Posts Tagged ‘privatization’

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.

News roundup: complex care, WV, VT, obesity & more

Tuesday, July 6th, 2010

Happy post holiday weekend. This is a big vacation week, but if you are one of the many who is on the job today, here’s a serving of a few news items that caught our attention.
Complex Care – here at Lynch Ryan, we focus on helping injured workers to recover and get back to normal life activities, including work, as soon as possible. But the reality is that some workers have serious injuries that require long-term recovery or permanent care. The Work Comp Complex Care Blog focuses on issues related to injured workers who require ongoing care. A few notable recent posts on things that can have a positive impact on outcome over the long term: Success Story: Simple Change Makes A Big Difference For Injured Worker and Standing Improves Mobility and Wellness in Patients Confined to Wheelchair.
West Virginia – We’ve been seeing a spate of stories about state workers comp programs moving from BrickStreet to private carriers. BrickStreet has been the sole provider of such insurance for government agencies, but that changed as of today, July 1. BrickStreet says this is to be expected, the same thing happened when competition went into effect for private sector clients two years ago.
Vermont is cracking down – Vermont employers who don’t carry workers comp beware: your business may be shuttered. Previously, when an employer was found to be without workers comp coverage, there was a five-day grace period to obtain coverage before business closure, along with a fine of $150 a day. The Vermont legislature recently increased penalties for noncompliance – employers found without workers comp coverage must now be closed immediately and fines have been increased to $250 per day. In addition, as of September, the Labor Department will add four limited service positions to step up enforcement.
OSHA challenge – CalOSHA is convening a panel on how to better protect workers in the adult film industry. OSHA’s existing state blood-borne pathogens regulations already cover condom use in productions filmed in the state, but many in the industry oppose mandatory condom use. It’s a serious issue — Los Angeles health officials have linked eight of as many as 22 possible HIV infections identified between 2004 and 2008 as tied to the industry.
Economic indicators – Roberto Ceniceros offers a roundup of recent economic news. In another post, he cites a recent news report noting that five Ohio pension funds and the state’s Bureau of Workers’ Compensation owned 30 million shares of BP stock, and wonders whether other state comp funds might be similarly affected.
Catastrophic risk scenarios – Jared Wade of Risk Management Monitor tells us about 7 potential disasters worse than the BP spill.
Obesity – At Booster Shots, the LA Times health blog, Tami Dennis notes that the obesity rate now tops 25% in two-thirds of the states, with Colorado being the only state coming in under 20%. The data is from a recent report F as in Fat: How obesity threatens America’s future (pdf), which was issued by the Trust for America’s Health and the Robert Wood Johnson Foundation.
DC court says no to PTSD – the D.C. Court of Appeals denied benefits to a former Pepco employer who sought benefits for a work-related case of post-traumatic stress disorder. Benjamin Ramey claimed that he suffered fear and embarrassment that resulted in PTSD after being tested for being drunk on the job. After the drug testing, Ramey was placed on suspension and enrolled in a rehabilitation program, but fired when he was ejected from treatment due to continued drinking.
Note to fraudsters – If you are out on workers’ comp disability benefits, you may want to think twice about accepting a part in a Hollywood film.

Hot off the presses: Health Wonk Review; other WC news notes

Thursday, July 23rd, 2009

Paul Testa of New Health Dialogue Blog takes the notion of a carnival to heart while hosting this week’s edition of Health Wonk Review: All’s Fair in Love and Health Reform. Join him as he takes us along the Midway that is Pennsylvania Avenue, the big tent of bipartisanship, the funhouse mirrors of the health reform debates, and the roller coaster rides in Congress. Great edition!
And in other news…
Think you can safely text while driving? Studies show that drivers overestimate their ability to multitask behind the wheel. This game from the new York Times measures how your reaction time is affected by external distractions: Texting While Driving Simulator.
West Virginia touts progress one year into privatization. Cited among the successes: 154 insurance companies have active workers compensation policies in the voluntary market, the unfunded liability on “old fund” claims has dropped by more than half to $1,5 billion, and claim protests have fallen 68%.
Attorney Jon Gelman looks at the challenges that declining salaries and unemployment pose to workers’ compensation.
Roberto Ceniceros is blogging from the Disability Management Employer Coalition conference. His report yesterday focused on the generational impact on disability, with each generation facing different disability drivers.
James Dao in the New York Times posts about a new study pointing to an increase in mental health diagnoses in vets, usually PTSD or depression: “The study … was based on the department health records of 289,328 veterans involved in the two wars who used the veterans health system for the first time from April 1, 2002, to April 1, 2008. The researchers found that 37 percent of those people received mental health diagnoses. Of those, the diagnosis for 22 percent was post-traumatic stress disorder, or PTSD, for 17 percent it was depression and for 7 percent it was alcohol abuse.”

Rocky Mountain Two Step: Destabilize and Deprivitize?

