California’s WC Reform(?) Produces Startling Numbers

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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.  

Picture Of California's WC Reform Flag
Wikimedia Commons – Makaristos

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.

Picture Hand Putting Money in Piggy Bank California's WC Reform Cost Saver
StockUnlimited

 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

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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