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Rush Limbaugh will not mention it on his radio program and Bill O’Reilly will deny its truth, but the latest data shows that the cost of insurance to employers is declining and so are the costs of employee medical benefits. Contrary to conservative myth, litigation is not driving up the cost of insurance and more tort reform legislation is not needed to stem the tide of ever-increasing insurance premiums. The fact is costs are going down.

Risk and Insurance Magazine recently released a report evaluating the effect of 2003 workers compensation system reforms. Risk evaluates the passing grade received by California’s workers compensation system given by the Commission on Health and Safety and Workers Compensation. Risk explains that:

“The CHSWC is a joint labor-management body created by the Legislature in 1993. The commission is charged with examining the health and safety and workers comp systems in California and recommending administrative or legislative modifications to improve their operation. As part of its mandate, the CHSWC published the report card”

Risk evaluated the data within the report and concluded that the cost of workers compensation continues to fall. The study revealed that the average rate of workers compensation premium per $100 of payroll is $2.40 which is lower than premiums were in 1994. The study attributes much of the success in lowering costs to the 2003 reforms which “were aimed at controlling medical costs, updating indemnity benefits and improving the assessment of permanent disability.” The 2003 reforms focused heavily on structural and systemic changes which lowered costs from within through deregulation and modifications to the way insurers and doctors did business, not tort reform.

The study also found that:

“Most injury costs appear to be leveling off…..after the reforms, the average costs for all of the types of injuries declined from 2004 to 2006, with the exception of psychiatric and mental stress. From 2006 to 2007, researchers said the average cost for some types of injuries, such as carpal tunnel/repetitive motion injuries, back injuries, and psychiatric and mental stress appeared to be leveling off. At the same time, slip and fall injuries increased, and other cumulative injuries decreased slightly.”

Tort reform advocates, many of whom were proponents of the 2003 reform, may interpret this data to mean that further legislation is needed to cure remaining problems. However, this is misleading. The data as interpreted by Risk reveals that the current reforms have worked and that many of the fears and concerns which prompted the 2003 reforms have been allayed and no further legislation is needed.

As recently as 2006, California Governor Arnold Schwarzenegger praised the 2003 reforms. His press release celebrating the anniversary of the reform legislation notes that that changes reduced costs by getting injured workers the immediate treatment they need to get back to work faster. In other words, even the conservative “governator” concedes that a proven method of lowering insurance premiums and health care costs to employers is by reforming and optimizing the way big insurance and large employers do business. Oftentimes, these simple reforms are overlooked in the debate over tort reform with proponents decrying “run away juries” and “predatory lawsuits,” rather than focusing on the real, underlying causes of increased insurance costs.

For a copy of the full, very long report card you may visit this link

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