Political battles rage in state over workers’ compensation

The politics of workers’ compensation, which provides aid to those with job-related illnesses and injuries, resemble medieval Europe’s perpetual wars.

Employers, labor unions, insurers, medical care providers and attorneys who specialize in compensation claims continuously plot strategy to capture greater shares of the multibillion-dollar system.

They are stalemated most of the time, but roughly once a decade, a coalition of factions makes a tactical breakthrough by changing the system’s rules.

Gov. Jerry Brown has intimate experience with the compensation war. As governor three decades ago, he tried and failed to overhaul the system.

And then, in the closing days of his governorship in 1982, Brown signed a multibillion-dollar increase in benefits — borne by employers — that unions, attorneys and insurers had jammed through the Legislature in the dead of night.

A decade later, in the early 1990s, the Legislature passed a sweeping deregulation of the system that touched off intense competition among insurers for market share, driving several insurers to insolvency. But as the pool of underwriters shrank, rates began to rise sharply, leading to another backlash.

Employers threatened to ask voters for a massive, cost-cutting overhaul of workers’ compensation, and a newly inaugurated Gov. Arnold Schwarzenegger used the threat of a ballot measure in 2004 to bulldoze the Legislature into acting.

That 2004 legislation tightened up medical costs and eligibility of disabled workers for benefits, creating a backlash still reverberating in the Capitol.

Right on cue, the stage is being set for a move by unions, attorneys, medical providers and insurers — roughly the same alliance as in 1982 — for another change that would hit employers, whose costs dropped sharply in 2004.

Unions and attorneys complain that compensation payments are too stingy, medical providers dislike the cost controls imposed on them, and insurers, whose profits soared after the 2004 revision, now complain about losing money on compensation policies due to rising medical costs.

Collectively, they could probably have their way in a Legislature controlled by Democrats, but getting Brown aboard is very uncertain since he’s courting business to support a large tax increase to balance the state budget next year.

Insurance Commissioner Dave Jones, another Democrat, also appears to be riding the fence. He praised insurers for holding the line on compensation premiums and hinted that premiums might have to rise, which is not what employers want to hear.

Dan Walters’ Sacramento Bee columns on state politics are syndicated by the Scripps Howard News Service.

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