Posts Tagged ‘monopolistic system’

Washington State: Comp Monopoly at Risk with Initiative 1082

Wednesday, September 29th, 2010

In November the voters in the Evergreen state have the opportunity to end one of the few remaining monopolistic systems for workers compensation (the three others are North Dakota, Ohio and Wyoming). As you might expect, there is much fulminating and little rational discourse evident in the pre-election build up on Initiative 1082.
Opponents of privitization project visions of greedy insurers denying claims (Hank Greenberg with an ax?), while proponents lampoon the arrogance and incompetence of a bloated state bureaucracy. (If you want to see what passes for humor in the great northwest, check out this rather lame rap video in support of the initiative.)
It’s hardly surprising that opponents of the measure view insurers as a greedy, heartless enemy. On the other hand, it’s pretty clear that most monopolies tend to evolve (or is it devolve?) into behemoths slow to respond and slow to innovate. Both visions suffer from inaccuracy and distortion.
Who Pays?
In most states, employers bear the full cost of workers comp: employees pay nothing for the premiums and nothing for the treatments. In Washington, there are three funds supported by comp premiums: an indemnity fund; a medical fund; and a supplemental pension fund. Employees contribute through payroll deduction to the latter two funds. The current deduction is 0.1543 percent of earnings, with no caps. If I’ve done the math right – a big if, unfortunately! – that’s about $76 per year for the average worker. Not a lot of money, but the principle is interesting – employees have a little “skin” in the game. Total employee contribution of premiums does reach the substantial level of about 22 percent.
While you would expect small businesses to embrace competition, some oppose 1082 for the simple fact that it will eliminate the employee contribution to premiums and shift the entire burden onto employers. Costs might go up. On the other hand, competition might bring costs down.
Decision Makers
Currently, costs for workers comp in Washington are modest: they rank 38th for cost in the 2008 Oregon survey, with an average rate of $1.98 per $100 of payroll. If the costs were higher, the pressure for change would probably be much more intense. As it is, voters will go the polls as they often do, with a lot of inflammatory rhetoric (and perhaps an annoying rap song) ringing in their ears. Then they will fill out their ballots. The fate of Washington’s comp system is in their hands.

Cavalcade of Risk #112 and various workers comp news briefs

Wednesday, August 25th, 2010

The Notwithstanding Blog puts a medical spin on things in hosting Cavalcade of Risk #112: Medical School Edition. This is an excellent showing for a new host and a relatively new blogger, self described as an “economics-trained fledgling first-year medical student.” After you’ve perused this week’s edition, why not poke around his blog a bit to kick the tires?
Workplace fatalities drop dramatically – In 2009, 4,340 workers died on the job, according to the preliminary Census of Fatal Occupational Injuries 2009, which was recently issued by the Bureau of Labor Statistics (BLS). This is the lowest number on record since data began being collected in 1992, and represents a dramatic drop from the 5,214 deaths in 2008. In terms of 100,000 full-time equivalent workers (FTEs), it is a drop from 3.7% to 3.3%. Transportation-related injuries accounted for the highest number of fatalities (39%), followed by assaults and violent acts (18%), contact with objects (17%), falls (14%), exposure to harmful substances/environments(9%), and fires/explosions (3%).
In explaining the decrease, BLS points to economic factors. In 2009, total hours worked dropped by 6%, following a 1% drop in 2008. The drop was particularly pronounced in dangerous professions, such as the construction industry, which historically account for a large percentage of fatalities. Plus, officials say that 2009 numbers are preliminary, and that some data may be delayed by the fiscal constraints experienced by reporting agencies.
Ohio’s workers comp system – Insurance Information Institute’s Bob Hartwig told a gathering of Ohio state officials that the state should privatize it’s workers compensation system. He made the case that moving Ohio from a monopolistic state fund to a competitive market would afford more choice to employers. Ohio is the largest of the four states in which the state is the exclusive provider of workers compensation coverage. The other three states are Washington, North Dakota, Wyoming. West Virginia is the most recent state to make the transition from a monopolistic system to a competitive market.
OSHA cites SeaWorld – Last February, Tilikum, a 12,000-pound orca, attacked and dragged whale trainer Dawn Brancheau to her death. After investigating the circumstances surrounding the death, OSHA cited SeaWorld for three violations. “OSHA’s investigation revealed that this animal was one of three killer whales involved in the death of an animal trainer in 1991 at Sea Land of the Pacific in Vancouver, British Columbia, Canada. SeaWorld had forbidden trainers from swimming with this whale because of his dangerous past behavior, but allowed trainers to interact with the whale, including touching him, while lying on the pool edge in shallow water.” SeaWorld’s former health-and-safety director turned whistleblower is also speaking up, calling her former employer’s practices questionable and dangerous. Linda Simons was fired by SeaWorld, allegedly for speaking up during the investigations.
Disability – The 2010 Survey of Americans with Disabilities, conducted by the Kessler Foundation in conjunction with the National Organization on Disability, reports on the gaps between people with and without disabilities. The survey found that employment represents the largest gap: “Of all working-age people with disabilities, only 21% say that they are employed, compared to 59% of people without disabilities – a gap of 38 percentage points. People with disabilities are still much more likely to be living in poverty.” Indicators are tracked over time, and this is the sixth time the survey has been conducted in 24 years.
Obesity and DisabilityObesity is linked to higher health care costs than smoking or drinking, and plays a major role in disability at all ages, according to Rand Corporation researchers, who have been conducting a series of studies analyzing obesity trends and estimating their effects on future health care costs. “More than one in five U.S. adults are now classified as obese based on self-reported weight, and almost one in three based on objectively measured weight.” Researchers also found that the fastest-growing group of obese Americans consists of people who are at least 100 pounds overweight.
Quick takes
Caveat emptor – Joe Paduda at Managed Care Matters offers a buyer checklist of issues when evaluating work comp savings on medical bill review.
Fraud fighting – at Comp Time, Roberto Ceniceros relates the story of some creative investigation tactics used to prove workers comp fraud on the part of a Florida mail carrier.
RIMS – check out the RIMS website, which has just been overhauled. In addition to improved navigation, it includes more accessible news feeds on the front page.
Legal brief – When is a deviation not a deviation? The Arkansas Court of Appeals ruled in favor of truck driver whose injury occurred off-route.