Friday, November 11, 2011

What Politicians Could Learn at the National Conference

I'm back from the National Workers' Compensation & Disability Conference a day early - I've had enough of Las Vegas in the past 10 days! It was a very busy couple of days with many meetings and networking, and a couple of lessons in between.

The one big lesson for me was that there are many more people than I thought who share the sentiment that workers' compensation basically doesn't work any longer - at least not in the manner in which it was intended.

I talked to many diversified industry interests, and while each person's opinion on what exactly is wrong and how to fix it was different depending upon the person's particular industry participation, the overwhelming sentiment was that injured workers get the short end of the stick, and the employers are paying too much for that privilege.

This was a very heartening, and enlightening, revelation for me - that there was nearly universal recognition that something very radical needed to be done, and that the traditional "reform" efforts don't address the universal problems of how to make "the system" responsive to the modern economy.

Which brings me to one of our stories this morning in WorkCompCentral, "Employers, Insurers Say Pure Premium Rate Process Back on Track". In that story, reporter Greg Jones notes that California Insurance Commissioner David Jones (no, they're not related) commented in approving the advisory rate that more need to be done to lower system costs.

That's an unfortunate use of words, because if I understand what Jones is actually saying is now that the rate making structure has changed the focus of the process, the conversation can be moved from discussing short term incremental costs to a bigger picture overview of rate adequacy.

With all due respect to Commissioner Jones though, I think the bigger picture he is taking, while good, isn't quite enough, because he is still focusing on itemization of costs, rather than the universal picture of returning value to the primary stakeholders in the equation, which of course are the injured worker and the employer.

In his rate making order, Jones said, "Further efforts are needed to reduce frictional costs in the workers' compensation system, including a reduction in the number of liens filed over disputes on the cost of delivering benefits to injured workers. I support the current efforts of Sen. (Ted) Lieu to establish reasonable limitations on liens through the enactment of SB 863, which will revise the time period to file liens and how they will be handled."

The cursed "frictional costs" - micromanagement of a system where where each "cost driver" gets examined closely and tweaked, rather than reviewing the overall culture and making changes to impact the behavior of the people involved.

Changing culture is something that government has much experience in and has done very effectively in the past when given the incentive and leverage to do so. Government uses law, marketing, and social pressure to influence mass behavior - ergo culture.

Changes in tax laws shift spending behavior. Smoking tobacco, something that was deeply ingrained in American culture for a very long time, now carries with it negative social perceptions - even in Vegas!

Back to Vegas - it would do government officials good to stop and talk to the people on the floor at conventions such as the National show in Vegas. Everyone has their opinion about what to do, and most of these go well beyond fixing "frictional costs".

And maybe I was talking to people who just wanted to agree with me rather than debate the merits of some of my arguments (which by the way are not set in stone - I'm about as flexible in my opinion as a politician during an election year if I'm persuaded by facts or argument that I had not considered) but there was near total agreement that the culture of the work injury protection scheme needs to change.workers compensation, work comp, injured worker

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