By Darrell Chapman
In his column, “Modest changes to workers’ comp would help reserves” (The Herald, May 19), Bill Weaver makes the case for one of the bargaining-chip bills that is blocking the path to a budget resolution in Olympia. As the 30-day special session nears its end, the Associated Press reports that the Senate Majority Coalition has included this workers’ comp legislation on the list of 33 bills they want addressed as part of budget talks.
Let’s set aside for now what this bill has to do with the budget, since any savings would benefit workers’ compensation funds and not the state’s operating budget.
Business interests are fighting to expand the use of what are known as compromise-and-release settlements, where injured workers sign away the benefits they would normally receive in exchange for lump-sum buyouts. The only way this saves the system money is if injured workers agree to accept less up front than they would get over time.
Proponents say injured workers should get that “choice” and predict they will make it so often that the system will save hundreds of millions of dollars. But opponents say that financial desperation — families who’ve lost their income are likely to be facing sudden, extreme hardship — can lead people into taking lump-sum payments that aren’t in their best interests.
When that money runs out and they still can’t work, these families will need public assistance. Then this WILL become an operating budget issue, as the cost of debilitating work injuries is shifted from employers to the state government. It’s happened in other states and it could happen here.
In 2011, the Legislature approved significant changes to the workers’ compensation system. Several changes were supported by both business and labor and those changes — which are not yet fully implemented — are now projected to save the $1.5 billion over four years, $200 million higher than originally estimated.
The most controversial aspect of those 2011 changes was the lump-sum buyouts. Business supported legalizing them for all workers. Labor and other injured workers’ advocates opposed them. In the end, legislators compromised and legalized them for workers 55 and older. The idea was that workers nearing retirement would have a better idea judging their expenses until they are eligible for Social Security and Medicare. Labor opposed this compromise, but it was narrowly approved anyway.
Now, just two years later, as the 2011 reforms are still in the process of being enacted and the state and courts are still determining the rules for approving such settlements, business interests are back. In the 2013 regular session, they pushed legislation to eliminate that age restriction, or failing that, to lower it from 55 to 40 years of age. They want more injured workers to take buyouts and they even want to stop the state from considering what’s in the injured worker’s “best interests” when reviewing and authorizing the buyouts. (I’m not making this up.)
Their legislation to accomplish this passed the Republican-controlled Senate, but failed due to opposition from both the Democrat-controlled House and Gov. Jay Inslee, who say they want to let 2011 reforms be fully enacted before making more changes. So now it’s a bargaining chip for the budget and here we are, headed toward a second overtime session.
What’s the emergency? Isn’t the responsible course to do just what the House and Governor have proposed, let 2011 changes be fully implemented and assess the impact on injured workers and the system’s costs before making more changes?
Business lobbying groups claim we can’t wait because of the system’s low reserve funds, which were depleted by recession losses. They say substantial rate increases might be needed to bolster those reserves.
But there’s good news on that front. As the stock market recovers, so have reserves.
This month the state announced that in the last six months of 2012, the Contingency Reserve funds grew 64 percent from $580 million to $953 million. Meanwhile, the state avoided rate increases in both 2011 and 2012 and still anticipates adding another $82 million to reserves on top of whatever investment earnings are occurring now in 2013.
The truth of the matter is that Washington’s workers’ compensation system is recovering quite nicely as the economy recovers. The only “emergency” here is that business lobbying groups see the window of opportunity for cutting benefits is closing at the same time.
Does that mean that lawmakers should stop looking for ways to improve the system and cut costs? Of course not! But the best way to cut costs is to prevent injuries by promoting safe workplaces, not by dangling big checks in front of desperate people in a game of “Let’s Make a Deal.”
Ironically, that’s the very game that’s being played behind closed doors in Olympia right now.
Darrell Chapman is President of the Snohomish County Labor Council.