Tuesday, August 28, 2012

Am I Missing Something? Yes, Politics...

“Today’s WCIRB report shows there is much more work to be done in reining in California’s workers’ compensation costs and in re-balancing the system financially.”

That was the statement of Marjorie Berte, western region vice president of the American Insurance Association, on Monday in response to an analysis by California Workers’ Compensation Insurance Rating Bureau (WCIRB).

Berle also said, “Expectations of net savings of two-to-one are now put at a net cost increase of 1.4% annually.”

The WCIRB said that the version of SB 863 it had reviewed would indeed save $420 million in 2013, but would increase total system costs by $700 million in 2014.

The Department of Industrial Relations (DIR) endorsed an earlier version of the bill but also said in its statement releasing the WCIRB advisory that, “While this information is being made publicly available, reform discussions continue in an effort to find the best solution to protect employees while preventing increases in the cost of doing business in the state.”

The original draft proposal of reform was touted by DIR and other proponents as a 2-for-1 ratio of savings to benefit increases. There have since been some preliminary studies released, all without full data or information by which to completely vet the costs or savings of the proposal, none of which have come close to the 2-for-1 ratio.

The most recent vote on bill amendments on Friday by the California Assembly was split down party lines, with Democrats in favor and Republicans opposed.

Which brings me to two points.

First, the vote demonstrates that workers' compensation doesn't really make any sense - it's just a political football (well, probably more like a frisbee). That the Assembly vote was so distinctly bifurcated demonstrates to me that the state's Democratic leadership is using work comp reform to leverage its position in the 2014 elections.

There is a Democrat in the Governor's office. The Legislature is run by Democrats. Any Democrat that wants the support of the party going into 2014 will vote yes on whatever reform measure is posited by the Brown Administration.

And the Brown Administration needs to show the people of California that it can chew gum and walk at the same time - i.e. produce savings that business can embrace, and raise benefits to take care of injured workers. Work comp is a great platform for politics because the risk of offending a few thousand voters who actually do use the system is very small compared to the risk of offending all of the state's employers and the majority of voters who will never engage the system.

And the numbers are so illusory and foreign to voters that politicians can bandy about all sorts of figures without having to be completely committed to a position.

Joe Voter on election day doesn't know about, nor care about, workers' compensation. Joe Voter won't investigate much more than reading headlines and will make the election choice based on those summaries. So if the press say the Democrats pulled a miracle then it will be accepted at face value by the majority of the voters, and that's all that really matters when it comes time to harboring power in Sacramento.

Second, the vote tells me that party politics is the worst thing that can occur to workers' compensation (okay, not just workers' compensation, but that is the topic of this blog).

Workers' compensation is about spreading the cost of taking care of the few that do get injured at work against the larger population that enjoys injury-free employment. Party politics dilutes that goal because the focus is not about the operation of the system, but about whether one party can claim bragging rights over the other party. It is a charade that fails to address issues in a socially or economically responsible manner.

The numbers will be what the numbers will be when it comes time for legislators to vote and that is good enough for them. The fact that no one can really understand those numbers is irrelevant, or so they think.

One number that the Democratic leadership seems to be ignoring is that 68% of the California population is of Latino descent, according to the League of United Latin American Citizens. Thomas Gonzalez, California state deputy director for the League said that SB 863 is discriminatory against workers who make less than $15 an hour, of which the majority are Latino.

This is a voting population that politicians can not ignore in California and is a voting population that traditionally votes Democrat.

The rush to get reform passed in time to implement in 2013 may backfire politically for Democrats - and wouldn't that be a surprise: a Democrat devised social policy that shifts a normally captive vote to the Republicans.

The way I see it, Republicans have nothing to lose by voting no against reform in the present political environment and Democrats have a lot to lose.

As a political strategy, the Brown Administration may want to rethink this reform deal.

A risk management friend of mine wrote to me the other day stating his point of view that "we don't need reform and we don't need imaginary cost savings ... am I missing something?"

To which I replied, "Yes, politics."

Post script: I forgot to mention that the last Democrat governor who used the workers' compensation frisbee faced a Republican legislature and then got voted out on a recall...

1 comment:

  1. I agree. People who manifestly know nothing about WC are making deals, voting on legislation, etc. It is pure politics, and the public be damnned. Some oxen are gored, others fattened up. Follow the money to identify which are which.