Competition a key part of workers’ compensation reform
It's been working successfully in Oregon for 20 years… so why not bring reform to Washington state's workers' compensation program?
That's the reasoning behind Initiative 1082, scheduled to appear on this November's ballot, which would allow private insurers to compete with the state Department of Labor and Industries and sell workers' compensation insurance to employers in Washington state.
There has been a growing frustration in the business community because of ever-increasing workers' compensation costs – with rates rising 54 percent since 2000. And employers are bracing for a possible double-digit increase next year to prop up a program that even the state auditor has warned is facing insolvency in the near future.
If you look across the U.S., you'll find that Washington is only one of four states left in the country that still has a government monopoly on providing workers' compensation. 46 other states give employers the choice to purchase workers' compensation coverage from whichever insurer offers them the best product at the best price.
Anyone with even a rudimentary understanding of business knows that a lack of competition leads to complacency, increasing costs and consumer frustration.
Employers in Washington state pay the second-highest cost per employee in the nation for workers' compensation. Injured workers stay off the job more than twice as long as the national average. And Washington is one of only a handful of states that increased workers' compensation taxes this year.
Higher costs of doing business are exactly what Washington employers do not need in the current economic climate.
By contrast, employers in Oregon haven't had a rate increase in 20 years-in fact, their rates have decreased 18 percent during that time. And this year Oregon's state fund handed out $100 million in dividend payments to participating employers. The benefits of competition haven't just been for employers – Oregon's injured workers enjoy some of the best claims management and care of any state.
Fears of a reduction in worker benefits or fears that more worker claims will be denied if privatization is allowed have not played out in Oregon or in states like West Virginia or Nevada, two states that most recently allowed competition.
I-1082 would create a workers' comp system similar to Oregon's and bring Washington in line with almost every other state. These states have already figured out allowing competition in the workers' comp marketplace yields lower workers' comp rates for employers and better care for employees. That's why more and more states have moved away from a government monopoly on workers' comp and embraced competition from private insurers.
Like our neighbors to the south figured out 20 years ago, it's time to give businesses that need coverage to protect their workers a choice when it comes to providing workers' compensation.
Clarkson, a principal in Soaring Eagle Homes, a local custom builder based in Camas, is president of the Building Industry Association of Washington.
