California’s Workers Compensation Difficulties
California’s Workers Compensation difficulties may have subsided for a few years. However, it seems that it was only a temporary situation.
Workers Compensation Action Network (WCAN) recently responded to ProPublica’s and NPR’s analysis of Workers Comp in California. A recent responsive article was also published on this blog – In Defense of Workers Compensation.
I am often asked why I write a large number of articles on California’s Workers Compensation system. California is a leading bellwether of WC (of sorts). In other words, what happens in the state will likely become part of the WC environment in your location or states of operations.
The article actually turned out to be a great quick primer on quite a few developments in California over the last few years. One note is Propublica did meet with a few of the Workers Comp press and requested input on future WC subject matter.
Even if your company has not exposure in CA, I recommended reading the seven page analysis published by WCAN. They performed a yeoman’s job to bring together the article. Please note the response is a PDF file.
Some of the statistics in the report are:
- Premium rates in California are 30% higher than they were four years ago. That is a significant increase when many states are experiencing rate decreases.
- Since 2004, average total benefits per claim in California have increased by 35%, or $18,000 per claim.
- Average payments for medical benefits per claim increased by 40%.
- Average indemnity (cash) benefits paid to injured workers increased by 27%.
- Benefit costs did decline briefly after enactment of SB 899 (2004). However, this trend only lasted for three years and costs declined by only 17% before beginning to increase again in 2006.
When one looks at these statistics, California may not necessarily be in an “insurance crisis“, however the cost of covering workers is becoming even more of a significant budget burden on California employers.
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