Washington state: Builders seek WC reform through ballot initiative

The Building Industry Association of Washington recently filed an initiative that would allow private insurers to enter the state's workers' compensation system.

Trade organizations and business groups were stymied by Democrats in the state Legislature, who turned down several proposals to make changes to the comp system. To move forward, the BIAW is seeking more than 240,000 signatures before a July deadline to land Initiative 1082 on the ballot this fall. The measure is aimed at bringing Washington state in line with the 46 other states that allow competition from private insurers in the industrial insurance market.

Matthew Clarkson, president of the BIAW, said Washington's monopoly on workers' comp means employers have no choice but to pay the state Department of Labor and Industries for coverage.

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"BIAW warned that if the Legislature refused to do anything this session to reform our state's broken and nearly bankrupt workers' compensation system, BIAW would," he said. "BIAW's initiative makes good on that promise."

Clarkson said the lack of a private insurance option has resulted in a costly and inefficient workers' comp system on the verge of insolvency. While workplace injuries have decreased 55 percent in recent years, L&I's costs to manage these claims have increased by more than 80 percent, he said. In addition, Clarkson said injured workers stay off the job more than two times longer in Washington than any other state.

According to the BIAW, Washington's workers' comp policies have played a significant role in driving employers out of the state. Boeing, for example, identified the state's workers' comp system as one of the reasons they awarded South Carolina the second production line of the 787 aircraft, Clarkson said.

However, despite pleas from the business community, critics said no changes have been made and costs have continued to spiral out of control. Employers in the state have seen workers' comp tax increases of 54 percent over the past decade and now pay the second-highest cost per employee for coverage. Late last year, officials announced that comp premiums would increase an average of 7.6 percent in 2010.

Added competition. The measure, which has been endorsed by the National Federation of Independent Business, would create a Joint Legislative Task Force on Private Competition for Industrial Insurance charged with developing proposed legislation to conform current statutes to the provisions of the initiative and make recommendations by December 2011. The Legislature would then be required to adopt legislation to fully implement the policy directives by March 1, 2012.

In addition to increasing competition in the workers' comp market, the measure would also eliminate the worker-paid share of workers' comp taxes. Washington is the only state that allows employers to deduct a portion of workers' comp taxes from employee's wages. The initiative would require employers to pay the full amount.

"Monopolies don't work, especially government monopolies," Clarkson said. "Monopolies breed incompetence, inefficiency and lack of accountability. Forty-six states have figured this out; it is time for Washington to do the same."

Read more at the WORKERSCOMP Forum^TM homepage.

May 17, 2010

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