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Editorial: Insurance reform would give options to workers

Wed., Jan. 6, 2010

Washington state’s industrial insurance program is notoriously unconventional.

This is one of only four states where private insurance carriers can’t compete for workers’ compensation business. Only in Washington is the rate charged to employers for such coverage based on the hours their employees work rather than wages paid. And only in Washington do employees pay part of the cost.

Furthermore, only seven states, Washington being one of them, refuse to allow workers with permanent total disabilities to accept a lump-sum settlement rather than stay indefinitely on the Department of Labor and Industries’ caseload as lifelong pensioners.

Being different isn’t always a bad thing, but when so many other states do so many things differently, we ought to ask what they know that we don’t.

One thing we do know is that the number of pensions has been rising in Washington. A 2008 study done for the state by the Upjohn Institute attributed part of the increase to a conscious effort to shorten the length of time-loss claims for injured workers. But even after accounting for that and for the state’s economic doldrums, Upjohn concluded the pension figures were still abnormally high.

During the legislative session that begins Monday, a number of bills will be introduced to reform various aspects of the industrial insurance system, a goal that business interests have set in order to make Washington’s economic climate more competitive. One important element of that package will be a proposal to allow the so-called settlement option in the case of workers whose work-related disabilities are total and permanent.

Those workers would have the choice of either taking a full payment up front or collecting monthly payments the rest of their lives. The proposal includes safeguards to assure that an injured worker is fully informed about the advantages and disadvantages, usually with advice from a lawyer or a settlement officer at the Board of Industrial Insurance Appeals. The board’s approval is required for any settlement, and the worker has a month to change his or her mind.

The settlement option doesn’t save the system money by shortchanging workers; it does so by avoiding years of administrative overhead expenses incurred to manage lifelong cases.

This reasonable reform won’t fix all the problems with Washington’s industrial insurance system, but it’s an important part of the solution.