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Life Preservers for Business

September 11, 2003

Most Californians learn to deal with the hard realities of HMOs and other managed care. Not, however, in the state's dysfunctional workers' comp system, where patients can book unlimited chiropractor visits and outpatient centers can charge what they please. Employers who foot the bills can only beg for mercy. Too many simply stop hiring or even move out of state. The Legislature seemed incapable of fixing the mess. Until this week.

The workers' comp reform package that the state Senate and Assembly agreed on Tuesday night is not the final answer, but it will begin to fix a system that manages to combine high premiums and low quality of care. Workers' compensation premiums paid by employers in the private sector, government and nonprofit world soared to $29 billion in 2002 from $9 billion in 1995. That money would have been better spent on salaries, factory rehabs and new equipment.

Gov. Gray Davis has promised to immediately sign the legislation, largely crafted by Insurance Commissioner John Garamendi. Supporters say it will generate more than $5 billion in immediate savings, with similar savings in subsequent years. True, the companion measures, SB 228 and AB 227, don't address the sheer growth in workers' comp cases that end up in courtrooms or the troubling percentage of workers' comp cases that end in a declaration of permanent disability. But the bills will cut costs dramatically by, among other things, establishing sorely needed price caps on outpatient surgery centers, prescription drug providers and chiropractors.

Workers' compensation -- when it works -- clearly benefits society in general. Another health-care bill that made it out of committee late Tuesday is a different story, even if well intentioned. Sen. John Burton (D-San Francisco) is pushing hard for a vote as soon as today on SB 2, which would create an employer-funded, state-operated pool to provide health-care coverage for many of the state's uninsured workers. Despite its obvious appeal, the measure is a bad idea, especially now.

Nearly 10 million Californians -- workers, the unemployed and their families -- went without health coverage for all or part of last year. The state obviously needs ways to cover more of these people, just as it has provided health insurance to many children in working families. But the workers' compensation program shows what happens when government uses someone else's money to pay for health-care delivery without creating the necessary checks and balances.

Burton's insurance bill is an intense issue for unions and some other Democratic stalwarts. But businesses struggling through the recession just got a life preserver tossed to them on workers' comp; they can't afford to carry another hefty economic weight. Davis, recall election or not, has to summon the courage not to sign SB 2 even as he says yes to workers' comp reform.

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