State Auditor Brian Sonntag reports that our workers’ compensation system is unsustainable — that huge premium increases are needed to keep the program solvent. But those increases, which must be paid mainly by employers, will cripple our ability to recover from the recession.
In the midst of our nation’s $1.4 trillion deficit and crushing unemployment, the issue of workers’ compensation might not seem all that important. It is. Abuses and expanded benefits are draining employers of money they could otherwise use to create jobs.
Workers’ compensation is an insurance system established to cover job-related injuries and occupational illnesses. Premiums vary depending on the risks associated with a profession and the number of claims for each company.
But critics complain that workers’ compensation is turning into another entitlement program, and the cost is breaking the backs of American employers — and taxpayers.
For example, Sen. Susan Collins, R-Maine, wants to reform the federal workers’ compensation system that allows injured workers over retirement age to collect workers’ comp benefits rather than retirement benefits. Under the federal system, employees get workers’ comp benefits up to 75 percent of their salaries tax free, compared with less than 60 percent under the retirement system.
“At the Postal Service,” notes Collins, “more than 1,000 employees currently receiving workers’ compensation benefits are 80 years or older. Incredibly, 132 of these individuals are 90 years of age and older, and there are three who are 98.”
The state of Illinois has the same problem. In a recent editorial urging workers’ compensation reform in that state, the Chicago Tribune noted that workers in Illinois receive workers’ comp benefits long after retirement age. In addition, workers get benefits for injuries they suffered while drunk or on drugs and for injuries that didn’t happen in the workplace.
Multiple problems
Gov. Chris Gregoire recently announced plans to reform Washington’s workers’ compensation system. Unfortunately, there seems little support for the most effective solutions, which are opposed by union leaders and trial lawyers.
Today’s workplaces are safer than ever, and fewer claims are filed each year. So why is Washington’s workers’ comp system unsustainable?
Too many of those claims remain open too long. In Washington, the average claimant is collecting benefits and off the job for 284 days.
One reason is that, unlike 44 other states, Washington doesn’t allow voluntary settlement agreements. Virtually every other type of insurance has a final settlement, where the worker negotiates a lump-sum payment. But that is prohibited in our state’s workers’ comp system where claims are open-ended — which is why we have four to eight times as many lifelong pensions awarded as the next highest state, California.
Another problem: Most states have standards that expressly link workers’ comp benefits for occupational diseases to the job. Our state doesn’t. That leads to extensive and costly litigation.
Real reform works. Oregon reformed its workers’ compensation system 20 years ago and premiums there have not increased since 1990. In fact, premiums have decreased 13 percent since 2006 while benefits have increased.
How did they do it? The state has a program to help injured workers return to the job, and the state helps keep medical costs under control by setting standards for expensive medical procedures and encouraging the use of generic drugs.
Oregon did it. The question is, does our Legislature have the political will and courage to do it as well?
Don Brunell is president of the Association of Washington Business, Washington state’s chamber of commerce. Visit http://www.awb.org.
