Contributor

Ray Haynes

Mr. Haynes is an Assembly member representing Riverside and Temecula. He serves on the Appropriations and Budget Committees. [go to Assembly Member Haynes website at California Assembly]

When Something Isn't Better Than Nothing
Workers' comp needs a real fix, not patchwork legislation
[Ray Haynes] 9/13/03

Responding at long last to the pressure from employers in this state to “do something” about workers’ compensation, the state legislature has passed a bill to try to pacify them. On the last day of session a bill was passed to try to deal with the exploding costs of this system. And legislation dealing with these costs is badly needed. Unfortunately, this bill falls far short of what is necessary and while it does “something” about the problem, in this case, it would have been better to have done nothing at all.

The system, which cost employers about $10 billion five years ago, has tripled to almost $30 billion statewide. Double-digit rate increases are expected again at the beginning of next year. Our employers pay more than any other state in the nation, and yet our employees still receive among the lowest benefits nationally. The high premiums are the single most cited reason for businesses packing up and leaving the state. Serious structural reform is needed in the system quickly to stop the tremendous damage that is being done to our business climate. Unfortunately, this wasn’t it.

Republicans involved with the negotiations had pushed for reforms that would total $10 billion in savings. The Democrat Chair of the conference committee had a stated goal of $5 billion in cost reductions. The end package has been estimated by Democrats to save from $4-$7 billion, but outside experts place the number at something closer to $2 billion. At best, the bills that were passed may prevent the first round of premium increases projected for January of next year. Nobody seriously believes that there will be any rollbacks or decreases in the extremely high rates that exist today.

Isn’t it better to have something than nothing? In the end, we decided that it was not.

First of all, passing a watered down bill like this will take the sense of urgency for real reform out of the equation. It has taken years to build the overwhelming pressure that is being felt in the Capitol over this issue today. Make no mistake about it—the legislature felt the heat from angry businesses and employers in this state and that is the only reason that they have rushed this half-baked package of reforms through in the last week of session. They are afraid if they hadn’t done “something” about it, they (or their Governor) would have been punished for it in the upcoming elections. Unfortunately, by letting them pass such watered-down reform, it will allow them to declare victory, and claim they have done “something” about workers’ compensation in this state. This will release the pressure being felt in the capitol and take the wind out of the sails of the serious reform movement. It will take a long time before employers realize they were snookered, and that the hoped-for decreases in workers compensation aren’t going to happen. Rallying the employers again around new reform efforts will take time and effort and will confront a group of people who will be even more cynical than they were before about the value of organizing and lobbying the legislature after having been let down and lied to again this time.

Second, there is a better than even chance that we are going to have a new Governor in this state, and probably a 50-50 chance at this point that that new Governor will be far more receptive to pushing serious reform with the legislature. The current Governor signed the legislation last year that helped create billions of dollars in new costs in the system and has continually resisted requests by the Republicans to call a special session to deal with this problem. A new Governor could come in without being obligated to the trial lawyers and union leaders who have helped corrupt the system, and could use the efforts of a still-energized and angry employer base in this state to force reforms through the legislature, or even the ballot box if the legislature isn’t willing. Passing this legislation may dilute that possibility.

By accepting these minor cost reforms, we have lessened the opportunity for more serious change in the system next year. I hope the savings that may materialize will help a few companies stay in business a little while longer. Company’s rates have doubled and tripled in the last year or two. We needed a serious solution to this very serious problem. We didn’t get one. Sometimes, in the long term, just doing “something” is worse than doing nothing at all.

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