No: Flawed initiative bad for small businesses

Published 1:53 pm Wednesday, September 8, 2010

As a small business owner, I know the importance of reading the fine print in any contract. That’s why I’m opposing Initiative 1082.

I-1082 is about workers’ compensation insurance, and please don’t feel like the Lone Ranger if you’re not up to speed on the issue. Most people know only this about workers’ comp: It’s there when you and your family need it, providing medical aid and some portion of your salary if you’re hurt on the job. In return, employers like me get immunity from on-the-job lawsuits. It’s a good balance that’s been working pretty well in Washington for a long time.

I-1082 would end Washington’s public, nonprofit workers’ compensation system by allowing private insurance carriers into our state. It would also force small businesses like mine to pay the employee share of workers’ compensation premiums. That sounds like a small change, but it’s huge. I’m in the restaurant business, and if you total it all up across the state, I-1082 costs us $17.3 million, just as we’re all coping with bad economic times. The boosters of I-1082 throw out an even bigger number: $315 million now paid by employees will be paid by employers. How can our small businesses handle a hit like that?

There’s more fine print, and you really get a feeling that it was written by people who just don’t care about small businesses or real families. Under I-1082, workers compensation insurers wouldn’t have to contribute to a special fund for carriers that go bankrupt. This is bad news. Across the country, workers’ compensation is one of the most volatile lines of insurance. And under I-1082, carriers could dry up and blow away, leaving everyone involved holding the bag. In its review of I-1082, the state Office of Financial Management said it simply: “Losses will be absorbed by employers, injured employees and medical providers.”

In section after section, I-1082 contains nuggets for the insurance industry that are bad for us. According to Insurance Commissioner Mike Kreidler, the insurance industry wrote I-1082 to give itself special exemptions that no other line of insurance is allowed — not car, home, life or health insurance.

I-1082 exempts workers’ compensation insurers from the voter-approved Insurance Fair Conduct Act, meaning carriers can wrongfully and intentionally delay and deny legitimate claims for years, with virtually no way of hold them accountable. In fact, the Office of Financial Management predicts that workers’ compensation appeals would go up by 34 percent if I-1082 passes. There’s a lot of misery in that number — workers in debt to doctors, doctors who swear they’ll never take another workers’ comp patient because insurance is such a hassle, employers who are cut out of the process.

Proponents of I-1082 say competition will solve all these flaws. But if you really think about, it’s hard to see how private insurance carriers would save us money. For one, they have more overhead than the public system. Administrative expenses in the public system are about 18 percent of total benefits. The national average is about 68 percent. Private insurance carriers have lots of expenses the public system doesn’t have, such as advertising and marketing. And let’s face it, private insurance exists to make excess profit, and that’s something that doesn’t exist in the current system.

The special interests pushing I-1082 say the state system is close to bankruptcy, so we’ll all end up with hefty workers’ compensation expenses no matter what we do. But our public workers’ compensation insurance has $11 billion in the bank, so it’s not even close to going under. That’s why state Auditor Brian Sonntag opposes I-1082; he knows the system is fundamentally secure. And let’s remember, when financial times are good, the state gives business owners a rebate. How often does your insurer do that for you?

The bottom line is simple: I-1082 is bad for small businesses, and bad for working families. With our Snohomish County economy still leaving a lot to be desired, we don’t need a flawed initiative to make tough times even worse. Let’s vote no on 1082.

Marilyn Rosenberg is owner of Zippy’s Java Lounge in Everett. Learn more at voteno1082.com.