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Home / Washington Business - January/February 2005 / Points of View: Workers' Comp Ripe for Reform |
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Points of View: Workers' Comp Ripe for Reform |
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Written On: January/February 2005 |
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Written By: By Sen. Jim Honeyford |
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Sen. Jim Honeyford (R-Sunnyside) is caucus chair for the Senate’s Republican minority. A peach and grape farmer outside the Legislature, Honeyford was first elected to the House of Representatives in 1994. He has served in the Senate since 1999.
In 2003, Washington’s employers and employees endured workers’ compensation premium increases averaging 29.5 percent. Then again in 2004, they faced a 9.8 percent average increase — and finally this year, they’ll see another 3.7 percent average increase. This is real money — money that’s not going toward developing new business and creating jobs.
Washington’s workers’ compensation system is flawed, and our state’s employers and employees will continue to suffer the consequences unless we take steps to turn things around. On the campaign trail, our new governor pledged to improve the state’s business climate to create jobs. Now it’s time to put those words into action by reforming our state’s workers’ comp system.
Washington is one of only five states in the nation where the state has a monopoly on industrial insurance. We are the only state that uses hours instead of payroll to determine premiums, and we’re the only state that requires workers to pay into the system. These factors — coupled with automatic cost of living adjustments for certain areas of workers’ compensation benefits and two recent court cases that significantly increased the cost of benefits — have resulted in rapidly escalating costs.
Over the last several years, I’ve worked with the Association of Washington Business and others to address some of these problems. First, we need to simplify and add certainty to our workers’ compensation system. The following changes are key:
1. We should use the highest four consecutive quarters of wages over the last two years to determine an employee’s weekly benefit amount;
2. We should only include wages, not fringe benefits like health insurance and retirement, when determining benefit levels; and
3. Time-loss payments should be based on a flat rate of 65.5 percent of a worker’s wage, which would give 71.2 percent of workers an increased payment.
These changes alone would result in savings of about $21.8 million in the state’s accident account in future two-year budget cycles.
Second, we should give self-insurers more autonomy and authority over their claims. This will allow self-insurers to process many aspects of their employees’ workers’ compensation claims without waiting for prior approval from L&I.
Third, we should require an annual audit of L&I, direct the agency to use the “Priorities of Government” process in budgeting, and have the Office of Financial Management come up with a funding plan that prohibits the use of accident and medical aid funds (worker and employer premiums) for purposes other than workers’ compensation.
Fourth, we should make changes to state policies on reopening of injured-worker claims. We should require closed claims to be reopened in order to alter benefits. L&I should be required to accept or deny the reopening of a claim within 90 days of application and workers should have to notify the employer of an accident within five days.
And finally, we must protect employers’ ability to use retrospective rating plans. These plans require extensive safety training to provide a safer workplace and fewer accidents, which results in savings and benefits to both the employee and the employer.
These are not radical ideas. In fact, each of them has been approved by the state Senate in the past. If we don’t take action now, our system will only get worse. The nation’s economy is on the mend — let’s not let the recovery pass us by. It’s time for Washington to get back to work.
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