Bert Caldwell : Workers’ comp fund finds ways to save

The holidays start early this year for 2.4 million Washington workers and their employers. For the next six months, starting Sunday, they will not have to pay the portion of their workers’ compensation premium dedicated to the medical aid fund, which covers claims for health care services.

The Department of Labor and Industries says the premium respite will keep $315 million in the pockets of employees and employers, with each group getting half. The savings over the six months range from $440 for a framing carpenter to $11 for clerical workers.

Employer savings multiply according to how many workers they have in a given job. They also benefit from a 2 percent premium decrease that took effect Jan. 1. That will save them an additional $31 million.

A fat surplus in the account that pays worker medical claims makes the holiday possible.

As of March 31, reserves slightly exceeded $1.2 billion. That’s more than double the $513 million L&I paid in medical claims in 2006.

The cash horde is the result of high employment, which generates more premiums, as well as better returns on reserve fund investments, and the department’s success controlling medical costs.

While medical claims nationally went up 7.7 percent, those in Washington advanced just 4.9 percent.

Spokesman Robert Nelson says closer attention to drug prescriptions was particularly helpful controlling costs.

The department covers a more limited number of drugs than in the past, with increased emphasis on less expensive generics. Also, new computer programs flag too-frequent refills.

The department also no longer pays for unproven therapies; pain pumps, for example, or some spinal procedures.

“They don’t really aid the injured worker,” Nelson says.

Although the savings might be marginal, he also credits the Eastern Washington Center of Occupational Health and Education (COHE), and a companion program on the West Side for some of the progress made. COHE gives employers and the department more timely notification of worker injuries, and suggests appropriate therapies to physicians.

“We were aiming to get people back to work,” says Nelson.

Fraud-detection efforts yielded $10 for every $1 spent.

Nelson cautions that the holiday does not apply to workers at companies that self-insure, nor to those whose employers pay the full medical aid premium. Washington is among the few states that split responsibility for payments between employers and employees.

The holiday, though welcome, continues a history of premium volatility that has alternately benefited or bedeviled employers.

In 1999 and 2000, the department returned $400 million in surpluses to employers. Then the economy soured and between 2003 and 2005 they were stuck with a total 42.5 percent rate.

Surpluses, Nelson observes, “can go away fast.”

A Workers’ Compensation Finance Committee is scheduled to tackle yo-yoing reserves at a meeting next month, with recommendations for minimizing the cycle due this fall.

Meanwhile, the Washington State Labor Council is advising workers to scrutinize their pay stubs to be sure their workers’ compensation premiums are lower. And the Association of Washington Business is encouraging employers to be mindful that the holiday is just that, a holiday. Next year’s budgets should reflect a return to normal expenditure levels.

Whatever those may be.

Fixing an appropriate level of reserves will be a tall order for the Finance Committee, but one that would assist state and business planners alike. If successful, the group should share their results with Washington’s private sector health insurers, who are sitting on $2 billion in reserves of their own, yet continue to increase rates.

Insurance consumers could use a holiday, too.