The 2011 Legislature is at a crossroads with regard to Washington state's flawed workers' compensation system: either fix it or fall into insolvency and risk the future economic health of our state. The state Auditor has already opined that our current system is unsustainable.
The problems we face are numerous. The average worker on time loss misses an average of 286 days after injury, more than twice the national average. Though claims have dropped 52 percent since 1990, rates are more than 50 percent higher than they were 10 years ago. Outside analysis shows that it costs almost $2 to run the system for every $1 in premiums paid in.
Nearly three dozen reform bills have been introduced into the Legislature the past five years. Only a handful received hearings. The Legislature took no action on any of the bills. The legislative sloth was so bad a reform initiative made it onto the ballot last fall. Voters rejected that proposal and put the matter back before the Legislature.
With political leadership and a sense of responsibility to employers and employees alike, legislators could begin to fix the problems this year, before it’s too late.
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Retailers across the state support many of the proposals made by Gov. Chris Gregoire to begin making crucial reforms in the state system.
Although Gregoire’s is a modest package, it would allow the state to manage a provider network of physicians to rehabilitate injured workers, like health insurers do. Currently, Labor and Industries does not have this power.
Gregoire would offer injured workers age 55 and up a cash settlement rather than maintaining them in costly retraining programs, which many of them would just as soon avoid. The governor’s proposal would provide state-funded employers with a subsidy lasting up to 66 days to encourage workers to get back to work, at least in light duty.
Gregoire would offer pensions to injured workers until their Social Security benefits start, rather than offering lifetime pensions that threaten to bankrupt the system when the pension award was a result of conditions not related to an industrial injury.
Reforms should include clarification on the definition of an occupational disease. It must be revised to exclude conditions that are not work-related. The state’s chronic revenue shortfalls, worsened by the recession, simply do not allow such benefits to be maintained without an economic cost.
The main concern we have with the governor’s proposal is an increase in permanent impairment awards of 30 percent. This is a cost shift to save on pensions but would increase costs in an accident fund that just had a 30 percent premium increase to employers just to sustain a negative $300 million balance.
Put simply, doing more of nothing this session will bring the state closer to an economic crisis within its teetering workers’ compensation system.
If nothing is done, companies will shrivel in the face of skyrocketing insurance rates and some will elect to expand elsewhere. Burdened by steadily rising overhead costs, companies will be hard-pressed to hire the tens of thousands of unemployed residents left in the wake of the recession.
The Legislature is scheduled to adjourn April 24. As recovery from the recession creeps along, why risk another wave of economic upheaval by ignoring the state’s eroding workers’ compensation system yet another year?
The time for action is this year.
Jan Teague is president and chief executive officer of the Washington Retail Association.