Workers' Comp News Around the Country

Last week we noted an article in the Puget Sound Business Journal that discussed the prospect of a large increase next year in workers' comp premiums for state fund employers in Washington.  While noting the data was preliminary and could change one way or the other by this fall's rate announcement, we also looked at some of the issues contributing to this situation and some of the positive things going on in other state workers' comp systems that operate, in many respects, much differently than our own. 

West Virginia, for example, was noted as having tremendous success in controlling costs and lowering premiums after one year of introducing private competition into the workers' comp marketplace.

Similarly, this week's San Antonio Business Journal reports that Texas Mutual Insurance Company, a leading provider of private workers' comp insurance in Texas, is returning $75 million in premium dividends to policyholders statewide.  That's good news for job providers in Texas during tough economic times.  It may not be coincidental that Texas enacted major structural reforms in workers' comp in 2005 to address high medical costs, low return-to-work outcomes, and restructure the state agency charged with overseeing the system. 

Our state was able to provide a rate holiday and partial dividend in 2007 that spent down over $300 million from a large contingency reserve that accumulated from investment earnings in the mid-decade market boom.  But without underlying reform, system costs continued to escalate and rates have had to increase, gradually, since then.

Also this week, in Colorado, news that the head of the state-chartered workers' comp fund has made a request to the Legislature to become a private entity.  The article doesn't say why, but the request is evidently so enthusiastic that the quasi-governmental entity is willing to pay $5.7 million in taxes this year and up to 20 years of back taxes in order to go private.  It probably has something to do with this, reports of an attempt by the 2009 Colorado Legislature to raid the fund in order to help balance the state's budget deficit. 

We have a similar problem in Washington, if on a slightly smaller scale, where the Legislature since the 2002 budget deficit has annually diverted millions of dollars of workers' compensation trust funds to the administration of programs within L&I and elsewhere that have nothing to do with workers' compensation, like family leave, wage and hour, and so on.   

When it comes to comp, we do things a lot differently in Washington than just about anywhere else.  Periodically, we need to ask why, and whether it's working for the workers and employers the system is meant to serve.

Cross-Posted at Olympia Business Watch.