Real Change News | Vote no on I-1082 to protect small businesses

September 8, 2010
Vol: 17 No: 37

Community & Editorial

Vote no on I-1082 to protect small businesses

by: Don Orange , Guest Writer

Effort to privatize workers’ comp insurance would take away safeguard

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In this tough economy, small businesses like mine are more challenged than ever. That’s why I urge you to vote no on Initiative 1082. I-1082 is about workers’ compensation insurance. Most people know only this about workers’ comp: it’s there when you and your family need it, providing medical aid and some portion of your salary if you’re hurt on the job. In return, employers like me get immunity from on-the-job lawsuits. It’s a good balance that’s been working pretty well in Washington for a long time.

I-1082 would end Washington’s public nonprofit workers’ compensation system by allowing big, private insurance carriers into our state. It would also force small businesses like mine to pay the employee share of workers’ compensation premiums. That adds up fast. The boosters of I-1082 say employers will have to pick up $315 million. How can our small businesses handle a hit like that?

I-1082 is loaded with fine print that benefits the insurance industry at the expense of everyone else. Under I-1082, workers compensation insurers wouldn’t have to contribute to the special fund for carriers that go bankrupt. This is serious – across the country, workers’ compensation is one of the most volatile lines of insurance. And under I-1082, insurance carriers could dry up and blow away, leaving injured workers, health care providers and employers holding the bag. In its review of I-1082, the Office of Financial Management said it simply: “No guaranty fund coverage will exist for insolvent private insurers … Losses will be absorbed by employers, injured employees and medical providers.” In section after section, I-1082 contains nuggets that are good for the insurance industry, but bad for small businesses and working families. According to state Insurance Commissioner Mike Kreidler, the insurance industry wrote I-1082 to give itself special exemptions that no other line of insurance is allowed – not car, home, life or health insurance.

I-1082 exempts workers’ compensation insurers from the voter-approved Insurance Fair Conduct Act, which means that insurance companies will be able to wrongfully and intentionally delay and deny legitimate claims for years, with virtually no way of holding them accountable. In fact, the Office of Financial Management predicts that workers’ compensation appeals would increase by 34 percent if I-1082 passes. More appeals means more people won’t be able to pay their medical bills, and doctors will start refusing to take workers’ comp patients. All the while, employers are shut out of the process.

Proponents of I-1082 say competition is the answer to all these problems. But it’s tough to see how big insurance carriers would save us money. They have more overhead than the public system. Administrative expenses in the existing system are about 18 percent of total benefits. The national average is about 68 percent. Big, private insurance carriers have lots of expenses the current public system doesn’t have, such as advertising and marketing. And, unlike our current system, big insurance companies exist to make excess profit for shareholders.

The special interests pushing I-1082 say the state system is close to bankruptcy; they claim that we’ll all end up with hefty workers’ compensation expenses no matter what we do. But our public workers’ compensation insurance system has $11 billion in the bank, so it’s not even close to going under. That’s why State Auditor Brian Sonntag opposes I-1082; he knows the system is fundamentally stable. And the state gives business owners a rebate. That’s pretty rare in the insurance business.

The bottom line is simple: I-1082 is bad for small businesses, and bad for working families. With our economy still recovering from the recession, we don’t need a flawed initiative to make tough times even worse. Let’s vote no on 1082.

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