Reality on Workers’ Comp

“A rapidly approaching train wreck” is how state Sens. Richard Alarcon (D-Sun Valley) and Chuck Poochigian (R-Fresno) describe the dysfunctional workers’ compensation system. Premiums paid by employers remain far above the national average, despite an initial round of reforms last year intended to force down overuse of some medical services. Yet benefits flowing to injured workers also remain among the country’s lowest, and the system does an abysmal job of getting injured workers back to work, often simply because of delays in providing appropriate medical care.

To top it off, the state agency that oversees workers’ comp could run out of money in a few weeks because of a frustrating error in the wording and signing of last year’s reform bills. Putting a patch over that mistake is urgent, just to keep the system limping along. But with just days left before Gov. Arnold Schwarzenegger’s March 1 deadline for coming up with a comprehensive fix to wring billions of dollars from the system, a partial solution is all that’s possible.

There’s no shortage of suggestions. The state Commission on Health and Safety and Workers’ Compensation filled 42 pages with small type in its informal summary of three proposals floated by Schwarzenegger, Insurance Commissioner John Garamendi and organized labor.

The danger is that legislators will grasp at simplistic solutions, such as the package floated by Schwarzenegger and Poochigian. It starts with the premise that California employers pay $5.85 per $100 of payroll for workers’ compensation premiums. Roll back premiums by fiat to the national average, $2.46, Poochigian reasons, and California can cut workers’ comp costs by $11 billion. It sounds like a snap, but California is not an average-cost place to live, do business in or get injured. Yanking $11 billion from the system would throw it into chaos, with workers the victims.

Bitter divisions remain over such basic issues as who should select doctors -- injured employees (who’ve had that right for 40 years) or companies that pay the premiums (as Schwarzenegger is demanding). Labor is dead set against Schwarzenegger’s plan to streamline a cumbersome appeals process -- and cut skyrocketing costs -- by creating an independent medical review board whose decisions would be binding. But the current system’s delays in providing timely medical care for workers and getting them back to work have to be solved.

Legislators should pick the areas where compromise is most possible and act on them by March 1. Send the resulting legislation to the governor’s office and promise another round in a matter of months. Schwarzenegger is savvy enough to see that such increments would bring more relief faster to businesses and injured workers alike.