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Office of the Chancellor / Public Affairs
Tuesday, March 30, 2004
 

Sacramento Bee 3-30-04

Dan Walters: Workers' comp needs more than another quick political fix

 

Workers' compensation has long been one of the Capitol's most contentious, complicated and financially weighty issues - but it has lacked political sex appeal, drawing little attention from political media and the larger public.

That's changed because California's movie star governor, Arnold Schwarzenegger, has chosen workers' comp - the system that pays for support and medical treatments of workers with job-related injuries and illnesses - as his issue of the moment.

Schwarzenegger is demanding that the Legislature make multibillion-dollar reductions in the system to reduce a rapidly escalating cost burden on employers, and threatening to throw his support behind a pending ballot measure if reforms aren't made within the next few days. And that is giving the issue the kind of public attention that it never received in decades past.

A recent study issued by the American College of Occupational and Environmental Medicine (ACOEM) frames just how complicated California's workers' comp system has become, despite its origins nearly a century ago as a simple, non-litigious approach that would help both workers and employers.

The ACOEM examined workers' comp medical care in California, comparing it to its own guidelines, hammered out in vigorous clinical research, on treating job-related maladies. It found that doctors, hospitals and other medical care providers are using expensive procedures, including invasive surgery, many times more often than recommended. The study's implicit meaning is that with few controls on medical treatment, the workers' comp system has been a cornucopia of full-service payments for medical care providers who are feeling the financial pinch of managed health care in non-comp treatments. Have thousands of California workers been subjected to unnecessary surgery just so medical providers can rake in the bucks? That possibility is at least implied.

The apparent overuse of medical care is just one of dozens of specific, very complicated subissues that are contained within the workers' comp crisis. But with Schwarzenegger pushing for action, the Capitol shows signs of reverting to form: dealing with a complex, technical subject on a purely political plane and not taking the time to do it correctly.

The many problems of the system, including the sharp escalation of medical costs, stem largely from a huge overhaul of workers' comp enacted a decade ago that was a classic example of the syndrome. The disparate groups with financial stakes in the system - insurers, employers, unions, workers' comp attorneys, etc. - jousted behind the scenes with a few key lawmakers and the Pete Wilson administration. The closed-door negotiations produced a scheme that the Legislature ratified with little understanding.

The plan's chief feature was deregulation of workers' comp insurance, which employers hoped would lead to competition and lower costs. The change had the intended effect for a few years, but cutthroat competition drove dozens of workers' comp insurers out of the market and in the end, due to lack of competition and upward pressure on costs for medical care, premiums escalated far beyond what they had been originally, leading to the current angst.

Much the same pattern of private negotiations was evident in the now-infamous energy "deregulation" scheme that the Legislature adopted without a dissenting vote in 1996, leading to an energy meltdown in 2001. In fact, the same legislator, former state Sen. Steve Peace, presided over both debacles, and as chairman of the Senate Budget Committee and state finance director also played a major role in fashioning the state's deficit-ridden budgets.

The workers' comp, energy and budget crises, then, have a common thread. Political deals were cut among insiders on very complex matters, and the Legislature was given a take-it-or-leave-it ultimatum under intense deadline pressure. But in each case, the product had no internal integrity and fell apart because no one took the time to examine it critically.

Fixing workers' comp should have the high priority that Schwarzenegger is giving it. But if it's not to be dysfunctional "politics as usual," fixing it the right way - doing something to restore the integrity of the system - should have an even higher priority.