Workable workers' comp.

• Author: Trolin, Brenda
• Position: Workers' compensation system - Includes related articles

Composed of former foes, an NCSL blue ribbon panel on workers' comp found enough common ground to come up with some solutions.

It was a desperate move ... but the gamble paid off.

Oregon had become a statistic that lawmakers didn't like--it had one of the most expensive workers' compensation systems in the country and one of the lowest benefit structures.

Oregon insurers, like those nationwide, were becoming more and more reluctant to underwrite workers' compensation because they were not collecting enough in premiums to cover costs, much less make a profit. Owners of small businesses were faced with premiums geared to the steadily increasing cost of medical care. Benefits for injured employees were often delayed and inadequate.

With the entire system threatening to crumble, Governor Neil Goldschmidt called representatives of labor and management to the executive mansion in 1990. They were told to reach a compromise and save the system. The governor promised to keep pressure groups out of the negotiations. The outcome was major reform that resulted in higher benefits and lower costs.

The key was bringing together people locked tightly into adversarial roles and opening the issue for discussion, negotiation and compromise.

When workers' comp is on the agenda in the legislature the special interests involved are only too eager to provide information and statistics. But there is seldom any agreement among the groups.

What if you got all those folks together and made them decide what they could live with in workers' comp reform and make them decide how the system should be fixed? Governor Goldschmidt did it in 1990 with business and labor--literally locking them into a room together.

NCSL did it in 1992 with a blue ribbon committee of medical, insurance, business, labor and legal experts. For over a year, 24 men and women met periodically to dissect the workers' comp system and recommend solutions to the recurring problems faced by most states.

Workers' comp systems vary widely from state to state, but the problems for lawmakers are similar. Employers, trapped within spiraling costs, demand that something be done. Insurers, snared in one of the worst lines of the business with its high risks and escalating payments, exert equal pressure. Attorneys and unions demand rights for injured workers. The doctors, chiropractors and therapists who serve the injured worker don't want the system saved at their expense.

Amid this cacophony is the legislator, attempting to sort out the demands, the needs, the requirements, the necessities of the system. Much like fighting the multi-headed Hydra of Greek mythology, once one head or problem is cut through another grows to replace it.

The basic goal of workers' comp has not changed since the system was created in 1911--to provide benefits promptly to injured workers at a cost that is reasonable to employers.

Cost is what's become the problem. Nationwide, it is anything but reasonable. In 1972, workers' compensation claims amounted to $5.8 billion; by 1978, the figure had risen to $9.7 billion. In 1982, claims totaled $22.5 billion. And this year it is estimated that claims will hit $80 billion.

Ironically, a system designed 81 years ago to minimize litigation between employees and employers now is enmeshed in lawsuits leading to delays, smaller settlements for injured workers and increased costs.

The demands on the system in 1993, coupled with advancing medical technology and an increasingly more complex workplace, have made it generally unmanageable. The major problems recur from state to state: the high cost of medical service delivery, inefficient administration of the system, controversial rate-setting procedures, ineffective means of resolving permanent partial disability claims and a lack of attention to safety as a means to reduce injuries and costs.

Focusing on these issues, panel members formed consensus positions invaluable to legislators under fire from the medical, legal, insurance, labor and business communities. The key recommendations are to:

* Control medical costs through the use of managed care.

* Enact...