Gov. Schwarzenegger should oppose the idea of putting rate
controls on workers’ compensation.
The last thing Gov. Arnold Schwarzenegger should accept for
workers’ compensation reform is rate regulation.
Gov. Schwarzenegger should oppose the idea of putting rate controls on workers’ compensation.
The last thing Gov. Arnold Schwarzenegger should accept for workers’ compensation reform is rate regulation. Yes, costs to California businesses have tripled in recent years to about $30 billion a year. But rate controls are not the answer.
The governor, though, is an amiable – and shrewd – negotiator. So, it’s not surprising that he told reporters about rate controls, “It’s definitely something to consider.” We hope he’s just showing a willingness to listen. Because if rates are regulated, costs actually would go up even as help for injured workers would decline.
Here’s the situation. Currently, private companies issuing workers’ comp policies make up only about 40 percent of the workers’ comp insurance market, down from 80 percent as recently as 2000.
That means the State Compensation Insurance Fund – which is supposed to be only the insurer of last resort and mostly for small companies – has mushroomed to 60 percent of the market from 20 percent.
Any reform should reverse that trend and shrink the state fund back to its normal level of usage. That means taking steps that encourage the private insurers to return to the California market. Once they do, competition will intensify and prices likely will decline. Service should improve.
The proposal for rate controls would make a bad problem even worse and should be rejected entirely.
