NOTE: Story was updated to clarify that Washington is the only state requiring workers to pay into the system.
Unable to win in the Legislature, the state building industry is launching a ballot campaign to bring private insurers into Washington's state-run workers' compensation system for the first time.
The Democrat-controlled Legislature flatly rejected several business groups’ proposals to reform the system during the just-concluded legislative session. The Initiative 1082 effort now sets up a ballot-box fight with the state’s influential labor interests in an election year for most legislative seats.
“We’ve already figured out the Legislature is not interested in doing anything when it comes to workers’ comp,” BIAW spokeswoman Erin Shannon said Thursday. “We’ve given the Legislature every chance; now we’re taking it to the people.”
I-1082 still is waiting for final approval of a ballot title, and Monday is the deadline for legal challenges. But BIAW launched its Web site, saveourjobswa.com, Wednesday; so many people wanted to reserve copies of the initiative petitions that the Web site crashed, Shannon said.
The builders plan to use paid signature gatherers to help collect at least 241,153 valid voter signatures before the July 2 deadline for the effort to qualify for the November ballot. I-1082 is one of about 50 measures proposed so far.
I-1082 would specifically let private insurers compete with the state’s monopoly system, which the state Department of Labor and Industries runs. About 350 large employers such as The Boeing Co., Microsoft and Wal-Mart opt out and run their own programs in synch with state standards, L&I says.
It also would get rid of the requirement that workers pay into the workers’ compensation fund, currently about 27 percent of the costs, L&I says. Private insurance will become an option for businesses in 2012 if the measure gets onto the ballot and passes.
Many business groups say the cost from L&I’s system is too high, and they objected this year to rate increases of 7.6 percent, which hit during a tough economic time. Shannon said other states have lower rates than Washington’s high-benefit system, and she argues it lacks the accountability that competition provides.
The Washington State Labor Council is gearing up for a big battle with its old nemesis, and council president Rick Bender said labor is building a broad coalition to fight back.
“We are strongly opposed to it because it is not in the interest of workers, nor do we think it’s in the interest of small businesses as well – as they will soon find out from other states,” Bender said. “We are considered a low-cost state and yet a high-benefit state.”
Bender said other states’ privatized systems have costs for “high executive salaries for insurers” and for advertising. He predicted the initiative “is going to be financed by the insurance industry. It’s no secret that the largest insurer that does workers’ compensation is AIG, the one we taxpayers had to bail out.”
The business lobby tried to lower costs for employers by allowing early settlement of medical claims this year. That effort and others went nowhere with the Democrat-controlled Legislature, and House Speaker Frank Chopp was among those who questioned giving the care of workers to private insurers such as AIG.
Both sides in the dispute have figures and studies to show that Washingtons system is either one of the most expensive, or one of the best run. Among its distinctions, Washingtons system is one of four nationally that is state-run.
It also is the only one that requires workers as well as employers to contribute payments into a fund for medical care, and the initiative would get rid of that requirement.
Elaine Fischer, a spokeswoman for L&I, said Washington’s system – which covers medical costs for on-the-job injuries, partial payment of lost wages and even rehabilitation and retraining – was set up without private competition. And the law was never changed.
“Our state does have some of the best benefits in the country for injured workers and their families, but at rates that are lower than half the other states,” Fischer said.
The BIAW won an initiative in 2003 that repealed ergonomics rules that L&I was enacting, and it won a referendum fight in 2002 to repeal changes to unemployment. But in more recent election cycles, BIAW’s favored candidates for Supreme Court and governor have lost.
The National Federation of Independent Business is joining the effort, and BIAW hopes the Association of Washington Business throws in its support, too.
“I think it will be the clash of the titans – of business and labor. I think it is one of the rare issues where all businesses, large and small, are on the same side. Everyone from your mom-and-pop to Boeing has wanted worker-comp reform,” Shannon said.
Brad Shannon: 360-753-1688