Senate Committee To Consider Bill To Regulate Workers’ Compensation Insurance Premium Rates
The Senate Labor and Industrial Relations Committee on Wednesday will consider a bill (ABX4 16) that would allow for the temporary regulation of workers' compensation insurance rates, the Sacramento Bee reports (Chan, Sacramento Bee, 6/18). Under the bill, the insurance commissioner would oversee workers' compensation insurance employer premium rates for two years. The bill would establish minimum and maximum premium rates for a carrier-based formula that takes into consideration expenses, profit margins and claims costs. The insurance commissioner would have to approve rates that exceed the established maximum (California Healthline, 4/19). The Assembly in April approved the legislation on a party-line vote.
According to the Bee, the hearing is part of an effort by Democrats to "rekindl[e] their push to regulate rates" because the recent workers' compensation reforms have not "sparked a dramatic drop in insurance premiums." The workers' compensation insurance premium reductions for more than 30 carriers, including the State Compensation Insurance Fund, have averaged 8.1% for new policies and those up for renewal after July 1, the Bee reports. "I'm very disappointed in the reduction in premiums. They should have made immediate reductions of at least 20%," Sen. Richard Alarcon (D-Van Nuys) said. Assembly member Lloyd Levine (D-Van Nuys) said, "Small businesses in California ... were promised by the governor a 20% to 30% reduction, and they want to know where it is."
Martyn Hopper, California state director for the National Federation of Independent Business, said that the push by Democrats is "purely political," adding, "Rate regulation is sending the wrong message and (will) not encourage more carriers to enter the market." The Bee reports that Insurance Commissioner John Garamendi (D) does not back rate regulation and said that the lower-than-expected rate reductions are because of the market power of State Fund, which lowered rates by an average of 7% and provides workers' compensation insurance coverage to more than half of the state's employers. Republican legislators consider rate regulation "a nonissue," the Bee reports. According to the Bee, Gov. Arnold Schwarzenegger (R), who has said that he favors a free insurance market, is likely to veto any workers' compensation rate regulation bills that are passed by the Legislature (Sacramento Bee, 6/18).
Although Schwarzenegger's "most impressive feat to date" has been negotiating with the Democrat-controlled Legislature to pass SB 899, battles over workers' compensation insurance "never really end," Sacramento Bee columnist Dan Walters writes in an opinion piece. "Democrats and their allies among labor unions and workers' comp attorneys" are seeking to reinstate rate regulation because insurers have not reduced premium rates substantially while they wait to see whether the law will "actually reduce costs," Walters writes. However, if workers' compensation premium rates do not "decline sharply after rising so rapidly in recent years," Schwarzenegger "will be embarrassed and there will be a renewal of the fight over regulation," Walters concludes (Walters, Sacramento Bee, 6/14).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.