Does New York Need Additional Workers' Comp Reforms?

Tuesday, January 29, 2013 | 0

The following Commentary was originally published in the Sunday, Jan. 20 edition of the Buffalo News.

A trial attorney’s recent essay on New York’s workers’ compensation climate (“Another Voice: New push for workers’ compensation reform ignores savings coming in 2013,” Jan. 8) disputes the need for comp reform with arguments that cannot withstand scrutiny.

For example, the essay implies that costs are insignificant to New York employers. These employers regularly dissent. They know that cost-based competition from other states and nations is more intense than ever.

Research justifies employers’ concerns.

Every two years, Oregon analyzes comp costs nationwide. This year’s study concluded that New York employers pay the nation’s fifth-highest premiums, 150% of the national average. This hampers our ability to compete for jobs in a weak economy.

The essay also ignores New York’s extraordinary burden of assessments. Assessments are a tax on comp premiums that support the operation of their comp system.

Two consecutive annual studies by the Workers’ Compensation Policy Institute have shown that New York employers pay the highest assessments – nearly five times the average.

The essay also cites a single component of a complex reform package to argue that policymakers expected to wait several years to see savings from the 2007 reforms.

But New York slashed comp rates by 20% just months after the reforms – with a statement citing “a careful analysis of the impact of the reforms” as a driver of this reduction.

But the reforms hadn’t yet reduced actual costs. And when this became clear, the New York Compensation Insurance Rating Board, which sets recommended rates in New York, had to reverse course and begin raising rates. Today, nearly six years after the reforms, overall costs to employers and taxpayers have not declined.

Meanwhile, benefits – and costs they entail – have continued to increase annually.

Another key cost driver – the time it takes to resolve claims – has actually worsened since the 2007 reforms.

When reforms were passed, the average length of a claim for permanent disability was four years. Today, it is six years, which adds an average of two years of benefits (and benefit costs) per claim. That doesn’t benefit either employers or workers, who both want the quickest possible recovery and case resolution, at the lowest possible costs.

Amid all these factors keeping New York’s high costs from declining, there’s simply no reason to believe that costs will start declining without significant and effective new reform.

New York’s debate over workers’ compensation should focus on the significant burden that compensation costs still place on all employers, including local government entities, which find that compensation costs make it harder to provide desired services while containing taxes.

Paul Jahn is executive director of the New York Workers' Compensation Policy Institute.