The Workers' Compensation system in place today has not dramatically changed since it was created more than 100 years ago. State legislatures spend inordinate amounts of time chipping away at one edge of a program while patching up another. In the end, one interest group wins and another loses, but the injured worker gains little benefit.
Everyone can agree that employees need protection and assistance for workplace injuries, but there isn't agreement about what role the true stakeholders—employees and employers—should play in an occupational injury benefit program and management of those injuries.
About 25 years ago, Texas employers began moving away from typical Workers' Compensation insurance and "nonsubscribed" from the mandate. Employers choosing nonsubscription build and manage occupational-injury benefit programs with benefits and medical management processes that are clearly communicated to their employees. In Texas, one-third of all employers are covered by nonsubscription, or what we call the "Texas Option."
Oklahoma passed its own Option in 2012. Although the two programs differ in some ways, they each contain three components required to protect all stakeholders: employee accountability, medical management control and free-market competition. Oklahoma employers are now starting to elect the Option and build ERISA-compliant plans that will drive down costs and increase positive outcomes for injured workers.
Employers, Option brokers, TPAs and other program service providers saw the opportunity to present this free-market alternative to Workers' Compensation in other states. A core group formed the Association for Responsible Alternatives to Workers' Compensation (ARAWC—pronounced "a-rock") to advocate for the Option. In less than one year, the organization has hired an experienced staff, completed due diligence research in nearly a dozen states, and selected the first two states in which to engage legislatively.
ARAWC believes that an Option should include some key features, including good communication with employees, the process for the employer's election to use an Option, the type of benefits covered by an Option, how disputes are addressed, other employee protections, and what kind of financial security requirements might apply. Oklahoma elected to vary from some of the features of the Texas Option.
For more information about the Association for Responsible Alternatives to Workers' Compensation, visit arawc.org.
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