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Wed October 27, 2010
I-1082 Would Allow Private Insurers for Workers Comp
Washington is one of only four states in the nation that offers workers compensation insurance only through a government agency. That could change this November. Initiative 1082 would allow private insurers to enter the market. Backers of the measure say the competition would force rates down on a tax that's been going up steadily in recent years. Opponents say it's a power grab by the insurance industry that could leave injured workers in a lurch. KPLU business and labor reporter Bellamy Pailthorp has the story.
It's one of those things most people don't spend much time thinking about. But it affects any employee. Workers compensation is mandatory insurance for on the job injuries. Most people have a monthly deduction on their paystubs – employers pay in too. If you get hurt, the state Department of Labor and Industries will cover your medical bills, possibly some damages and a portion of your salary if you can't work. Those with permanent disabilities can qualify for pensions. In return, workers can't sue. The system was created in the reform era nearly a hundred years ago. And in recent years, it's come under fire.
"The business community has for years been complaining to the legislature about ongoing problems with how the state administers our workers compensation insurance program," says Patrick Connor, Washington State Director for the National Federation of Independent Business.
"And since we couldn’t get any traction in the legislature, not this year and not in the last ten or twenty years, the business community finally said enough is enough, we're going to take our case to the people."
He says the rates for workers comp have been going up here, while in other states with private competition, they've been going down. He wants businesses to have a choice about how they insure their workforce.
"Allow us and our workers the opportunity to shop for better service and better rates. If you're happy with what you get from the department of labor and industries, fine, stay there. If you want to choose a private carrier, the governor's own budget office says there's going to be 320 out there to choose from."
The campaign has attracted big money from insurance companies hoping to get into the market. Liberty Mutual, Hartford Financial and Farmers have together donated more than a million dollars for Initiative 1082. The Building Industry Association of Washington donated a million and the Boeing Company put in $100,000. Campaign ads call Labor and Industries a government monopoly; a You-Tube video portrays it as a gangster rapper, burning money on the capital steps.
But what critics call an inefficient government monopoly is to supporters a non-profit safety net that would be damaged by Initiative 1082. Top contributors to the "no" campaign are organized labor and trial attorneys – and they too have spent millions on ads, such as one featuring an injured firefighter, saying workers comp was "there for him" and that "now the big insurance companies are trying to come to Washington and take over our system…"
Insurance commissioner Mike Kreidler is leading the opposition. He says the initiative would not change the level of benefits required to be paid out under Washington law – which are more generous than many other states. That means companies that need to make a profit would have to cut corners in other ways.
"The only way an insurance company can really make money in this market is to delay and deny claims. And that's as – as long as that's the case, it makes me really, very nervous, about that changes, that is could negatively impact both the injured worker and the small employer."
And he says he doesn't have the same set of tools for regulating workers comp that he has for other lines of insurance such as healthcare or homeowners policies. So if you were an injured worker fighting to overturn a denied claim, you'd have to get an attorney and it could take 1-3 years working through the process, with no benefits at all. Kreidler says there wouldn't be much he could do about it.
"If the initiative were to become law, I can't make a company pay a particular claim. I have to show a pattern and practice on the part of that company. And even if I show a pattern and practice on the part of that company, the maximum I can fine that company is $10,000."
He suspects many insurers would pay the fine without changing their behavior. But supporters of 1082 say the measure would create a legislative task force to work on setting up better consumer protections and prevent harm to workers. And they point out that even with rates that have been going up already, L and I is underfunded and -- according to the state auditor -- headed toward insolvency, unless it raises rates even more.
In the end, it's a question of what you trust: a government-run system that no one denies urgently needs reform, or free market forces and the changes private competition would bring.
For more information:
Yes on I-1082: www.saveourjobswa.com
No on I-1082: www.voteno1082.com