Working together on workers' compensation

OLYMPIA — As we enter the time of year in which workers’ compensation insurance rates are proposed for 2010, there is vigorous discussion of the rates and of Washington state’s overall workers’ comp system.

As director of the Department of Labor & Industries, I welcome this discussion. To have the best system for supporting injured workers and helping employers stay competitive and free from expensive lawsuits requires constant analysis of what works or doesn’t work. We need business and labor, legislators and other stakeholders to work with us to make the system better for everyone’s benefit.

While we consider what to change or improve, let’s not lose sight of the fact that Washington has a workers’ comp system that is unique in the country, that meets the obligations set for it by the Legislature, and that compares favorably with other State Funds and private insurance carriers.

Here are some of the advantages of Washington’s workers’ comp system, which was first established by the state Legislature in 1911:

• It provides some of the best benefits in the country to injured workers and their families at rates that are lower than over half the other states.

• We can afford to do this because our administrative costs are far lower than the national average for workers’ comp insurers as measured by A.M. Best, a nationally recognized insurance rating service. Our administrative costs are 18 percent of benefits paid, compared with an industry average of 68 percent. This is because our State Fund system doesn’t have to make a profit, run marketing campaigns for new customers, pay taxes, pay brokerage fees and commissions, and so on. By the way, our administrative costs last year went up 7 percent, not 28 percent as some have incorrectly asserted.

• We cover everyone, including high-risk companies in hazardous industries whose injury and illness rates might make them ineligible in the private insurance market. We won’t cancel anyone, and we won’t be out of business tomorrow.

• We’re the only state in the country in which employees pay a significant portion of the insurance premiums – about one-fourth. This cuts the out-of-pocket costs to employers while maintaining strong benefits for injured workers.

• Because we’re the exclusive workers’ comp insurer, our reserves are significantly lower than in the private sector. This allows Washington to keep workers’ comp rates down.

• We give a claims-free discount to 70 percent of our 171,000 employer accounts, which can save them from 10 to 40 percent on their premiums. In many other states, many of these same small employers would be required to pay a high minimum premium to obtain coverage.

• We have an increasing number of online tools to make it easy for employers to get information about their account and to be actively involved in claims, along with their injured workers.

• We provide an option for companies to participate in a program that refunds some of their premiums if their workplace-safety experience and return-to-work efforts are better than companies not in the program.

• We are expanding a widely recognized program of working with medical providers in the community to intensively manage new claims in collaboration with employers and workers. Studies have shown that this program, known as Centers for Occupational Health and Education (COHE), reduces costs by an average of $800 to $1,200 per claim and lost work time by an average of nine days.

And we do it in a way that, overall, is satisfactory with the employers and workers covered by the insurance program. A new survey conducted by The Gilmore Research Group shows, among other things, that 87 percent of workers with medical-only claims were somewhat or very satisfied with their claims experience, and 93 percent thought decisions made about their claims were fair. Seventy-eight percent of employers said they were somewhat or very satisfied with their overall claims experience.

While the debate continues over workers’ comp rates and the system itself, I would encourage you to learn more through our new “2008 Annual Report for the Washington State Fund” and through a new “Facts about workers’ comp” Q&A on our Web page. By knowing more and understanding the complexity of the system and the challenges and opportunities ahead, we can work together to refine the system in a way that best serves workers, employers and providers.

Judy Schurke is director of the Washington State Department of Labor & Industries in Tumwater.