Reform of Workers Compensation

Issue Overview

Why California needs workers’ compensation reform:

• Workers’ comp costs have more than doubled in the past four years. In 2003, California employers experienced double-digit increases in workers’ compensation insurance premiums. A major workers’ comp insurer of dental practices has raised premiums 56.4% in the past two years, and last year increased its minimum premium charged to dental practices 33%. In the last four years, the statewide average workers’ comp premium rates have increased an average of 136%.
• Premiums increase, while workers’ claims go down. The 136% average increase in premiums since 2000 contrasts with an actual 3.4 % reduction in the number of workers’ claims over the same period of time.
• California: Highest premiums in the nation. Employers in the state experience the highest average workers’ comp premium cost in the nation: $6.33 per $100 of payroll.
• Workers’ comp cost increases affect small businesses disproportionately. Workers’ compensation is required of every employer in California, regardless of size. Many large employers self-insure their workers’ comp obligation, and medium-sized employers receive lower premium rates. Hence, the burden of increases in the cost of workers’ comp insurance hit small employers, such as dental practices, disproportionately.
• Workers’ comp increases affect everyone. The increasing cost of workers’ compensation insurance is another cost of providing health care in California – one which, for a small dental practice, is ultimately passed on to the patient. Yet…
• Dental practices are less likely than other businesses to pass increasing costs on to consumers. With the ever-increasing penetration of managed care into the practice of dentistry, the fees a practice may charge patients is controlled less by the practitioner, and more by the dental care plan or insurer. Hence, escalating costs of doing business, such as those represented by increases in the cost of workers’ compensation, cannot readily be passed directly onto consumers of dental care services. This can inhibit a dentist’s ability to participate in certain managed care programs and government programs such as Denti-Cal and Healthy Families where reimbursement rates are poor.
• Real reform benefits patients and those in the dental profession. Because of the nature of the practice of dental care, the work performed by dentists and allied dental health professionals is close, detailed work that is physically demanding. Fixing the state’s workers’ compensation system is essential to providing needed care to dental professionals, getting them back at work as soon as possible, at a reasonable cost to the dental practice.

California needs real reforms to the state’s workers’ compensation law:

• That employees be compensated for real injuries, based on objective medical findings.
• That greater incentives be put in place for employees to return to work as soon as they are able.
• That treatment decisions for work-related injuries be more the responsibility of medical professionals, and less that of attorneys and the courts.
• That medical disputes be resolved through an independent medical review process, not through the legal system.

Last revised April 2004