Op-Ed: It’s time to reform our state’s costly workers’ compensation system

Most people have probably heard the commercial in which someone exclaims, “I just saved a ton of money by switching my car insurance to . . .”

In our state there are many different auto insurance companies from which to choose, offering an assortment of products. To win your business, they have to be competitive and offer affordable rates.

Not so, however, when it comes to workers’ compensation insurance — and we should change that.

Here in Washington, you won’t hear commercials saying, “I just saved a ton of money on my workers’ compensation insurance by switching to . . .”  That’s because Washington is one of only four states in the nation that refuses to allow private-sector insurance companies to offer workers’ compensation coverage. That’s one of the reasons we have the second-highest premiums in the nation.

To make matters worse, the Department of Labor and Industries (L&I) has increased workers’ compensation premiums by an average of 7.6 percent this year, and unemployment insurance costs are slated to go up this year for 170,000 Washington employers.

Now is not the time for the state to put more costs and more regulations on the backs of struggling businesses. Now is the time to reduce taxes and regulations.

We must everything we can to help businesses keep their doors open so they can employ people. We need to quit doing things that force businesses to close their doors and lay off employees.

Government regulations, taxes and the national recession have taken a heavy toll on jobs in this state. More than 334,000 people filed for unemployment benefits in December, the most in two decades. Here in the 14th District, more than 5,000 people are looking for work — that’s nearly the entire population of Union Gap.

Many employers are already at the brink. They’ve reduced costs, laid off workers and cut pay and benefits. I’m very concerned these workers’ compensation premium increases would lead to even more job losses and cause even more businesses to close.

Most states are cutting workers’ compensation rates. Oregon hasn’t had an increase in 20 years. Ironically, Washington rates are going up even though our employers have made their workplaces safer — the number of claims filed has declined by 52 percent since 1990. Yet premiums are 50 percent higher than they were 10 years ago.

It seems to me that the system is broken and needs to be fixed. We need to change the state’s workers’ compensation system and we need to do it now.

Here are several changes we can make immediately that will lower costs:

1. Develop a settlement option. Allow the worker, the employer and L&I to agree to the final settlement of the claim. Forty-four other states do this.

2. Don’t spend the money somewhere else. The Legislature and L&I have allowed premiums to be used for purposes other than workers’ compensation.

3. Better define occupational disease. We need to quit using this fund to pay people for injuries and conditions that do not happen on the job. Washington’s definition is one of the broadest in the nation.

4. Establish medical provider networks that are experienced in treating the worker’s particular condition.

5. Freeze premiums immediately. This would give employers some financial certainty this year.

6. Allow private competition and eliminate the state-run monopoly on workers’ compensation insurance. States that allow private insurance companies to offer this coverage save money. In West Virginia, a state that privatized its system in 2006, premiums have dropped by 30.3 percent.

At a time when the Legislature is trying to close a $2.6 billion budget deficit, we need to find ways of making the best use of your tax dollars.

The legislative session is scheduled to adjourn March 11. We need to use the remaining time of the session to address the costly government burdens that are strangling Washington’s businesses.

The small and large businesses in our state play a vital role in providing good jobs for families, supporting our communities and generating the tax revenue that supports our state budget.  It’s time to reform our workers’ compensation system so these businesses can prosper.

Editor’s note: Rep. Norm Johnson serves the 14th Legislative District. He can be contacted at (360) 786-7810 or through his Web site at: houserepublicans.wa.gov/Johnson.

State Representative Norm Johnson, 14th Legislative District
122C Legislative Building | P.O. Box 40600 | Olympia, WA 98504-0600
(360) 786-7810 | Toll-free: (800) 562-6000