Editorial: Workers’ comp reform aids economy

At the two-year anniversary of the sweeping workers’ compensation reform that Gov. Arnold Schwarzenegger pushed through the Legislature, there is good evidence that many small and large businesses have significantly reduced their insurance costs and applied the savings to creation of new jobs.

The governor said last week that the state’s employers had benefited from a 40 percent drop in workers’ compensation costs. According to Insurance Commissioner John Garamendi, last November, the actual premium reduction by insurers was 27 percent, despite a 46 percent reduction in the cost of paying claims. But at this point, the specific percentage of savings is less important than the fact that Republicans and Democrats can agree that because of workers’ compensation reform, it now costs less to do business in California.

One of the business executives who appeared alongside the governor last week was Nancy Axtell, the risk and management director of Pride Industries, a Roseville firm that hires the disabled and now finds the company’s insurance claims costs are 40 percent lower.

“Not only has my company saved a lot of money, we’ve been able to expand and hire more people with disabilities,” Axtell said.

A new survey by the business-supported Workers’ Compensation Action Network found that more than two-thirds of employers reported a drop in their workers’ compensation costs, and one-fourth had more than a 25 percent increase. One-fourth also reported using those savings to raise their employees’ pay, and slightly fewer said they had expanded their business or made new hires.

“It was not too long ago that California’s employers faced the highest workers’ compensation costs in the nation,” California Chamber of Commerce President Allan Zaremberg said in a statement. “Two years later, it is clear the reforms have been a tremendous success. California employers have saved $15 billion. These savings have fueled economic growth, creating hundreds of thousands of new jobs in California.”

Admittedly, workers’ compensation reform has not been without its critics. Shortly after Gov. Schwarzenegger’s press event, disabled worker advocates held their own dissenting press briefing. They brought out employees who told of having their justified injury complaints either rejected or delayed by insurance bureaucracy.

This is a serious issue that a fair and just society should not sweep aside. State government should re-examine the two-year record of workers’ compensation reform and fix anything still wrong with the system. These reforms were established by an all-too-rare bipartisan effort, and they have been good for California. Let’s have another bipartisan effort to wipe out any remaining unfairness.

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