Quote:
Originally Posted by Willravel
After looking into it, it seems Seaver's explanation stands up to scrutiny better than your systemic fraud theory. Looking at wc rates across the country, they seem to change based on the cost of living. Unless you're going to suggest that California workers are simply more corrupt than workers from other states—which is an offensive and (more importantly) unsupportable position—I think you have to look at cost of living to explain the cost of wc.
|
Here is an article from 2001, giving some history and perspective also illustrating that the cost of living had little to do with the escalating costs. In 1995 the state enacted massive reforms, according to the article the corner stone was letting the market establish rates. Premiums declined. However, as the article states the average claim in 1994 was $18,000. then it went past $34,000 by 1999. The industry in essence became insolvent. Rates went up accordingly. When you look into the factors that drove those costs up, it had everything to do with fraud and medical control of the claim going in favor of the injured worker. Injured workers with medical control were able to greatly take advantage of the system. Keep in mind "injured worker" in some cases could mean "stress" and no actual physical injury. So a person gets a doctor to say, the workplace "stress" is an injury.
Quote:
Several factors lie behind the increases, which come as businesses face higher costs for another necessity, energy:
* Insurers lose money on workers' comp. According to the Assn. of California Insurance Companies, workers' comp insurers pay out $1.56 in claims and other costs for every $1 they collect in premiums in California.
* The cost of the average workers' comp claim shot past $34,000 in 1999, the most recent year for which numbers are available, compared with about $18,000 in 1994, according to the association.
* The benefits payable to injured California workers rank among the lowest in the country, and the state Legislature probably will increase them substantially before its current session ends.
The losses among workers' comp insurers were severe enough to force one carrier, Superior National Insurance Co., into receivership last year and send a second, Fremont General Corp., reeling in the same direction--and the carnage may not end with those two.
Workers' comp premiums dropped rapidly in 1995 when the state ceased controlling how insurers set rates. This spawned a fierce competition for market share among workers' comp insurers. But although multi-line carriers--those selling other lines of property-casualty insurance in addition to workers' comp--made up for the losses with profits on their other lines, specialty workers' comp insurers couldn't.
The free-for-all was good for employers, of course; after years of turmoil and ever-increasing costs for the California workers' comp system in the 1980s and early 1990s, costs finally came down.
Then the insurance market as a whole hardened in the last half of 2000 and multi-line insurers no longer were willing to countenance the losses on workers' comp.
It's anybody's guess how far premiums will go up. State officials expect the legislation now pending in Sacramento could cost employers $1.6 billion to $2.3 billion, depending on how the increases in benefits and the cuts in costs are calculated.
This would push overall costs from about 1.75% of payroll at present to something like 2%. Although that might seem reasonable, the increases in costs could match the premium increases slapped on many employers in California beginning last summer--20% on average, more for many companies.
|
Employers Probably to Be Hit With Higher Workers' Comp Costs - Los Angeles Times
In 2004 there was more Work comp reform, but for many it was too little too late. I don't follow the current conditions.