which demonizes private insurance companies on its Web site, including “the notorious AIG,” says the restaurant and bar industry alone would lay out $17 million to provide coverage until private insurance would become available.
Yet, as of Aug. 19, no small-business owner had contributed to the No on 1082 campaign, says Save Our Jobs, the group that advocates the initiative. Besides, it says, in West Virginia, which allowed private workers’ comp policies beginning in 2006, rates since have come down by 44 percent, saving employers $150 million.
In a fact sheet on its Web site, L&I says the Washington state system is in the lower one-third of all states in terms of costs and in the upper one-third in terms of benefits paid per $100 of wages. Yet, Kaplan says Washington is a low-premium state, not a low-cost state. For years, Kaplan says, businesses with operations in more than one state have ranked Washington poorly against other states on the average cost of claims. “The department is not going to get better at case management until it has some competition,” Kaplan says.
Many businesspeople believe our workers’ compensation system is costly, inefficient, and hurts our state’s economic viability. The issue comes down to whether you believe in competition. We do. It’s time to allow it to work.
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