California businesses cautiously endorsed the preliminary agreement reached Friday in Sacramento to overhaul the state's troubled workers' compensation system. But many of them, as well as analysts and insurance company representatives, doubted that the proposed measures would bring the kind of prompt and large premium reductions employers are seeking.
The tentative deal, crafted by Gov. Arnold Schwarzenegger and key lawmakers after weeks of political wrangling and intense lobbying, addresses some critical factors that have pushed the state's workers' comp rates to the nation's highest. It would set, for example, stricter guidelines for determining the extent of a worker's disability -- a change that is widely expected to hit the pocketbooks of lawyers who represent injured workers because of reduced litigation in the system.
But the plan apparently doesn't touch on some other elements that many say have been a source of abuse, such as ensuring that workers' comp insurance isn't used to cover injuries that aren't primarily suffered on the job. The architects of the reform effort also elected not to lower the maximum weekly disability payments for workers hurt on the job.
Most people interviewed Saturday were hesitant in their assessment of the agreement, having seen only the outlines of the proposed overhaul. Labor groups in particular were circumspect.
Details of the deal haven't been released, and officials were careful to say that there were still things that needed to be ironed out, including the contentious issue of rate regulation. A bill is expected to be drafted by Thursday.
"I don't know what the final writing is going to be, but the way it looks right now, it sounds good," said Mario Rueda, owner of Pacific Molding Inc. in Corona, whose 35-employee plastics manufacturing company has seen its annual workers' comp premiums triple since 2001 to $104,000.
Like other business owners, Rueda said he was considering leaving California because of high workers' comp and other costs. He has already priced the cost of a one-way ticket to relocate his company to Henderson, Nev. -- about $225,000. Rueda said Saturday that he would stick it out awhile longer. "I'll be happy if something happens next year and I get a 25% rate reduction," he said.
Other businesses are hoping for premium cuts of up to 50%. But they're not likely to get anything like that anytime soon, at least not given these latest reforms, according to experts. At the same time, they said, the proposed changes were potentially substantial.
