Gov. Schwarzenegger Touts Third Anniversary Of Workers' Compensation Reforms

Workers' Comp. Executive Newsdesk
April 20, 2007

This month marks the third anniversary of Governor Schwarzenegger's signing of former Assemblyman Chuck Poochigan's (R-Fresno) comprehensive workers' compensation reform legislation, SB899.

Yesterday, the governor, in a press release touting the occasion, said "California is back on track, thanks to the successful reforms," and that the once-broken system is no longer "a poison to our economy."

Schwarzenegger stated that problems with the workers' compensation system were what companies had complained to him about the most as he traveled the state campaigning for governor in 2003.

"We worked together with Democrats, Republicans and all stakeholders to bring down costs and protect injured workers," Schwarzenegger said in the release.

The aim of SB899 was a 25 percent drop in pure premium rates, and in that regard, the legislation has been more than a success. Pure premium rates are now nearly 65 percent lower than those of 2003, according to Dave Bellusci, vice president and chief actuary of the Workers' Compensation Insurance Rating Bureau of California.

"We've seen reductions in both medical and indemnity costs, and in addition to that we are seeing declining claim frequency as well," Bellusci says. "We've also seen a decrease...in the volume of chiropractic visits, and physical therapy visits have gone down as well, which obviously [incurs] less medical costs."

Because of the drop in premiums, businesses are reportedly pumping up the economy by using saved monies to hire more workers and grow their businesses.

"Workers comp was the biggest drag on the economy in the years leading up to Schwarzenegger's election and his success in the reform of it has been the biggest policy boost to our economy," said Alan Zaremberg, president of the California Chamber of Commerce.

"Workers' comp reforms undoubtedly led to the creation of hundreds of thousands of new jobs."

According to a survey released by Workers' Compensation Action Network, 25 percent of respondents had provided raises to their employees in 2006 as a result of recent workers' compensation reforms. Thirty-two percent expanded their business or added employees and another 8 percent provided benefits such as health insurance.

But while the worker's comp industry might be celebrating the numerous benefits of SB899, threats loom. A number of worker's comp bills will be heard in the Legislature this year, including some that seek to reverse some of the positive steps forward. There are also a number of legal challenges to the reforms wending their way through the courts.

"Folks who benefited from our broken system of the past would like to return to those days, and they are trying to do that through legislation and in the courts," Zaremberg said.

Such opposition efforts include nearly 30 bills proposed by state lawmakers that could make substantive changes to both medical treatment and cash benefits paid out through California's workers' compensation system before enough data has been collected on how the reformed system is working.

Source: Workers' Comp. Executive Newsdesk


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