October 2007

Study adds pressure to rework California workers' comp

Changes to California’s workers’ compensation insurance system have cut costs by about $4 billion more than originally expected, leading some labor advocates to lobby harder for legislation to increase workers’ compensation benefits, the Sacramento Bee reports.

The Legislature in 2003 and 2004 approved reforms to California’s workers’ compensation system that were projected to reduce costs by about $10.1 billion. But a recent review of workers’ compensation claims by the industry-backed Workers’ Compensation Insurance Rating Bureau, found costs fell by about $14.5 billion.

The increased savings came from several areas in which cost reductions exceeded expectations, including:

• New formulas to determine permanent disability benefits — which cut costs by about $2.2 billion, above projections of $1.4 billion;

• Caps on chiropractic visits — which reduced costs by about $800 million, twice the $400 million expectation; and

• Limits on physical therapy sessions that translated to $400 million in savings; analysts initially projected the caps would cut costs by $300 million.

Advocates for injured workers are using the findings to heighten their lobbying efforts in favor of legislation before Gov. Arnold Schwarzenegger that would increase workers’ compensation benefits.

Source: California Healthline, www.californiahealthline.org

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