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Non-Tech : Costco, slow but sure? -- Ignore unavailable to you. Want to Upgrade?

To: Harry J. who wrote (1134)	9/8/2003 9:44:44 PM
From: Sam Citron	Read Replies (1) \| Respond to of 1147

As anyone who listened to Costco's last cc knows, CA's workers' comp system is a mess. Here's some background: Workers' compensation reform on the Capitol hot seat By Dan Walters -- Sacramento Bee September 2, 2003 Were it not for a few other distractions -- such as a recall aimed at ousting Gov. Gray Davis and a multibillion-dollar budget crisis -- the incipient collapse of California's system of compensating workers for job-related illnesses and injuries would be occupying the Capitol's center stage. Over the last decade, workers' compensation costs, borne entirely by employers, have exploded from $7 billion a year in 1998 to around $25 billion, and additional double-digit increases are in the works. California's employers spend more on work comp, as it's called, as a percentage of payroll than those in any other state, yet direct weekly benefits to injured workers are among the nation's lowest. A deregulation of work comp insurance premiums, adopted a decade ago, initially cut firms' costs as insurers competed fiercely for market share, but one by one, all but a handful of work comp carriers went belly-up -- so many that the state's insurance guaranty fund itself is facing insolvency. As private carriers exited the California market, the quasi-public State Compensation Insurance Fund (SCIF) absorbed an ever-greater share of the business. Today, SCIF is writing over half of work comp insurance, but is under pressure from Insurance Commissioner John Garamendi to increase its loss reserves, probably by raising premiums -- even though Garamendi says he wants cost-cutting reforms. Not surprisingly, rapidly accelerating work comp costs are having huge impacts on employers, including those in the public sector, and they are hammering the Legislature for relief. Private firms large and small have threatened to lay off workers and/or move operations out of the state unless the burden is lessened. The Capitol's dominant Democrats, more allied with labor unions than business, have tended to dismiss the complaints. Last year, Davis signed labor-backed legislation boosting work comp benefits by more than $3 billion a year, ignoring employers' pleas about costs. But Davis, facing the Oct. 7 recall election, is now urging some serious cost-cutting. The question, of course, is how? Politically, work comp has always been regarded as a very large pie to be divvied up among those with enough influence, and changes generally have been made when some of those interests have banded together to shaft less powerful stakeholders. And that Darwinian approach created the crisis, since politicians who write the rules have been more interested in pleasing moneyed interests than in maintaining an affordable and efficient system. As the 2003 legislative session enters its final days, a two-house conference committee is working on what its chairman, Sen. Richard Alarcón, D-Sun Valley, says he wants to be a $5 billion package of cost reductions. It would be enough, Alarcón says, to both forestall already planned work comp insurance rate boosts and reduce existing premiums by as much as 10 percent. "We're going to have to make serious and systemic cuts," Alarcón told the committee last week, saying the current system is "not good for the employers and not good for the workers." Whose ox would be gored? The legislation is still being written, but much of the savings apparently would come from changing medical care of injured workers. Last week's hearings of the Alarcón committee focused on what critics said were out-of-control medical utilization. The state auditor's office issued a report on work comp medical costs that bolstered that approach to the crisis. The medical care providers, of course, don't see it that way and are lobbying furiously to protect their pieces of the multibillion-dollar pie, but they appear to be the weakest of the major work comp interests at the moment and are likely to take a big hit, if there is a reform bill. Whether anything happens is problematic because work comp has become intertwined with still another highly controversial issue, a drive to compel employers to provide health insurance for their workers. Senate President Pro Tem John Burton, who's pushing the health care legislation, is the Capitol's most powerful lawmaker and says he wants employers to accept his legislation if they want the benefits of work comp reform. "They're tied together in my mind," Burton says. sacbee.com