Workers’ Compensation Insurance Rating Bureau Recommends 2.9% Premium Reduction
The Workers' Compensation Insurance Rating Bureau, a not-for-profit association that represents insurers and recommends premium rates, said on Monday that insurance companies should reduce workers' compensation premiums by 2.9% in 2004, the San Francisco Chronicle reports (Abate, San Francisco Chronicle, 9/30). The bureau in July recommended a 12% premium increase but lowered that rate after taking into account workers' comp reform legislation passed this month by the Legislature, the San Diego Union-Tribune reports (Laing, San Diego Union-Tribune, 9/30). According to bureau estimates, the reform legislation -- which is expected to be signed by Gov. Gray Davis (D) on Tuesday -- could save insurers between $3.5 billion and $4.1 billion, the Sacramento Bee reports (Chan, Sacramento Bee, 9/30). Some of the reforms in the reform measure include fee schedules for treatments and prescription drugs; limits on chiropractic and physical therapy visits; reviews using national standards to determine how much care is appropriate for a particular injury; and increased penalties for employer fraud from $50,000 to $150,000 (California Healthline, 9/15). Although the new bureau figures will likely mean a smaller premium increase, many employers will likely pay 4% more for workers' compensation insurance next year, the Union-Tribune reports.
Insurance Commissioner John Garamendi (D) on Monday asked the bureau to try to find additional savings from the reform package (San Diego Union-Tribune, 9/30). He said it is "inconceivable" that any savings from medical utilization review and anti-fraud measures were not estimated by the bureau (Dickerson, Los Angeles Times, 9/30). Garamendi also said, "Reductions in workers' compensation costs are going to happen. Further increases are not going to happen" (Sacramento Bee, 9/30). Sen. Richard Alarcon (D-Van Nuys), who sponsored the legislation, wrote in a letter to Garamendi that savings could "end up in the pockets of insurers rather than the pockets of employers whose businesses we are trying to save" (Liedtke, AP/Fresno Bee, 9/30). However, Robert Mike, president of the rating bureau, said the group was not able to assess cost savings from measures that were not yet officially in place and had not been legally tested (San Francisco Chronicle, 9/30). In response to Garamendi's concerns, the bureau will convene a panel to determine more thorough cost savings estimates, according to the Times (Los Angeles Times, 9/30). Garamendi plans to issue his final rate recommendation by the end of October, but insurers are not legally required to follow his ruling (Sacramento Bee, 9/30).
In related news, the AP/Sacramento Bee reports that the workers' comp reform bill has become an issue in the Oct. 7 gubernatorial recall election. While Davis has planned to sign the bill, gubernatorial candidate Arnold Schwarzenegger (R) has criticized it, saying it provides "inadequate" relief to businesses, according to the AP/Bee (Werner, AP/Sacramento Bee, 9/30).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.