Workers’ Compensation Insurance Premium Rates To Decrease 3.6% on Average in 2004
The average workers' compensation insurance premium rate reduction for 2004 is 3.6%, California Insurance Commissioner John Garamendi (D) announced on Wednesday, the Los Angeles Times reports. The figure represents the average rate of 95 workers' compensation carriers, who together provide coverage to about 75% of California employers (Dickerson, Los Angeles Times, 12/4). Of the 95 insurers, 69 are cutting rates, 16 are keeping rates the same and 10 are increasing rates. The 3.6% premium rate reduction includes the 2.9% reduction by State Compensation Insurance Fund, which provides workers' compensation insurance to more than half of California employers (Kasler, Sacramento Bee, 12/4). State Fund's 2.9% cut and the average 3.6% cut "fall far short" of the 14.9% reduction Garamendi called for in November, the San Diego Union-Tribune reports (Laing, San Diego Union-Tribune, 12/4). Former Gov. Gray Davis (D) in September signed into law two bills (AB 227 and SB 228) regarding workers' compensation that establish fee schedules for treatments and prescription drugs; limit chiropractic and physical therapy visits; implement reviews that use national standards to determine the proper amount of care for certain injuries; and increase penalties for employer fraud from $50,000 to $150,000. Garamendi recommended the 14.9% cut because the laws are expected to result in a one-time, $5 billion savings to the state workers' compensation system, with a additional annual savings of $5.4 billion (California Healthline, 12/3).
Garamendi "tried Wednesday to put the best face on the skimpy reductions," according to the Times (Los Angeles Times, 12/4). "The bad news is (insurers) haven't reflected the full (savings) potential in their rates. The good news is we're turning the corner," Garamendi said. He added that the overall reduction is a "dramatic turnaround" compared with rate increases that have totaled 136% since 2000, the Bee reports. Jay Hansen, board member for State Fund, said that it could further reduce premium rates in mid-2004, adding that "there's more room for rate changes -- we hopefully expect them to go in the right direction." Mark Sektnan, assistant vice president for the American Insurance Association, said that before the workers' compensation bills were passed in September, the rates were expected to increase 12%, meaning that the "market is responding positively to California's effort" to reform the workers' compensation system (Sacramento Bee, 12/4). However, Allan Zaremberg, president of the California Chamber of Commerce, said, "I think everyone should be somewhat grateful that we didn't see the 14% increase that was projected, but nobody should be satisfied with the status quo" (San Diego Union-Tribune, 12/4). Garamendi urged the Legislature to pass additional workers' compensation reform legislation to get California's rates, which are more than twice the national average, down to the national average (Los Angeles Times, 12/4). Vince Sollitto, a spokesperson for Gov. Arnold Schwarzenegger (R) said that the rate reductions indicate that the reforms passed in September are a "positive, albeit small, step in the right direction" but also show that more reforms are necessary, the Bee reports (Sacramento Bee, 12/4). Assembly member Mark Wyland (R-Escondido) said, "Legislators should recognize the need for genuine, meaningful reform instead of the bare start we got last year" (San Diego Union-Tribune, 12/4). KQED's "California Report" Thursday reported on the decrease in workers' compensation insurance premium rates (Varney, "California Report," KQED, 12/4). The full segment will be available online in RealPlayer after the broadcast.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.