Increased Workers’ Compensation Costs Cause Small Firms To Reduce Health Benefits, Survey Finds
Increasing workers' compensation costs have caused California small businesses to cut health benefits, wages and jobs, according to a survey released yesterday by the California chapter of the National Federation of Independent Business, the Sacramento Bee reports (Ortiz, Sacramento Bee, 7/8). Under the state no-fault workers' compensation system, employees can proceed with medical treatment and dispute employer decisions (California Healthline, 6/9). The California NFIB chapter received 1,500 responses to its survey from members between April and June and found that:
- About 99% of responding companies had "dramatic insurance price increases" over the last three years, but only 23% of them had a claim filed against them by an injured employee.
- Eighty-six percent of companies cut employee wages or delayed raises because of higher workers' compensation costs.
- Forty-six percent of owners said they reduced or eliminated employee health insurance or pension contributions because of higher workers' compensation costs.
- Forty-one percent of owners laid off employees because of higher workers' compensation costs, while 39% of owners reduced employee hours.
"We've known for ... quite a while that the workers' compensation system was in crisis," Martyn Hopper, state director for the California chapter of the NFIB, said, adding, "[Many legislators] don't appreciate what small-business owners are up against when it comes to workers' comp" (Sacramento Bee, 7/8).
The state's workers' compensation program is in a "grave crisis" and must be reformed with a bill that provides for "substantial change to the structure, quantifiable cost savings and an effective date of Jan. 1, 2004," Insurance Commissioner John Garamendi (D) writes in a San Francisco Chronicle opinion piece in advance of the Legislature's expected consideration of a package of workers' compensation reform bills tomorrow. The workers' compensation system is "overused, with injured California workers visiting medical providers more than twice as many times as injured workers in other states do," while employers pay the highest rates in the country and employees receive some of the lowest benefits in the nation, Garamendi writes. According to Garamendi, to fix the system, laws must be enacted that:
- Establish "reasonable protocols and limits" for medical costs and doctors' visits;
- Intensify fraud detection efforts and increase penalties for workers' compensation fraud;
- Limit litigation; and
- Lower workers' compensation insurance premiums.
"Workers' comp is fixable, and lawmakers must move bills that get the job done," Garamendi concludes (Garamendi, San Francisco Chronicle, 7/8). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.