In Our View: Good News on Workers' Comp
Rate average is proposed to remain the same for second straight year
Friday, September 21, 2012
Despite all the criticism and derision heaped upon Washington's Legislature, its members occasionally show moments of brilliance. One of the lawmakers' finer performances occurred in 2011 when significant reforms were made in the state workers' compensation insurance program.As a result, twice now the Department of Labor & Industries (L&I) has proposed no increase in average rates for workers' comp, and the reforms of 2011 are receiving most of the credit. This happened most recently on Monday when L&I proposed no increase in the average rate for 2013. Judy Schurke, department director said that, without last year's reforms, "I wouldn't be making this proposal today. In fact, without those reforms, we would be facing a rate increase." That's crucial in our state, the only state where workers pay a substantial portion of workers' comp premiums, about 24 percent in 2013.
Among numerous changes made in 2011 was creation of the Stay at Work program, which gives employers financial incentives to keep injured workers on the job in light duty. Also, a Medical Provider Network allows L&I to work with medical providers to make sure injured workers received improved care. And a program called Structured Settlements gives older injured workers another option for financial support during long-term injuries.
These reforms were projected to save about $1.2 billion over four years. Any critics who complained that was an exaggeration have been rendered silent. The actual savings are now projected at $1.5 billion.
And no increase in the average rate for two straight years is only one of the benefits of reform. Another is the ability to strengthen workers' comp reserve funds. This week's proposed rate could add about $82 million to those reserves.
All of these numbers prove that the Legislature knew what it was doing last year in reforming workers' comp. The year before, an attempt to reform workers' comp was made with Initiative 1082. The Columbian opposed I-1082 because it would have increased costs to employers and could have jeopardized benefits for injured workers. Authors of I-1082 included insurance companies and the Building Industry Association of Washington.
Voters spoke clearly. I-1082 was rejected by 59.1 percent of voters statewide (56.3 percent of voters in Clark County.) And something happened that is relatively uncommon in a diverse state split by the philosophical Cascade Curtain: The measure was opposed in all 39 counties.
Other factors have contributed to stabilizing workers' comp rate averages. Fewer claims have been filed in high-hazard industries, and claim frequency is down. The increase in medical costs has been held below 4 percent for five quarters, and L&I is resolving claims more quickly.
Two far-reaching impacts are taking hold. Employers are given a more clear view of workers' comp as they try to thrash their way out of this economic crisis. And workers have seen their portion of premiums stabilized, while also knowing they will be financially protected in case of injuries on the job.
A final decision on the proposed 2013 workers' comp rate will be made by L&I in December. (The proposal for no rate increase is an average; rates may go up or down for some employers depending on their claims history and changes in the frequency and cost of claims in their industry.) In the meantime, employers and workers can learn more by visiting the L&I website or by attending one of six public hearings around the state next month. Vancouver's public hearing will start at 10 a.m. Monday, Oct. 29, at the Red Lion Hotel Vancouver at the Quay's Portside Room.