Workers’ Comp: Nice Start

Complex legislation drafted during a forced march to a deadline will have its share of flaws. So it will be with workers’ compensation insurance reforms. At least with a basic framework in place, the fine-tuning should be easier.

There were cliffhangers and moments of discouragement, but with a final key vote in the wee hours Thursday, state legislators proved that last winter’s bipartisan agreement on debt bonds was no fluke.

The reforms are aimed at cutting costs in the state’s bloated $22-billion workers’ comp system, which saddles employers with the nation’s highest premiums but too often frustrates injured workers who need prompt, quality care to get back to work. Gov. Arnold Schwarzenegger and Democratic legislators negotiated a compromise that spared voters a nasty ballot fight in November over a self-serving initiative sponsored by business leaders. Once the celebratory cigar smoke clears, bureaucrats face assembling this complex new puzzle.

They must start by implementing controversial medical standards that are supposed to lower costs by adding objectivity to the difficult task of identifying and classifying disabilities caused by workplace injuries. A new dispute-resolution system must be built in a way that will protect injured workers as well as weed out fraud. The promised savings won’t materialize without spending on staff, training and technology.

Most important, legislators and the Schwarzenegger administration must monitor the reforms to ensure that the final bill, SB 899 by Sen. Chuck Poochigian (R-Fresno), doesn’t begin to smell like the failed deregulation of electric power, another complex bill written in secret under intense time pressure. That’s unlikely, given the difference in the subject matter, but painful memories fade slowly.

A beaming Schwarzenegger clearly was happy with the bill. Some business leaders will question whether the estimated $4 billion to $7 billion in annual savings will be enough, and workers will protest losing the nearly unhindered right to pick a doctor. Since rate regulation wasn’t part of the package, it’s also uncertain how quickly private insurers will reflect savings in their rates.

California’s oldest social insurance program, which dates to the 1920s, clearly required serious reforms. It’s too bad the bill was crafted largely in secret by Schwarzenegger and top Democratic and Republican leaders before being distributed to legislators a day before the final votes. But given Sacramento’s partisan history, the miracle is that the deal exists at all.