California’s WC Reform Not Yet A Cost Saver
A few startling numbers from California’s WC Reform are listed below. One wonders if the reform is working or if not enough time has elapsed to the differences.
Workers Compensation Action Network (WCAN) recently published a press release and email on the effects on SB 863. Even if you have no California Workers Compensation interests, it may behoove you to track their changes.
There are so many states that have just enacted or have reforms in the future. Reforms do not necessarily equal cost savings. The same type of changes may be coming to the states where you have WC interests.
A few of the most recent updates for the California reforms (?) are:
- An 8.7% increase in the base rates
- Claim frequency has risen – not really reform-related
- An increase in Permanent Disability benefits
- A new fee schedule for physicians – these usually cause a reduction in fees. This one caused an increase in medical costs.
Since 2009, the base Workers Compensation rates have increased by 35% for CA employers. This figure does not take into account the proposed additional 8.7% increase for 2014.
There are many projected cost reductions that will not be listed as they are forecasted results and not actual numbers.
After analyzing Workers Comp for so many states, the one conclusion I have concerning reforms is they are never permanent. California’s SB 899 was a landmark cost-savings group of laws that were meant to ease the crisis that occurred from the mid-’90s until the bill was passed.
I lauded the creation of Medical Provider Networks (MPN’s) as a method to quickly reduce medical costs by enhancing the employers’ medical control when sending their workers for post-accident treatment. MPN’s were one of my Five Keys To Saving on Workers Comp.
The changes from cost savings to cost increases with SB 899 were not surprising as WC systems change over time. The rapidness of the changes was surprising to me.
One very important consideration is the WC reforms take at least two years to show in the X-Mods. The full result of SB 863 may not be seen until 2015 and after.
The bottom line is reforms by name only do not result in automatic costs savings.
©J&L Risk Management Inc Copyright Notice
