Wednesday, November 30, 2011

OK Non-Subscription - Start of A Trend?

Oklahoma may be the start of a new trend in work injury protection with a proposed law to permit employers to provide an option to mandatory workers' compensation through alternative ERISA plans.

The proposed “Oklahoma Injury Benefit Option” would give employers the option of establishing and managing a benefit plan that complies with the federal Employee Retirement Income Security Act (ERISA) instead of participating in the state system. Employers would be allowed to opt out of the state workers' compensation system only if their benefit plans provide benefits that meet or exceed those employees would receive under workers’ compensation.

Texas is the only state in the nation that has a voluntary work comp system. Those who don't participate in the state's work comp system are called "non-subscribers". Those who have no alternative risk mitigation system in place whatsoever for work injuries are known to "go bare".

Neighboring Oklahoma's proposed plan would not have any "bare" employers, but would allow "non-subscribers."

Becky Robinson, who chairs the Oklahoma Injury Benefit Coalition (OIBC), told WorkCompCentral Wednesday that the group also is selecting sponsors for the legislation. The bill should be ready by Dec. 9, and the sponsors should be in place by then, Robinson said.

According to Robinson many companies in the coalition also operate in Texas, and “have witnessed firsthand” how the option can provide better health outcomes for workers and reduced costs to businesses. The option “is a game-changer for Oklahoma,” she said.

Indeed, I believe that if the Oklahoma experiment is successful that other states will move along the same lines. Constructed properly, non-subscription ERISA plans in Texas have saved those employers millions of dollars over the course of the past 10 years and have much better outcomes for injured workers - namely because these ERISA systems remove the non-functional, procedure-based, trappings of mandatory work comp systems.

In addition, I believe that a competing system will actually improve workers' compensation system performance as vendors (insurance companies, brokers, medical providers, AND the state, etc.) will no longer have a captive audience - a true competitive marketplace can be established to provide employers and employees with a modern benefit system not subject to the lobbying of special interest groups bent on profiting off a compulsory program.

A key to success in Oklahoma will be more complete data gathering and analysis. Texas mandates some reporting for its non-subscribers, but it is insufficient to provide an apples to apples comparison via the normal state data analysis channels.

It will be interesting to watch how OIBC's efforts meet the political machine in Oklahoma and to see what objections are raised as the coalition's plans move through the legislature. If the proposal does make it to the governor's desk though I anticipate many more states taking a long, serious look at non-subscription ERISA models as a viable option over the next few years.workers compensation, work comp, injured worker 

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