May 03, 2010

NW10-013

To: Northwest Council Members

From: Northwest Legislative and Public Affairs Committee

Subject: PRESUBMITTED NEW BUSINESS: OPPOSITON TO INITIATIVE 1082 WHICH WOULD PRIVATIZE THE WASHINGTON STATE INDUSTRIAL INSURANCE (WORKERS’ COMPENSATION) SYSTEM.

Background

In Washington State, work-related injuries are handled in a no-fault workers' compensation system. Employees receive medical coverage, partial income replacement, and pension coverage through the state system. By the same token, employers are protected from law-suits for work-related injuries.

The State Fund covers the vast majority of Washington State employers, and approximately 2,570,000 workers. Employers pay most of the workers' compensation insurance premiums, although workers pay about one-fourth.

Boeing and certain other large employers are self-insured, but are still subject to the terms of the workers' compensation plans. The State Fund is one of the best in the country for benefits, and fifth lowest in the country for cost to employers.

With employee contributions, workers have equal representation on boards in the workers' compensation system. A new ombudsperson program gives workers another option to resolve problems. With our current system, workers pay a very small premium. In exchange, we get a stake and a say in managing a healthy workers' compensation fund.

Initiative I-1082 would end worker contributions, and introduce private insurance companies into the system. I-1082 would shelter private insurers from any oversight from the State Insurance Commissioner, and the Department of Labor and Industries would have no say over private claims or claim denials.

If I-1082 passes, private insurance companies will have a profit motive to make the new unregulated system less favorable to employees who are injured at work.

Privatization in other states resulted in more claim rejections and long appeals, which forced many employees to give up their claims, abandoning those benefits to the private insurers. In addition, private insurers cherry-picked the least expensive employers from the state funds, leaving more expensive employers in the public system, and driving up costs for employers who prefer the state non-profit system with worker voice on its Boards.

As a self-insured employer, Boeing is not allowed to collect premiums on the medical coverage. That means the current public system gives Boeing employees a cost advantage relative to other workers, who pay premiums for all parts of the workers compensation system.

Boeing would be free to take advantage of the unregulated private system at any time.

For more information:

Washington State Department of L&I Facts about workers' compensation:

http://www.lni.wa.gov/news/2009/qa091015a.asp

Washington State Labor Council: http://www.wslc.org/reports/Outside-EC2.htm http://www.wslc.org/legis/workcomp.htm http://www.wslc.org/legis/workcomp.htm

Secretary of State’s web site for initiatives: http://www.sos.wa.gov/elections/initiatives/people.aspx

Building Industries association of Washington (BIAW): http://www.biaw.com/

Motion

It is moved that: THE NORTHWEST COUNCIL OPPOSES INITIATIVE 1082 (I-1082) AND ANY FURTHER VERSIONS OF MEAURE 1082 OR ANY INITIATIVES THAT WOULD LEAD TO THE PRIVATIZATION OF OUR STATE INDUSTRIAL INSURANCE SYSTEM; AND THEREFORE ENCOURAGES SPEEA MEMBERS, AND ALLOWS THE NORTHWEST L&PA COMMITTEE, THE LABOR DELEGATES AND SPEEA STAFF TO OPPOSE THE PASSAGE INTO LAW OF I-1082, AND TO EDUCATE, ENCOURAGE, AND PRESENT MATERIALS TO OTHERS IN ORDER TO ULTIMATELY BRING ABOUT THE DEMISE OF THIS INITIATIVE.

PRO

1. The measure is undemocratic and subrogates the health, welfare and interests of the workers in this state to those of costs to businesses.

2. The measure is so poorly written and poorly conceived that it will be contested in court if it is passed at a cost to us of millions of dollars.

3. Our state has a low cost system that both the workers and businesses pay into. The system is well run and provides good benefits and assistance to injured workers. The system doesn’t need to be wrecked by handing it over to insurance companies whose only interest is in making a profit.

CON

1. Some members believe that competition will bring about lower costs and better benefits.

2. Some members will feel we have no interest in this issue as Boeing is a self-insured business.

3. Some members may believe that the system is abused too much.