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Get Real on Workers' Comp

February 12, 2004

California can do many things -- immediately -- to defuse the workers' compensation crisis that is sapping the financial strength of the state's businesses, governments and nonprofit organizations. First, however, the Legislature and the governor must get real about their goals.

The Schwarzenegger administration should start by abandoning a March 1 deadline for a full-blown legislative reform package.

The artificial deadline won't be met, and it risks the placement of opposing measures on the November ballot, forcing voters to choose between extreme alternatives and delaying reform.

The first real deadline is March 31, the last day for the governor to sign legislation that insurers can incorporate into rates that would be effective July 1.

Legislators last year put needed controls on certain overused treatments, including chiropractic care. Republicans and Democrats alike now must withstand fierce lobbying by doctors, lawyers and others with a hand in the system's pockets. The tough issues include fuzzy medical complaints -- for instance, back pain that can't be traced to a specific cause -- that lead to costly legal disputes and treatment delays.

The administration also should drop its politically attractive but unrealistic promise to immediately slash $11 billion from the troubled $29-billion workers' comp system. It takes time to identify specific reforms that can eliminate waste and fraud and balance the pain of such deep cuts.

The state's out-of-control prices for workers' compensation insurance, which funds treatment and compensation for injured workers, are well known by businesses laying off workers or postponing hiring. Costco workers' comp premiums are twice as high here as in other states where the chain operates.

Government also is being hit hard. Los Angeles County paid $156.6 million in workers' comp expenses in 1999; by 2002 the total was up 65% to $257 million.

During a workers' comp workshop at USC Tuesday, state Sen. Richard Alarcon (D-Sun Valley) and state Assemblyman Rick Keene (R-Chico) agreed on three broad reform principles: squeezing out bloated administrative costs; expediting a choked claims process that produces frustration and lawsuits; and ensuring reasonable medical care.

That common ground is the foundation for specific reforms that will, for starters, allow objective medical guidelines, not lawyers, to determine treatment.

Alarcon says constituents frequently corner him in airports and coffee shops to demand that legislators reform the broken system. Asking voters to choose in November between dueling initiatives sponsored by injured workers' lawyers and corporations is not the right path to reform.

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