The Washington State Labor Council is still holding its nose over some proposed changes to the state workers compensation program that helps injured workers get back to work.
The labor council backs one bill that passed unanimously in the Senate today [Thursday], and council president Jeff Johnson said that the large coalition of unions he represents does not want to see anything that takes away worker protections in this year’s 105-day legislative session.
"We fundamentally have a strong system," Johnson said in an interview, while several hundred of his council members were Olympia for their yearly legislative conference. "There are 35 states that have more expensive systems than ours. That is not to say we can't make our system better."
But Deputy Director Ernie LaPalm of the Department of Labor and Industries told the labor gathering at the Red Lion hotel that the state needs other reforms besides the Senate Bill 5801 and others measures that labor supports.
[SB 5801 cleared the Senate floor on a 48-to-0 vote Thursday; Democratic Sen. Tim Sheldon of Potlatch was marked as an excused absence.]
Sticking to just the labor-approved elements of reform is "not enough," LaPalm said. He said the system needs to provide insurance-rate relief for employers whose premiums are going up by double digits.
LaPalm prefaced his remarks with a lot of praise for the labor movement, for public sector workers and for the Labor Council’s efforts to improve worker safety in Washington. And he said he wants to spare job losses by keeping businesses' insurance premiums as low as the state can manage.
Long-term disability pensions make up about 85 percent of workers compensation claims, according to L&I, and Gov. Chris Gregoire is proposing other reforms to limit those permanent payments and reduce costs in the insurance system by about $720 million over four years.
Gregoire and L&I's proposals include House Bill 2002, which labor supports. It is an Oregon-style approach that pays an incentive to small businesses of up to 50 percent of a worker’s wage if they let the worker return for limited duties while mending from injuries.
But Gregoire and L&I also want to limit lifelong disability pensions. Business groups have complained about those costs for years, but they haven’t persuaded the Democrat-controlled House and Senate to give them relief from what they contend are expensive pensions.
And Senate Republican Leader Mike Hewitt of Walla Walla said this week he thinks lawmakers are at a "stalemate" over those pieces of the reform.
But Johnson said that limits on pensions – asking workers over age 55 to consider taking a disability payment in lieu of retraining, or cutting off pension payments once workers hit retirement – are not necessary. The legislative focus should be on reducing injuries that lead to disabilities and lost time from the job, he said.
The council has calculated that SB 5801, which now goes to the House for a vote, could cut the chances of long-term disabilities by half.
SB 5801 sets up a limited provider network of experts in worker injuries who would handle medical claims in the system, and it expands the work by the Centers for Occupational Health Excellence that set best practices for getting workers back on the job.
Johnson also said that Washington in unique in requiring workers to contribute a share of the workers comp premiums. Workers have paid half of the medical cost share of the premium or about a quarter of the full premium since 1917, Johnson said.
But L&I says it has has a shortfall in one of the two workers-comp accounts that pay for injury claims and retraining. That deficit of about $200 million (which is smaller than the surplus in the other fund) is helping to drive up employers' rates, according to L&I director Judy Schurke. She spoke to The Olympian's editorial board recently.
Schurke told the newspaper that long-term disability claims made up 8 percent of claims in 2008 but 85 percent of benefits paid out that year. By contrast, 72.5 percent of claims were for medical costs only and those amounted to just 5 percent of total claim costs.
Schurke also said the system could save $720 million over four years if all four elements of the governor's reform are approved. "All I can tell you is the governor is very committed to it," Schurke remarked at the time.
She also said the recovering state economy has replenished some of the funds' shortfall through better returns on trust-fund investments. Schurke expects additional revenues to come into the workers comp trust funds as businesses rehire during the economic recovery.
But rates have gone up and will go up more without reform. She said rates rose by 3 percent in 2009, 7.6 percent in 2010, and 12 percent this year. Rates could have gone up much more but the agency drew down its contingency funds by $117 million, believing that it would represented the cost of 2,000 jobs if businesses had to pay it.