Employee’s comp battle might warmth up once more

Dan Walters: CALmatters comment

One of the ongoing political conflicts in California may be heating up again, which requires some background to understand because it’s so muddled.

To begin with, for more than a century, California employers have had a legal requirement to provide medical care and, where appropriate, cash payments to workers suffering from work-related illnesses and injuries.

It is known as workers’ compensation, or labor compensation for short, and the term encompasses a myriad of specific provisions about entitlement to benefits, payment installments and medical care, each of which has an impact on the bottom line of an immense system. California employers spend more than $ 21 billion a year either buying insurance or paying claims out of their auto insurance reserves, roughly $ 2 per $ 100 wage bill.

The work skill is so immense that it supports a permanent cadre of interest groups and their lobbyists who are constantly arguing about operating rules.

A predictable cycle has emerged over the past half century. Once in a decade – or once as governor – the five competing factions go to war, three of the five have struck a deal to snag bigger chunks of the finance pie and push it through legislation. It takes a few years for the changes to affect the system and a few more for a new tripartite alliance to form for another battle.

It last happened a decade ago when Jerry Brown resumed governorship 28 years after his first term ended.

Employers and unions have come to an agreement with the implicit blessing of labor insurers to cut medical costs and use the savings to increase cash benefits for disabled workers and lower employers’ insurance premiums.

The two factions excluded from the deal – lawyers who specialize in labor cases and providers of medical care, therapy and rehabilitation – howled. But with Brown’s blessing and the political clout of the unions, it was put into effect.

It worked as planned, actually too well in the eyes of the two boisterous factions and unions, who complained that employers benefited more than their injured workers.

The share of insurance costs in payroll is down more than two-thirds from its 2003 peak, due to both those signed by Brown and the changes introduced by legislation a decade earlier from predecessor Arnold Schwarzenegger were made. However, California employers still pay the fourth highest labor cost in the country, according to Oregon’s annual state-to-state compilation.

So what now?

In response to the Covid-19 pandemic, lawmaker and Governor Gavin Newsom decided last year that some medical professionals would assume that certain illnesses would qualify them for compensation benefits without having to prove links to their job.

This year, several bills would widen the guesswork to include other workers and other diseases. For example, the guess that San Diego lifeguards now have skin cancer would be extended to nine other diseases. Another would extend lifeguards’ suspicions of skin cancer to include rangers and state park rangers. Yet another would create an extensive list of guesswork for nurses.

Health care providers who were on the short end of their last major contract want legislation to automatically inflate their fees. Another bill would create a state-run network of health care providers for the treatment of compensation payments that would bypass employers’ provider networks.

These and other measures would, directly or indirectly, increase costs and / or redistribute the cake. The most important of the five factions is work, and if they form an alliance with the medical and legal groups, the chances of a major overhaul of work skills are high – right on the ten-year plan.

CALmatters is a public interest journalism company dedicated to explaining how the California State Capitol works and why it matters. For more columns by Dan Walters, visit calmatters.org/commentary.

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