The Heart of the Matter

It was Valentine’s Day, but in Room 437 at the State Capitol, love was not in the air. We were there to hear some serious testimony about a serious issue: California workers’ comp. All the big players were there, and as was often repeated during the course of the morning, they were ready to roll up their sleeves and go to work.

Although the attitude was far from light-hearted, an air of expectancy and maybe even a little hopefulness pervaded. “We want to see who’s happy, who’s not-somebody’s got to be happy, but it’s not the insurers, it’s not the policyholders-we don’t know who it is,” muttered one attendee as we waited in the hallway outside the hearing room.

We never did find out the answer to that question because the hearing was adjourned early. But by gathering the right people together in the right place with a clear agenda, we at least put ourselves on the road toward identifying and solving the problem.

One thing that quickly became apparent is that the cost of claims is rising, even as the number of claims is dropping-but the reasons for the increase are unclear. “I find it absolutely amazing that other than the medical costs, nobody can suggest why the other costs are going up,” Assembly Insurance Committee Chairman Thomas Calderon flared at one point. “We just don’t know, but we need to know.”

Employers really want to know. They are becoming increasingly frustrated as many programs are implemented, yet costs as a percentage of payroll continue to rise.

“Things are rapidly changing in the industry,” said Dominic DiMare, legislative advocate with the California Chamber of Commerce. “An informal poll I’ve done found that employers are enduring the third year of workers’ comp premium increases, and a lot of the small to medium-sized businesses are struggling with serious increases.”

Indeed, something is happening out there, even though it may feel like rates will never get up to where they should be. On the way back from the hearing, I was chatting with the owner of a furniture store who (without knowing which side I was on) began to rant about the way insurance companies had been raising his rates for the past few years. It was all I could do not to say, “Sorry, buddy, but you ain’t seen nothin’ yet!”

Californians have “three choices,” Jack Stewart, president of the California Manufacturers and Technology Association, told the Committee: “(1) We can do nothing as we have done; (2) we can statutorily increase benefits, which would temporarily help workers; or (3) we can take a good, hard look at the system and identify the cost drivers so both employees and employers can benefit.”

Choice number three is the right one. And judging from the interest shown on Feb. 14, everyone involved is ready to get to work on the problem-we’ll find happiness in this workers’ comp system yet.

Topics California Workers' Compensation