Thursday, April 9th, 2009

Colorado, like most states, is facing a serious budget deficit. They are scrambling to balance the budget. So the legislature came up with the brilliant idea of tapping the reserves set aside by Pinnacol, the state’s largest provider of workers comp coverage, with 70 percent of businesses in the fold. Pinnacol began as a state operation and was subsequently spun off. It now operates – very profitably – as a mutual insurance company.
The state, facing a budget deficit of $1.4 billion, has its eye on $500 million that Pinnacol has set aside to cover the future costs of current claims. They have proposed a Rocky Mountain two step: first, make Pinnacol a state agency, as it once was, thereby assuming control of the company’s assets. Then, draw $500 million from the reserves and use them to cover a chunk of the current budget deficit.
As is so often the case, Pinnacol is being punished for being successful. Despite having reduced comp premiums by 42 percent over the past four years, and despite having set aside the funds needed to cover future obligations on current claims, Pinnacol is now the proverbial sitting duck. Blinded by cash in the coffers, legislators are poised to make two big mistakes: deprivatize a successful privatization and destabilize a financially stable operation. What are they smoking in the thin mountain air?
Mediocre Alternatives
A consortium of Colorado businesses has lined up against the ill-advised measure. As an alternative, they suggest three steps to close the budget gap:
: “tobacco securitization” – selling bonds against future tobacco settlements [after the economic debacle of the past 8 months, you might label this proposed process insecuritization.]
: sell state buildings [in a depressed market???]
: Reduce the pay of all state employees across the board [easy for the private sector folks to say]
At this point, I’m not convinced that either plan is worth pursuing. As a general rule, it is a bad idea to solve big,short-term problems by making bigger, long-term mistakes. Here’s hoping that cooler heads in the clear, mountain air of Colorado kick back with a Coors and figure out a better path toward solvency .

News roundup: Premium rates, ADA, disability awareness, OHIO privatization, and more

Wednesday, October 26th, 2005

RIMS Benchmark Survey: downturn in commercial rates
Commercial insurance renewal premiums in the third quarter were down by more than 5% from rates in the same quarter last year, although the survey notes that workers comp was the only major line to drop by less than 5%, with an average reduction of 3.75%. However, for many respondents, the effects of hurricane season hadn’t yet been factored into prices.
ADA protects persons “associated with” the disabled
Diane Pfadenhauer discusses a less widely recognized provision of the Americans With Disabilities Act that extends legal protections to those individuals who are associated with a disabled person.
October is Disability Awareness Month
According to the Society for Human Resource Managers (SHRM), there are 33 million people in the United States with disabilities and the unemployment rate for this population is 44%. SHRM notes that many employers fear high costs associated with making accommodations for workers with disabilities, but 38% of employers have not had to spend any money on accommodations and an additional 17% have spent less than $500.
For a whole different outlook on disability, you may want to see a film called Murderball about a team of quadriplegic rugby players. Some time back, Larry King featured a very compelling interview with a few of the charismatic team members – what an inspiration!
Ohio: many oppose privatization of workers comp
Despite the recent investment scandals, it seems that many employers, attorneys, and unions are unified in opposition to the idea of privatizing the state workers’ compensation system. Ohio is one of a diminishing number of monopolistic states. The current Bureau of Workers Compensation system was established in 1995 with a nine-member Workers’ Compensation Oversight Commission. Since then, it has been credited with speeding up claims and reducing premiums by an average of more than 30%.
The Best-laid Disaster Plans Are Merely Works in Progress
Workforce features an article offering an overview of problems and issues that HR departments faced in the aftermath of the Katrina disaster. The article profiles the experiences of three large employers – Entergy, Sodexho USA, and McDonalds – and some of the creative problem-solving that was required to locate and retain workers, communicate with workers despite the collapse of the communication infrastructure, arrange payments and administer benefit programs, and assist workers and their families in resolving various psycho-social issues.
12 picks for America’s Safest Companies of 2005
Occupational Hazards recognizes a dozen companies that set their own standards for safety excellence, exceeding OSHA and EPA regulations and industry norms. Safety efforts in these companies were generally characterized by high employee involvement and superior management commitment.
Insider View of the Vioxx trials in NJ
Robert Ambrogi and J. Craig Williams from Law.com’s arsenal of law bloggers offer first hand accounts from inside the courtroom at the VIOXX trial underway in New Jersey.
Also. from Legal Talk Network’s Workers Comp Matters:
Latex allergies in the workplace with Sandra Jutras, a career clinical nurse who developed a serious level one latex allergy; Attorney Jim Brady, and Dr. Gail Lenehan, national advocate and member of the Massachusetts Nurses Association’s Congress on Occupational Health and Safety.
Medicare set-aside allocations – Jean Feldman of CHOICE Medical Management discusses the complex issue of workers compensation Medicare set-aside allocations.
Making a difference
We can all sometimes get bogged down in the status quo and wonder if it’s still worth it to try to effect a change. It’s good to be reminded how one person can make an enormous difference – rest in peace, Rosa Parks. The LA Times has a wonderful tribute to this remarkable woman. (free registration required)