OLYMPIA – Businesses and workers would save $315 million under a proposed six-month “rate holiday” for some workers’ compensation insurance costs, Gov. Chris Gregoire said Thursday.
If approved, the break on some rate payments would come in the second half of 2007. It would add savings to a proposed 2 percent decrease in the average workers’ compensation premium rate. That decrease is worth another $30 million.
The six-month rate suspension would pare a large budget surplus by halting workers’ and employers’ payments into a fund that covers health care and some job counseling for injured workers. The fund would still have enough money to pay health benefits for injured workers.
“We have an obligation to use the surplus to reduce the cost to our customers,” said Judy Schurke, acting state Department of Labor and Industries director.
The rate holiday would not apply to separate insurance rates that cover pensions, disability benefits, lost wages or cost-of-living increases.
Gregoire called the proposed rate holiday “good news for Washington employers and their workers.”
“It reflects the fine job they’ve done to reduce workplace injuries, the higher-than-expected investment earnings, and L&I’s commitment to controlling health care costs,” she said.
Don Brunell, president of the Association of Washington Business, welcomed the rate suspension plan. Some may prefer a long-term rate discount, but that approach could bring unwanted higher rates once the surplus is exhausted, he said.
“I think we recognize the predicament they’re in,” Brunell said. “If you reduce the rate and then raise the rate, it presents a whole set of different problems.”
The proposed holiday and overall rate decrease continue a streak of good news for ratepayers. After rates were increased by about 3.7 percent in 2005, a strong economy allowed state officials to avoid a general increase in this year’s rates.
Brunell said the AWB is investigating how the proposed changes for 2007 would affect each individual employment sector. But he said the overall picture looks promising.
“On the surface, it looks very positive for us,” he said. “It beats a couple of years ago, when we had rate increases.”
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