* I mentioned this bill in my weekly newspaper column, so let’s take a look. Here’s a press release from last week…
The Illinois House of Representatives today passed HB 2622, a bill creating a not-for-profit workers’ compensation insurance company that would compete with other insurers to provide workers’ comp coverage to Illinois employers.
Proven to be successful in the 17 other states where they operate, including neighboring Missouri and Kentucky, these companies typically grow to be the biggest providers of workers’ compensation insurance in their respective states.
HB 2622 was sponsored by Rep. Laura Fine (D-Glenview), and supported by organized labor in Illinois, including the Laborers’ International Union of North America (LIUNA).
Sean Stott, Director of Governmental Affairs for LIUNA’s Midwest Region, said that the creation of a not-for-profit insurance alternative will enhance competitiveness in Illinois’ insurance market and force insurers to cut costs for Illinois employers.
“Big business and Governor Rauner want to cut benefits for injured workers and exclude legitimate injuries from coverage,” said Stott. “That has proven not to be an effective way to control employer costs.”
In 2011, Illinois lawmakers passed a series of benefit cuts for workers. Stott said the savings from those cuts have not been passed on to Illinois employers, but instead have substantially increased the profits of insurance companies.
Since Illinois does not strictly regulate workers’ compensation insurance premiums, as others states do, the recommendation of a 29 percent cut in insurance rates since the 2011 law changes has not been honored by the insurance industry.
The portion of workers’ compensation premiums paid by Illinois employers that is used to pay injured workers’ benefits has dropped 28.4% since the 2011 law changes. According to the Illinois Department of Insurance, barely half of premiums collected by insurers (53.5 percent) in 2015 were used to pay workers’ comp claims.
“Where is the rest of Illinois employers’ money going?” Stott asked. “It should come as no surprise that insurance company profits are skyrocketing.”
According to the Department, insurer profits on workers’ comp sales have increased 30 percent since 2011.
HB 2622 offers Illinois employers an alternative to padding the profits of insurance companies. State-chartered workers’ comp insurance companies provide long-term savings and a high level of service to their policy holders because they:
• Emphasize avoiding accidents by improving workplace safety through working with employers to eliminate hazards.
• Have no profit motive: they answers to policyholders, not stockholders.
• Do not sell other types of insurance, so their exclusive focus is providing employers with the highest quality customer service.
* The IMA hates the bill…
Illinois’ workers’ compensation costs rank 8th highest in the nation and remain a primary reason why manufacturing companies and good paying jobs are fleeing the state. Since the end of the 2009 recession, Illinois has lost 1,600 manufacturing jobs while our neighboring states have added tens of thousands of new jobs.
This week, House Democrats passed two bills (HB 2525, HB 2622) under the guise of reform. Nothing could be further from the truth. It’s window dressing and a political sham designed to deflect from the necessary reforms that are needed to make Illinois more attractive for job creation and capital investment. Further, lawmakers are taking $10 million in employer money from the Illinois Workers’ Compensation Commission to start a new public insurance company that will compete with the private sector at a time when they have not passed a balanced budget with comprehensive budget reforms.
The bill’s chief sponsor publicly acknowledged in committee that he refused to make any changes in the last year despite personally participating in more than 100 hours of meetings with all stakeholders.
These House Democrat-sponsored bills will not reduce costs or reform the system to make Illinois competitive. In fact, this legislation further hinders Illinois’ workers’ compensation by codifying a horrible court ruling into law for the benefit of trial lawyers and labor unions.
The Illinois Manufacturers’ Association continues to call on the Governor and lawmakers to enact real and meaningful reforms to our workers’ compensation system that include these key components:
Create a causal standard
Bring inflated medical costs into line with average states
Reduce the abuse and high cost of drugs and compounds
Strengthen use of American Medical Association standards
It’s time to stop the bogus and contrived political games and start making Illinois work again.
* Steve Schneider, Midwest region vice president for the American Insurance Association, is also no fan…
“AIA is disappointed by the House’s passage of HB 2525 and HB 2622, adverse workers’ compensation legislation.
Illinois is the most competitive state for worker’s compensation insurance. More than 300 insurers compete for the right to earn a customer’s business. Competition is intrinsically good for all Illinois employers who must purchase this mandated, comprehensive coverage. This competition stems from Illinois’ current open competitive rating law that has been in effect for 35 years. HB 2525 would eviscerate that law and its benefits for Illinois employers.
By replacing healthy competition with an extremely vague regulatory standard, HB 2525 could lead to every single workers’ compensation policy and its premiums undergoing formal review by the Department of Insurance every year, or even more frequently. Such bureaucratic interference with open competition will hurt not just workers’ compensation insurers, but all Illinois businesses.
Additionally, HB 2622 not only inappropriately interferes with the private market, but also fails to provide meaningful reform to the Illinois’ workers’ compensation system. No reason exists for Illinois to create its own state-sponsored workers’ compensation insurance company to compete against private sector insurers and jobs when no major crisis is present and massive government intervention is not necessary.
Insurers stand ready to work with policymakers on meaningful reform to provide an effective workers’ compensation system with reduced cost drivers for employers and appropriate benefits and medical care for injured workers with a minimum of delays and disputes. HB 2525 and HB 2622 is not the right approach to achieving meaningful reform.”
The bill passed the House with 67 votes. It’ll be vetoed no matter what the Senate does and then it won’t be overridden.