Lawmakers Seek Ways to Reform Workers’ Comp

A special legislative committee began grappling with California’s skyrocketing workers’ compensation costs Tuesday, questioning how much in savings lawmakers could generate and whether the cuts would result in lower insurance bills for businesses.

The six-member, two-house committee met for about four hours and planned to take four hours of testimony this afternoon as it tries to find ways to control the costs that officials say have become unbearable for many businesses.

Workers’ comp costs, which cover treatment of employees who suffer job-related injuries, have climbed from $9 billion in 1995 to about $29 billion this year, state Insurance Commissioner John Garamendi said.

The cost of employers’ workers’ comp insurance also has risen, ballooning to twice as much as in some other states.

Officials trace the problem to the removal of minimum workers’ comp insurance rate levels in the mid-1990s and the resulting price war that drove about a quarter of the state’s workers’ comp insurers into bankruptcy protection.

Garamendi said it is “absolutely essential” that lawmakers adopt corrective legislation.

“This issue cannot be ducked,” he said. The answer “cannot be smoke and mirrors. It has to be real and substantive. Without that the insurance industry will not survive, nor will the business community.”

But committee members differed on how much they could wring out of the system.

Sen. Chuck Poochigian (R-Fresno) said the committee should try to find $11 billion in savings to cover the increased cost of employers’ insurance in the last three years.

“The further we are below $11 billion, the worse off employers are and employees are,” he said.

“To turn the economy around we have to show a greater level of improvement to the workers’ comp system than the $2 billion, $3 billion or $4 billion that’s been bandied about.”

But Assemblyman Fabian Nunez (D-Los Angeles) said Poochigian’s goal wasn’t realistic.

“We ought to have two guiding principles,” he said. “We ought to look for meaningful workers’ comp reform, but we cannot do it at the expense of workers who are injured on the job.”

Garamendi predicted that lawmakers could save at least $7 billion by, among other things, adopting fee caps for outpatient treatment centers and finding ways to prevent the overuse of medical services by workers’ comp patients.

Meanwhile, a group of chiropractors and their patients gathered outside the Capitol to protest a potential provision that would limit workers’ comp patients to 15 chiropractic visits unless they have a doctor’s approval.

“Capping chiropractic care will not straighten out the problems our workers’ compensation system faces,” said Douglas Wilson, president of the California Chiropractic Assn.

“Chiropractic care is just 5% of the total costs in workers’ compensation. It is impossible that we are responsible for the 300 plus percent increase in premiums that employers are experiencing.”

Sens. Richard Alarcon (D-Sun Valley) and John Burton (D-San Francisco) questioned how lawmakers could ensure that savings they generated would translate into lower insurance bills for employers.

“I want to know what it’s going to take” to guarantee that “when we generate billions in savings it’s not just going to line the pockets of insurance companies,” Alarcon said.

“Give me whatever power you think is appropriate to force those rates down and I will do it,” Garamendi replied.

Lawmakers are scheduled to end their session Sept. 12.