Calif. Lawmakers MisfireAgain On WC Reform Bill
For the third consecutive year, California lawmakers are debating a workers' compensation reform bill that might very well end up doing more harm than good, leaving it to the governor to head off a disaster.
National insurance company associations lined up in Sacramento last week to plead with the California Assembly Insurance Committee to balance proposed benefit boosts with more controls over soaring medical costs, but to no avail.
By the time you read this, it might already be too late to convince the legislature to send a more effective measure to Governor Gray Davis. But unless substantial changes are made to address the concerns of employers and insurers, the insurance and risk management communities should lobby the governor for a third consecutive veto.
We don't mean to sound like a broken record, but as we said with the debate over new federal ergonomic regulations and the proposed patients' bill of rights in Congress, a cost-benefit analysis is critical to make sure that well-intentioned but misguided legislators don't drive an already severely fractured system into complete ruin.
As we said in the case of ergonomics and patients' rights, any increase in system costs would put tremendous pressure on already struggling employers in a sinking economy. Particularly in California, where energy costs are going through the roof, a huge spike in workers' comp benefits with no corresponding cost controls would break the backs of many financially troubled firms.
Indeed, the workers' comp bill that just passed the Assembly Insurance Committee would hike benefits at least $3.6 billion, or 26 percent. That could be the deathblow for many firms already grappling with skyrocketing health insurance and power costs.
If the pleas of insurers and employers do indeed fall once again on deaf ears, for the third time in as many years Gov. Davis will be called upon to do the right thing for employers and workers by vetoing whatever flawed package the legislature tries to force down his throat.
Perhaps three times will prove to be a charm, and legislators will finally sit down in good faith with the governor, insurers, employers and organized labor to pass a reasonable workers' comp reform bill that raises benefits to adequate levels while imposing badly needed checks and balances to control runaway medical expenses and speed up return-to-work rates.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, September 10, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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