Filed Under:Markets, Workers Compensation

The Assault on State-Regulated Workers' Comp

A critical component of our national “safety net,” the state-regulated workers’ compensation system, is being besieged, another victim of politicians reaching everywhere to generate short-term benefits by increasing services without raising taxes.

In one case, the principle that “politics makes strange bedfellows” was confirmed again last week when Ohio officials announced they were planning through two steps to provide a $1.9 billion cash rebate to the state’s employers by tapping the reserves of the state’s actuarially-sound workers’ compensation fund.

An improving economy has improved his re-election chances but recent efforts to lower personal income and small business taxes have run into opposition from his own party.

State Workers Compensation Bureau officials said a higher-than-expected return on investments is making possible the $1 billion dividend. But, the fact that the rebate will be made in July 2014, just as the gubernatorial re-election campaign heats up, is not just coincidental.

The executive director of that plan said that the loss could be dealt with through the actuarially-sound municipal program, but everyone acknowledges that an “alternative plan” would have been unlikely to adequately compensate West Fertilizer employees if the explosion had occurred while they were working.

In general, this trend to replace actuarially-sound fiscal policies in the financing of workers’ compensation pools with policies driven by the election cycle is dangerous.

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