Friday, June 18, 2010

Will Washington state have the next Workers’ Comp system to allow competition?

In Washington State, the Department of Labor and Industries (LNI), is the publicly run workers’ compensation insurer and occupational safety and health authority for the state. It is one of only four remaining ‘exclusive’ state fund workers’ compensation insurers in the US. Exclusive state funds are the closest cousins of Canadian workers’ compensation boards and commissions. If the current campaign to get an initiative on the ballot, Washington’s LNI as it is called, will lose its exclusive insurer status and other insurers will be permitted to enter the market and compete for the sale of workers’ compensation insurance.

Citizen-based initiatives are relatively rare in Canada. In BC we have the example of a campaign to get a referendum in front of the electorate regarding the Harmonized Sales Tax. Initiatives are more common in the US. In Washington state, to take an initiative to the people ( that is, to get a proposal on the ballot for the next election), an initiative proposal must be filed with the state and then, within prescribed time frames and get endorsements from a specified number of registered voters. This year, the threshold is 241,153 signatures by July 2, 2010.

According to the information filed with the state, I-1082 has the following purpose:
This measure would permit certification of private insurers as industrial insurance insurers, and authorize employers to purchase state-mandated industrial insurance coverage through an “industrial insurance insurer” beginning July 1, 2012. It would establish a joint legislative task force to propose legislation conforming current statutes to this measure’s provisions, and would direct the legislature to enact such supplemental conforming legislation as necessary by March 1, 2012. It would also eliminate the worker-paid share of medical-benefit premiums.

The full text of the initiative is available at the following link:

Proponents of the initiative have a website and opposition groups to the initiative have posted their arguments on a variety of websites and blogs including several union sites such as and .

If the intent of the initiative sounds familiar, it should; this initiative has a similar intent to the Bill debated in the Ontario legislature late last year. As you will recall, that Bill sought to allow private insurers to enter the Ontario market and compete with WSIB for the sale of workers’ compensation insurance to employers in that market. (See my earlier post). In Canada, the US and Australia, when dissatisfaction with an exclusive state fund rises, so do the calls for privatization and competition despite strong evidence that private or competitive models will be no less costly or efficient.

Direct comparisons between Canadian Boards and individual states are difficult but from a number of research studies and analysis we can say that over the long run, the Canadian model delivers higher benefits to workers and lower costs to employers than the typical US system. We also know directly from research carried out by the late Terry Thomason and John F. Burton, that exclusive state funds (which included the BC and Ontario boards) consistently provided lower costs to employers over a two decade time frame than either purely private markets or markets where there was competition permitted with a state fund.

It remains to be seen if the proponents of I-1082 will achieve the required number of signatures. If they do, the initiative will appear on the November 2010 ballot. Whatever happens in Washington State (or Ontario), the best defense any exclusive system can mount against such initiatives is to provide incredibly customer-focused, efficient service to all our stakeholders and to work with them to reduce the human and financial costs of work-related injury, illness and disease.

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