* From Gov. Bruce Rauner’s State of the State Address…
The cost of worker’s comp is the biggest factor driving our job losses. If we simply aligned our workers’ comp costs with those of a state like Massachusetts – which is hardly a bastion of conservatism – we can save state and local taxpayers over $300 million per year, while protecting those who suffer workplace injuries, and grow more careers at higher wages.
* State Sen. Daniel Biss writing in Crain’s…
Rauner loves to talk about the economic success that Texas has experienced, and he has a point. Texas has had robust job growth, and its unemployment rate is only 4.7 percent—while Illinois’ is more than a point higher. These are achievements Texas should be proud of. But it must be noted that Mississippi has a higher unemployment rate than Illinois, and so do several other conservative states. Guess what else. Texas has a poverty rate of more than 16 percent—the fifth-worst in the country. Illinois’ poverty rate is 11.5 percent, putting us roughly in the middle of the pack.
In other words, although Texas’ achievements are real, they come at a huge cost: Lower wages, less regulation and a weaker safety net are causing poverty to rise and the middle class to shrink.
And while the anti-worker policies of the far right might have contributed to Texas’ record of mixed economic success, they obviously haven’t conferred the same benefits on all states where they’ve been tried. Yet they seem to have had the same costs.
On the other hand, the Democratic approach to economic growth mitigates poverty, raises wages and helps grow the middle class. What’s the unemployment rate in deep-blue Massachusetts? It’s 4.7 percent—the same as Texas.
And, by the way, some progressive states, such as Minnesota and Vermont, have unemployment rates that are far lower.
Biss told me a sentence was cut for space…
It isn’t clear exactly what about the Massachusetts system the governor is advocating for, so I can’t immediately comment on the specifics.
* He told me that because I had already done a bit of searching and found this background info on workers’ comp…
In its first 73 years, few dramatic changes were made to the Massachusetts compensation system. Meanwhile, other states implemented speedier procedures and paid more adequate benefits. In the early 1980s injured workers, unions, and health and safety organizations in Massachusetts campaigned for reform.
In 1985 these groups convinced the state legislature to revamp the system: the Massachusetts Division of Industrial Accidents was reorganized, benefits were increased, cost-of-living protection was added, and insurers were made responsible for workers’ legal expenses.
Five years later, however, the Massachusetts economy entered a downturn. Business groups, exaggerating the burden of insurance premiums and threatening to leave the state, demanded rollbacks in worker benefits.
In 1991, in a shameful display of blaming the victim, the legislature:
• Reduced the total-disability benefit rate to 60% of wages
• Shortened the duration of total-disability benefits to three years
• Reduced the partial-disability benefit rate by 10%
• Shortened the duration of partial-disability benefits to five years
• Eliminated payments for the first five days of disability (except for extended injuries)
• Eliminated benefits for scarring other than on the face, neck and hands
• Reduced cost-of-living benefits
• Eliminated certain injuries from coverage
The governor at the time was Republican William Weld. He did, however, have a Democratic legislature to deal with.
* Here’s a column penned by one of the drafters of that workers’ comp reform law…
A gubernatorial candidate travels around Massachusetts and hears complaint after complaint from employers about the spiraling cost of insuring their employees. Annual double-digit rate increases have become the norm. Small businesses are wilting under the weight of these costs. Large businesses are considering relocating to places where insurance costs are lower. Many employees do not have access to quality healthcare. The candidate understands that a crisis exists and makes a priority of controlling, if not reducing, these costs. The candidate becomes governor. Is there any possible way this story ends happily?
Actually, it did, in an almost fairy-tale-like fashion, though not without a lot of angst. The year was 1990, the candidate was Bill Weld, and workers’ compensation insurance rates had gone up a staggering 92 percent over four years. Then, shortly after Weld took office in 1991, things went from bad to horrible. Insurers filed for another rate increase, this time a record 45.6 percent. Faced with this mess, the governor pushed through the Legislature a reform bill that he promised would eliminate the need for any rate increase. Very few people thought he would be able to keep that promise.
Let’s skip to the happy ending. Workers’ compensation rates have plummeted by about 60 percent since passage of the reform, in what many observers have described as the most remarkable turnaround in any insurance market in the country.
So, it did work. Now, all Gov. Rauner has to do is figure out how to be as effective as Bill Weld.
/snark
*** UPDATE *** From Rep. Mark Batinick…
Rich,
I’ve been studying the Mass. model for work comp for a long time. Attached is an LRU report from January of last year I requested. They do several things there well that we don’t. When I look at their model I see a system that focuses on the worker getting paid and healed as fast as possible. Any case open more than 12 weeks after an injury must be reviewed “to ensure that the treatment is necessary, reasonable, effective, and of good quality.” While indemnity costs per worker were near the median, the percentage of claims paid within 21 days of the injury was the highest. The benefit of getting the worker paid and healed quickly is self-evident.
And yes. They do have a causation standard.
The Massachusetts information starts on page 4 of the attached report. But in the interest of transparency, I attached the entire document.
Click here to read it.
