Schwarzenegger To Compromise on Workers’ Compensation Reform
Gov. Arnold Schwarzenegger (R) on Thursday said that he is willing to compromise on his proposed $11.3 billion in cuts to the state workers' compensation system, the Sacramento Bee reports. Schwarzenegger said that he is willing to revise his original proposal to reduce the cost of the state workers' compensation system by 50% because of new insurance industry figures that show the cost of treating injured workers will be lower in 2004 than originally projected (Chan, Sacramento Bee, 3/12). The Workers' Compensation Insurance Rating Bureau on Tuesday announced that its 2004 projected total losses for workers' compensation insurance carriers would decrease by $7 billion to $17.9 billion. Late last year, the bureau estimated that California workers' compensation losses in medical and indemnity payouts to injured workers would be $24.9 billion in 2004 (California Healthline, 3/11). Schwarzenegger's plan to reform the state workers' compensation system includes measures that would prohibit workers from receiving multiple disability payments for the same injury; require dispute resolution more frequently to reduce litigation costs; limit penalties paid by insurers and employers in medical bill disputes; and establish uniform standards for permanent disability (California Healthline, 3/4). Schwarzenegger said that he would "sit down and make a deal" if legislators agree to a reform package that would produce a 25% to 30% reduction in state workers' compensation costs. However, exactly how much the governor is willing to compromise is "unclear" because the savings in Schwarzenegger's plan were based on annual workers' compensation costs of $24.9 billion, the Bee reports. A 25% to 30% cut from annual costs of $24.9 billion would save between $6.2 billion and $7.5 billion, compared with savings of $4.5 billion to $5.4 billion for cutting the same percentage from annual costs $17.9 billion. Sen. Richard Alarcon (D-Van Nuys) said, "This is good news for the effort to find a good compromise in the Legislature." Insurance Commissioner John Garamendi (D) agreed, saying that Schwarzenegger's statement is important because it shows that "he's willing to negotiate. It's about getting good, solid reform." Rob Stutzman, the governor's communications director, said that Schwarzenegger is indicating that "in order to get a deal, he understands he may have to give on some issues," adding, "He'll come some distance from his starting point" (Sacramento Bee, 3/12). KPCC's "Talk of the City" Thursday included an interview with Sacramento Bee columnist Dan Walters about whether the Legislature can reach an agreement on workers' compensation reform before the March 31 deadline (Felde, "Talk of the City," KPCC, 3/11). The complete segment is available online in RealPlayer.
In related news, Garamendi on Thursday said that he would meet with about six workers' compensation insurers to encourage them "to pump their share of the California market," the AP/Los Angeles Times reports. Garamendi said that while he is in New York for a meeting of the National Association of Insurance Commissioners, he plans to meet with five or six workers' compensation insurers that have "finger holds" in the California market but have substantially reduced their presence in the state. "Right now is the time to pitch California as a very good market for the workers' compensation industry," Garamendi said, adding that the Democratic attempts to regulate insurance rates and a November ballot initiative for workers' compensation reform could discourage workers' compensation insurers from coming to California (AP/Los Angeles Times, 3/12).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.