Report Backs State-Run Comp Over Privatization

Wednesday, September 15, 2010

A coalition of consumer groups released a report Tuesday critical of a move to privatize Washington's state-run workers' compensation program, saying the current system is "remarkably cost-effective, with higher benefits to workers."

Supporters of Initiative 1082 on the November ballot, however, called the study biased, inaccurate and misleading.

"The Washington system is a far more efficient benefit delivery system to employees than the private market, with the lowest possible cost to employers. Recent experience suggests that allowing the private insurance industry to enter this market will very likely result in increased costs for employers, decreased benefits for injured workers, and new burdens on Washington state," asserts the report titled "Biggest Bang for the Buck," produced by Americans for Insurance Reform (AIR).

The study was authored by actuary J. Robert Hunter, director of insurance for the Consumer Federation of America, who was a former Texas insurance commissioner, and Joanne Doroshow, executive director of the consumer group Center for Justice & Democracy.

Among the highlights of the study:

Over the five-year period ending in 2008, the cost to private insurers to run their workers' compensation systems was more than 90% higher than Washington's costs to run its state system.

From 2004 to 2008, Washington workers received nearly $1.29 in benefits for every dollar paid in premiums. By contrast, the private insurer payout was 62 cents for every dollar in premium, and state funds in states where private insurers compete for business paid out 70.2 cents.

For a copy of the complete article, contact CJ&D.

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