Home -> Law Blog Directory -> Consumer Law Blogs -> ThePopTort

Consumer Law

: ThePopTort

Workers' Comp in Washington State - I-1082 Will Raise Costs and Reduce Benefits

By Joe Consumer

If anyone had any doubt that smart government can really work - incredibly well, in fact - one need only look so far as Washington State and its phenomenally efficient workers compensations system.  Believe it or not, it is one of four states that still has a state-run, non-profit workers' comp system (the others being Ohio, North Dakota and Wyoming.) The insurance industry, of course, wants in. They?ve put a terrible initiative on the ballot there, I-1082, that would scrap the remarkable Washington State system - and would screw both employers and workers.

A new study from Americans for Insurance Reform, BIGGEST BANG FOR THE BUCK: Washington?s State-Run Workers Compensation System, shows just how much better Washington State?s non-profit system is than just about anywhere else in the country. (Here is the full report.)

The study was written under the direction of actuary J. Robert Hunter, who is Director of Insurance for the Consumer Federation of America (CFA), former Commissioner of Insurance for the State of Texas, and former Federal Insurance Administrator under Presidents Carter and Ford.  It was co-authored by Joanne Doroshow, Executive Director of the Center for Justice & Democracy.

In describing the study?s findings, Hunter said, ?Our study shows that Washington State?s non-profit state run system is an incredibly efficient benefit delivery system for employees for the lowest possible cost to employers.  I-1082 would do real damage to this great system.  For example, if private insurers were allowed in, companies would cherry-pick only the safest jobs to insure, providing them with the largest profit.  Meanwhile, the state would have to cover the high-risk occupations, destroying the required risk-spread to keep prices lower, and burdening state taxpayers.?

Among the findings by BIGGEST BANG FOR THE BUCK are:

·      Over the 5-year period ending in 2008, the cost to private insurers to run their workers? compensation systems was more than 90 percent higher than Washington State?s costs to run its state-system.

·      From 2004 to 2008, Washington workers received $1.29 in benefits for every dollar paid in premiums. By contrast, the private insurer payout was 62 cents for every dollar in premiums paid.

·      Total administrative and other expenses ? salaries, commissions, marketing and advertising costs ? averaged 36.5 percent of earned premiums for private insurers. For Washington State, expenses totaled only 19.3 percent.

Said Doroshow, ?Washington State?s non-profit state workers? compensation system is amazingly cost-effective and economical.  Voters should be extremely wary of the insurance industry?s misleading campaign about I-1082.  This initiative would raise costs, lower benefits and create new burdens on Washington State.  It is utterly indefensible.?

Full post as published by ThePopTort on September 14, 2010 (boomark / email).