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California: Comp reforms making a difference, says state's 2008 report card
California's workers' compensation system has significantly improved in recent years due to legislative reforms enacted in 2003.
The state received a passing grade according to the Commission on Health and Safety and Workers' Compensation's recently released study, Selected Indicators in Health and Safety and Workers' Compensation: 2008 Report Card for California. The CHSWC is a joint labor-management body created by the Legislature in 1993. The commission is charged with examining the health and safety and workers' comp systems in California and recommending administrative or legislative modifications to improve their operation. As part of its mandate, the CHSWC published the report card, which incorporated data derived from many sources within the workers' comp community, including the Workers' Compensation Insurance Rating Bureau of California, the California Workers' Compensation Institute, the National Association of Social Insurance, the Bureau of Labor Statistics, the California Department of Insurance Fraud Division, the California Labor and Workforce Development Agency, and other organizations.
· Comp costs continue to fall. According to the report, the cost of workers' comp insurance in the state has undergone dramatic changes in the past decade due to a combination of factors -- beginning with the deregulation of workers' comp premiums in 1995 and leading to the legislative reforms in the early 2000s. The reforms were aimed at controlling medical costs, updating indemnity benefits and improving the assessment of permanent disability. The study found that the average workers' comp premium rate per $100 of payroll rose significantly beginning in 2000 up to the second half of 2003. However, after the reforms, the average rate has dropped every year since that time. According to the latest data, the average premium rate per $100 of payroll is $2.30, which researchers said is lower than it was in 1994. · Paid indemnity costs have decreased. According to the report, the cost of the total indemnity benefits increased 64 percent from 1998 to 2004, and then fell by more than 33 percent from 2004 to 2007 after the reforms. The costs of total indemnity, permanent partial disability, and vocational rehabilitation/non-transferrable education vouchers also declined from 2004 to 2007 after years of growth. · Reforms have helped control medical benefit costs. The cost of the total medical benefits doubled from 1998 to 2003, and then decreased by more than 22 percent from 2003 to 2007 after the reforms. In addition, pharmacy costs nearly quadrupled from 1998 through 2004, before declining slightly from 2004 to 2007. Researchers found hospital costs more than doubled from 1998 to 2003, then declined by 39 percent from 2003 to 2006, and slightly increased again in 2007. Medical-legal evaluation costs fluctuated from 1998 to 2002, then doubled between 2002 and 2006, and slightly decreased in 2007. Payments to physicians doubled from 1998 to 2003, and then dropped by nearly 40 percent from 2003 to 2007.
January 29, 2009 Copyright 2009© LRP Publications |
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