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Oct 07

MANY STATES CONTEMPLATE HOW TO COMPENSATE [Workforce Management]

With employers pushing for relief from the rising costs of workers’ compensation insurance in a stagnant economy, several states made significant changes to their compensation laws this year–and more changes could be on the way.

Employers made substantial headway in Montana, Oklahoma and Kansas, which all have business friendly, Republican-controlled legislatures. The measures focused in particular on limiting an employer’s obligation to pay for medical treatment of injured workers and tightening eligibility for workers’ compensation disability benefits. In Montana, which has the highest workers’ compensation rates in the country, costs could be reduced by more than 20 percent in the first year alone.

Lawmakers in Montana “were trying to effectuate fairly major changes to bring costs more in line with the states as a whole,” says Trey Gillespie, senior workers’ compensation director at the Property Casualty Insurers Association of America.

Illinois and North Carolina also passed workers’ compensation legislation but with more equivocal results for employers. Things got so tense in Illinois that at one point the Illinois House voted to eliminate workers’ compensation altogether, a move opposed by both business and labor. Gov. Pat Quinn estimated that the final bill would save businesses at least $500 million a year in insurance premiums, but some experts believe further legislation is needed. “Illinois remains a very troubled system,” says Bruce Wood, director of workers’ compensation at the American Insurance Association.

Such large states as California, Florida and New York have shied away lately from major compensation legislation, but that could change soon–at least on the West Coast. “2012 is a year where there is going to be more of a focus” on workers’ compensation in California, predicts Nicole Ganley, spokeswoman for the Association of California Insurance Companies.

Compensation premiums across the country have been mostly flat or in decline, but any savings to employers have been offset by mounting bills for medical treatment. As a percentage of total compensation claims, medical costs rose to 58 percent in 2009 from 46 percent in 1988, according to the National Council on Compensation Insurance Inc.

Montana’s workers’ compensation bill is expected to generate nearly $100 million in savings in its first year, in part by locking in medical provider rates at 2010 levels. The law also provides that medical treatment of injured workers who are not permanently totally disabled may be ended five years from the date of injury.

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