Dan Walters: Workers' comp overhaul a recurring drill

dwalters@sacbee.comDecember 14, 2012 

Gov. Jerry Brown and legislative leaders tout an overhaul of the multi-billion-dollar system of compensating disabled workers for job- related illnesses and injuries as a major accomplishment this year.

Actually, negotiators for employers and labor unions hammered out changes in workers' compensation during months of private negotiations and handed them to the Legislature, thus continuing a time-honored – or, some say, dishonored – tradition of altering rules of the compensation system once a decade.

It also continued a tradition of changes occurring when some players in the game join forces to stick it to other players. In this case, employers and unions agreed to raise benefits by close to a billion dollars a year and pay for them by squeezing medical care providers and workers' comp attorneys, while easing rapidly rising employer-paid insurance premiums and, presumably, providing enough liquidity to return insurers to profitability.

On paper, that's what would happen with full implementation, but whether the presumed effects become real impacts depends largely on regulations now being written – some as emergency rules not subject to hearing – by the Brown administration.

Eight years ago, when the last big changes were made, critics accused then-Gov. Arnold Schwarzenegger's administration of writing harsh rules that deprived workers of legitimate treatment and benefits.

The backlash fueled drum-beating that culminated in this year's overhaul, so contending parties are watching the current rule-making very closely. It's likely, too, that groups opposed to the 2012 legislation will try to modify it in the Legislature, and perhaps challenge portions in court.

Meanwhile, Insurance Commissioner Dave Jones wants insurers – who have complained about losses from rising medical costs – to get another boost in employer-paid premiums, raising the specter of insurer insolvencies and questioning whether this year's changes would result in enough savings to offset their losses.

This week, the Workers' Compensation Insurance Rating Bureau confirmed that insurers, who compete fiercely for business, continue to pay out much more in claims and expenses than they receive from employers, even though premiums have risen 22 percent in the last three years, and more increases are in the pipeline.

It's all part of a familiar drill after the Legislature makes major systemic changes. It takes several years for new rules to be drafted and take effect and for real-world impacts – which are often different from those assumed in the legislation – to reveal themselves.

Pressure then begins to build for another overhaul.

That should happen around 2020 and will be a problem for the next governor and a Legislature without members who voted on the 2012 version.

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