* During his press conference yesterday, Senate President John Cullerton mentioned the new workers’ comp ratings advisory. Cullerton crowed about the recommended 10.9 percent drop. We have two views today, starting with Sean Stott at the Laborers’ Union…
This week, the National Council on Compensation Insurance (NCCI) released the latest figures on what Illinois employers should expect to pay for workers’ compensation insurance next year – a 10.9% decrease in their premium rates compared to this year. This is the fifth consecutive recommendation for lower rates for employers following the 2011 workers’ compensation benefit cuts enacted by the Illinois General Assembly, and follows the third largest drop in the nation in 2017. In total, Illinois employers should have seen a 36.5% reduction in their workers’ compensation rates since the 2011 benefit cuts, according to the NCCI.
But in Illinois, insurance companies aren’t required to follow those recommendations, and the industry has increased its own profit margin rather than pass savings on to Illinois employers.
“Common sense will tell you that if insurance companies are paying out less to injured workers and paying less to health care providers, costs should also go down for Illinois employers,” said Sean Stott, Director of Governmental Affairs for the Midwest Region of the Laborers’ International Union of North America. “But that’s not happening. In fact, insurance profits have increased more than 400% since the 2011 benefit cuts.”
“The Legislature passed bills that would hold insurance companies accountable for what they charge Illinois employers and create a more competitive market,” said Stott. “If Governor Rauner truly wants to save Illinois employers money, he would sign those bills into law.”
This year’s recommendation is the fifth time since 2011 in which the NCCI has recommended lower rates for workers’ compensation insurance, including the second consecutive double-digit percentage reduction. The NCCI did not make a recommendation in 2016.
In 2011, the General Assembly made the following changes to the workers’ compensation system in Illinois:
· Cut medical fee payments by 30%;
· Expanded the use of American Medical Association (AMA) Guidelines for assessing permanent partial disability (PPD) benefits (despite the AMA’s insistence that this is an inappropriate use of their Guidelines);
· Restricted PPD wage differential benefits to the later of age 67 or 5 years after injury;
· Cut PPD for most carpal tunnel cases by 20% and reduced the basis upon which benefits are calculated by 7.5%; and
· Allowed employers to limit injured workers’ choice of medical providers.
* From Mark Denzler at the IMA…
Illinois continues to have the 8th most expensive cost of workers’ compensation in the United States and it remains a major impediment for manufacturing companies operating in this state. Surgeons continue to charge 250 to 350 percent more for performing the exact same surgery on a patient covered by workers’ compensation than they receive under private insurance. In real numbers, an arm injury in Illinois pays out an average of $439,858 compared to the national average of $169,878 – these out-of-whack numbers are the reasons why wealthy trial attorneys, union bosses and doctors oppose even modest changes to the current system. The fact is that the average cost of a workers’ compensation claim in Illinois is among the highest in the nation.
While we are pleased that NCCI’s latest advisory recommends an advisory rate level decrease, and our members hope to see some reduction in their premium cost from insurers, the cause behind NCCI’s advisory underscores the real problem facing the state’s economy.
NCCI made a key observation about a drop in the lost-time claim frequency of 4.6 percent in the last year. However, NCCI research points to three main reasons for reductions in lost-time claim frequency including
* an industry shift away from construction and manufacturing jobs,
* a decrease in average weekly hours for employees, and
* a reduction in earned premium resulting from an unstable economic climate.
Quite simply, Illinois’ poor economic climate coupled with the loss of good, middle-class manufacturing jobs and reduced hours for workers is causing the drop in lost-time claim frequency.
At the end of the day, Illinois is not competitive when it comes to the cost of workers’ compensation and we will continue seeing companies leaving the state and families suffer because Illinois lawmakers choose to protect the interests of wealth trial lawyers, union bosses, and the medical community over job creators and hard working Illinoisans who struggle to find good jobs.