Afternoon Jolt

Wednesday Jolt: Workers' Comp Reform Reality Check

The day's winners and losers.

By Afternoon Jolt June 19, 2013

Today's Loser: The Republican Argument for Workers' Comp Reform

Following up on yesterday's news from Olympia—$231 million in extra revenue, plus $90 million in savings from decreased caseloads—that took momentum out of the house Democrats' push to close tax loopholes for new revenue (though one could certainly ask the Republicans why the first thing they want to do with extra money is fund tax breaks for oil companies and tech giants) ... news from the capital today poured cold water on the Republican agenda.

The GOP is still pushing a business-friendly change to workers' comp guidelines that would expand an employer's ability to offer injured workers' one-time lump settlements from the workers' comp fund rather than ongoing payouts.

However, the selling point behind the legislation—a follow-up to legislation passed in 2011 that made the one-time payments an option in the first place—is that it's supposed to lower payouts, stabilizing the state fund.

Never mind that the fund has started to stabilize now that the recession is over (the fund grew between June 2012 and December 2012—by $373 million, a 64 percent jump), but today, the Workers’ Compensation Advisory Committee announced that the projected savings from the 2011 legislation didn't come to fruition; they were off, in fact, by nearly $140 million. 

"The anticipated savings from the structured settlements program are less than we projected in 2011 when we first considered the changes," says Kim Contris, a spokeswoman at the state department of Labor and Industries. 

In 2011, the department estimated, and Republicans used as ammo for the bill, the fact that the new program would save $379 million to the state fund on claims filed through 2012. However, L&I now reports that the number of approved one-time payouts  has been fewer than they'd predicated, reducing the savings by nearly 40 percent to $240 million.

The Washington State Labor Council, which opposes the current legislation to expand the program—which is once again being sold for its supposed big savings—seized on the news.

WSLC president Jeff Johnson issued the following statement today:

The Department of Labor and Industries announcement today that cost savings from structured settlements are less than expected comes as no surprise. Organized labor argued all along that projected savings were wildly off base. Those inaccurate projections from 2011 were the biggest reason legislators legalized the lump-sum buyouts in the first place. Now some legislators want to double-down on this failing experiment by expanding the buyouts and they have a new set of “projected savings” that are also grossly inflated.

We have a message in to the bill's sponsor Sen. Janea Holmquist Newbry (R-13, Moses Lake), though we imagine she could use the news to argue that the more reforms are needed to get more savings and, in fact, $240 million is nothing to sneeze at.  ...


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