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Dan Walters: Worker’s comp conflict heating up again
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Dan Walters: Worker’s comp conflict heating up again

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Dan Walters: Prop 13, and a conflict 42 years in the making

Walters, Dan

One of California’s perpetual political conflicts may be heating up again, which requires some background to understand because it is so convoluted.

To begin at the beginning, for more than a century, California employers have been required by law to provide medical care and, if needed, cash payments to workers who suffer job-related illnesses and injuries.

It’s called worker’s compensation, or work comp for short, and the term embraces countless specific provisions governing eligibility for benefits, payment rates and medical care, each of which affects the financial bottom line of an immense system. California employers are spending more than $21 billion a year either to buy insurance coverage or pay claims from their self-insurance reserves, roughly $2 for every $100 of payroll.

Work comp is so immense that it supports a permanent cadre of interest groups and their lobbyists who joust constantly over operational rules.

Over the last half-century, a predictable cycle has emerged. Once a decade — or once a governorship — the five contending factions go to war, three of the five cut a deal to grab bigger slices of the financial pie, and push it through the Legislature. It takes a few years for the changes to impact the system and a few more for a new tripartite alliance to form for another battle.

It last happened a decade ago when Jerry Brown resumed the governorship 28 years after his first stint expired.

Employers and labor unions struck a deal, with the implicit blessing of work comp insurers, to curtail medical costs and use the savings to increase cash benefits for disabled workers and decrease employers’ insurance premiums.

The two factions left out of the deal — lawyers who specialize in work comp cases and providers of medical care, therapy and rehabilitation — howled. But with Brown’s blessing and the unions’ political clout, it was enacted.

It worked as planned, in fact too well in the eyes of the two left-out factions and labor unions, which complained that employers benefited more than their injured employees.

Insurance costs as a percentage of payroll have dropped by more than two-thirds from their peak in 2003, thanks to both the changes signed by Brown and those muscled through the Legislature a decade earlier by predecessor Arnold Schwarzenegger. That said, California employers are still paying the nation’s fourth highest work comp costs, according to Oregon’s annual state-by-state compilation.

So what now?

Last year, in response to the COVID-19 pandemic, the Legislature and Gov. Gavin Newsom decreed that some medical workers would have a presumption that certain illnesses would qualify them for work comp benefits without having to prove connections to their jobs.

This year, several bills would expand presumptions to other workers and other maladies. One, for example, would expand the presumption that San Diego’s lifeguards now have for skin cancer to include nine other illnesses. Another would expand the lifeguards’ skin cancer presumption to include game wardens and state park rangers. Still another would create an extensive slate of presumptions for nurses.

Medical care providers, who were on the short end of the last big work comp deal, want legislation to provide automatic inflation increases in their fees. Another bill would create a state-operated network of medical care providers for work comp treatment that would bypass employers’ provider networks.

These and other measures would directly or indirectly increase costs and/or reslice the pie. The most important of the five factions is labor and if it forges an alliance with the medical and legal groups, chances of a major work comp overhaul are strong — right on the decennial schedule.

CALmatters is a public interest journalism venture committed to explaining how California's state Capitol works and why it matters.

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