The National Academy of Social Insurance (NASI) released its annual workers’ compensation report today. For 2014 (there is a data lag), Washington’s benefit costs were the highest in the nation at $825.33 per covered worker. The states with the next highest benefit costs were California ($776.86), Alaska ($682.06), and Wyoming ($665.56). Washington has consistently ranked first by this measure.
In our foundation report, we highlighted the high benefit costs.
Similarly, the state has consistently had the highest workers’ compensation benefit costs in the country. In 2012, the most recent year for which data are available, benefit costs averaged $840 per covered worker, nearly twice the U.S. average of $434.98.
So, the costs have dropped slightly, from $840 to $825 per covered worker.
We also acknowledged the state had made some policy improvements and we recommended others.
In 2011, the Legislature allowed workers who are at least 55 years old (dropping to 50 in 2016) to voluntarily settle their claims with structured settlements. Opportunities to build on this reform might include expanding the use of voluntary settlements to workers of any age. Voluntary settlements bring closure for workers and reduce long-duration time-loss claims.
Clarifying the definition of what constitutes an occupational disease (a condition warranting workers’ compensation) would also help control costs. Over 1997-2009, “occupational disease claims have been a rising proportion of all compensable claims in Washington while their proportion has fallen in both Oregon and British Columbia.”
In Washington, the definition of occupational disease is very broad. The lack of clarity means diseases may be covered that are not directly caused by workplace exposure, but are instead ordinary diseases of life. Other states (e.g. Virginia) exclude common illnesses and specify when a disease arises out of employment.
As the WRC notes, the state has proposed increasing workers’ comp premiums by 0.7 percent. The Association of Washington Business responded to the proposal:
“Once again, the Department of Labor and Industries has elected to impose a tax increase on Washington employers that it does not need to impose,” said AWB President Kris Johnson. “The department’s proposed 0.7 percent average rate increase may seem like a small number, but some industries will see dramatically higher rate increases.
“Furthermore, the cumulative impact of this proposed tax increase, which follows several years of unnecessary workers’ comp rate increases, represents a significant cost to all Washington employers, making it harder for them to compete with other states. In fact, officials could have reduced rates an average 2.3 percent and still broken even, meaning this proposal is 3 percent higher than was necessary.”
A final decision on rates will be announced in December.