by Alex Fryer
on Tue, Sep 28, 2010 at 2:27 PM
(This guest Slog post is by Alex Fryer, a spokesman for the No on 1082 campaign, which is attempting to defeat an initiative to privatize workers' compensation. — Eds)
Initiative 1082 isn’t the sexiest or the easiest measure to understand. But it has a huge impact on everyone who makes a paycheck, signs a paycheck, or cares about progressive values in the state. Bottom line: I-1082 is about people getting hurt at work. If you’ve spent any time at the Haborview ER, you know it’s not that uncommon. Each year, about a 120,000 workers file a claim with the state, which provides medical care, and a portion of lost wages if needed.
In Washington, we have public, non-profit workers’ compensation insurance. The employer pays most of the premium but employees pick up about 28 percent. In return, employers can’t be sued for on-the-job accidents.
I-1082 would allow largely unregulated private carriers into the state. This has been the longtime fantasy of the biggest financial supporters of I-1082, the insurance industry and the ultra-conservative Building Industry Association of Washington (BIAW), which stands to gain millions of dollars in un-regulated kickbacks if I-1082 passes.
The economics behind I-1082 are simple. The only way private carriers can make excess profit from workers comp is to screw injured workers. And I-1082 hands them to tools to do it.
The proponents of I-1082 say private carriers would be able to offer lower rates because they are better at “managing claims.” This is code for: The insurance industry will deny and delay claims to protect their huge profits. There is no way private insurance companies can offer the same benefits (which are established by state law), offer rates better than the state, and still make money.
So read the fine print. I-1082 exempts workers’ compensation insurers from the voter-approved Insurance Fair Conduct Act, meaning these insurers can intentionally delay and deny legitimate claims. That’s in Section 3. But would an insurance carrier ever act so despicably, you wonder? Check out Oregon. In 2007, the state fined AIG (yes, that AIG, the company that took $185 billion in bailout money then took their executives to a getaway spa before handing out bonuses) for intentionally denying benefits to workers who deserved help.
Under I-1082, our state wouldn’t have the same enforcement tools against AIG or any other insurer. According to the I-1082 website, the measure “provides greater protection for small businesses and injured workers.” This is a total lie. There is, for example, no guaranty fund that protects policy-holders when an insurance carrier goes bankrupt. Why is this important? Because workers comp is one of the most volatile lines of insurance, and carriers go out of business all the time. In the past 10 years, there have been more than $10 billion in insurer insolvencies, and most have been workers comp, according to the Insurance Commissioner.
The Office of Financial Management said it best. If a carrier went bankrupt: “Losses would be absorbed by employers, injured employees and medical providers.”
The BIAW wants I-1082 because, frankly, they need the cash. It’s takes money to fight the protection of endangered Orca and salmon. And trying to pack the state Supreme Court with far right judicial activists ain’t easy. So the BIAW inserted Section 2 (7) which allows the BIAW to set up unregulated fee payments with workers’ comp insurers. According to Insurance Commissioner Mike Kreidler, this is illegal in any other line of insurance.
The BIAW has put in $500,000 to I-1082 so far. It must figure that’s a good investment for the millions of dollars it could wring out of these schemes.
And finally, I-1082 forces small business owners to pay the employee contribution of workers compensation premiums. According to the I-1082 campaign, this will cost employers $315 million. If this thing passes, the increase will go into effect next year, and every year after that, forever and ever. But they don’t want to talk about this too much. So they crank up the quote-machine about competition and the free market and hope no one pays too much attention.
In fact, the proponents of I-1082 hope no one actually reads the initiative or understands what’s at stake. Because once you do, voting No on 1082 is the easiest decision you’ll make come Election Day.