Workers’ Compensation Insurers Report Seventh Straight Year of Losses
Workers' compensation insurance carriers in the state lost nearly $1.8 billion in 2002, the seventh straight year of losses, according to a report by the National Association of Insurance Commissioners, the Sacramento Bee reports. The annual report found that the state's workers' compensation insurance carriers posted a 17.1% loss in 2002, compared with a 15.8% loss in 2001. By contrast, the "quasi-public" State Compensation Insurance Fund of California reported a 1.2% loss in 2002, compared with a 3.1% profit the year before, the Bee reports. Between 1993 and 2002, California carriers reported an average 5.7% operating loss, compared with an average 6.3% profit nationally. Edward Welch, director of the Workers' Compensation Center at Michigan State University, attributed the California companies' ongoing losses to low premiums. California insurers paid out an average of $1.17 for expenses and claims for every dollar they earned from premiums and investments in 2002. The Bee reports that the release of the latest numbers come as Gov. Arnold Schwarzenegger (R) continues his efforts to reform the state's workers' compensation system (Chan, Sacramento Bee, 1/22). As part of his "California Recovery Plan," Schwarzenegger in November proposed cutting up to $11.3 billion in funds from the state's $29 billion workers' compensation program, under which employers pay $5.85 per $100 of payroll -- the highest rate in the nation -- for coverage. Schwarzenegger's plan 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, 1/8).
More than two weeks after Schwarzenegger set a March 1 deadline for passage of "real" workers' compensation reform, "hardly any progress has been made in the Capitol," with Democrats "not motivated" and Republicans "powerless," Los Angeles Times columnist George Skelton writes in his "Capitol Journal" column. The March 1 deadline "seems a pipedream," with Schwarzenegger's attention "focused elsewhere" in recent weeks as he works to rally voter support for the budget deficit bond and budget-balancing package, Skelton writes. However, in order to reform the state workers' compensation system, Schwarzenegger "must get involved personally -- not just slough off negotiating to his staff" -- and work with Democrats to "fix the problem," Skelton writes (Skelton, Los Angeles Times, 1/22).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.