Workers' comp rates drop -- at possible cost

Workplace - A workers' advocate wonders whether the 16-year trend has played into the drop-off in the number of approved claims

Thursday, September 28, 2006
BRENT HUNSBERGER
The Oregonian

Most Oregon employers will see workers' compensation rates drop next year, state officials said Wednesday, continuing what has been a 16-year decline in the cost of insuring against workplace injuries.

But that drop may have come at a cost to workers injured on the job, at least one workers advocate said Wednesday. The rate of injured-worker claims accepted by insurers fell to an all-time low last year of 1.3 per 100 workers, down from 2.8 per 100 workers in 1990.

"I know Oregon wants to create a good climate for business, but at what expense?" asked Steve Schoenfeld, a Portland attorney who represents workers in workers compensation cases. "A lot of workers are getting squeezed out."

Cory Streisinger, director of the Oregon Department of Consumer and Business Services, which oversees the compensation system, said the drop has occurred largely because workplaces have become safer, not because insurers are denying more claims.

What's undeniable is that employers are reaping benefits. The Department of Consumer and Business Services said the average workers' compensation premium and related fees paid by employers will decline by 2.9 percent -- from $2.10 per $100 of payroll this year to $2.04 per $100 in 2007. The figures cover insurer profits and administrative costs, as well as premiums and state administrative fees.

In all, Oregon employers will save about $44 million next year, the department said, or about $26 per insured worker. The system covers 87,150 employers.

Not all employers will see their rates decline. The cost of insurance varies by industry, claim experience and other factors. For example, construction companies will see, on average, a slight increase in their premiums, state officials estimate.

But, on average, rates in Oregon will remain lower than the average rates of surrounding states of Washington, Idaho, California and Nevada.

Oregon Gov. Ted Kulongoski used the annual rate announcement to draw attention to the state's economic development efforts during a news conference Wednesday in front of a downtown Portland construction site.

In a statement earlier in the day, Kulongoski called the development "good news for employers and great news for our overall economy.

"But it's great news for Oregon's work force, as well," he said.

Along with legislative reforms in the 1990s and declining rates of on-the-job accidents, state officials also say administrative cost-cutting has helped drive down insurance costs by 58 percent since 1990.

State officials acknowledge that the changes have led to fewer accepted claims per 100 workers. But Streisinger said denial rates have held steady at between 16 percent and 17 percent over the past 15 years.

Oregon's on-the-job injury and illness rate has declined from 10.1 per 100 workers in 1990 to a projected 5.4 per 100 last year, state officials said -- reflecting safer workplaces overall.

But even after factoring in lower injury rates, recent research indicates that insurers are covering fewer injuries, said John F. Burton Jr., professor emeritus at Rutgers University's School of Management and Labor Relations.

"That's a pretty clear indication that the workers' comp system has tightened up." said Burton, an economist who has studied the impacts of workers' compensation systems for 40 years.

While Oregon's on-the-job injury and illness rate declined by 47 percent from 1990 to 2005, the accepted claims rate dropped more sharply -- by 54 percent, according to state figures.

Nationwide, worker benefits have declined as states have tightened eligibility standards over the past 15 years, as the Oregon Legislature did in the early and mid-1990s, Burton said.

"The bottom line is I think there's a general trend nationwide to make it tougher for workers to get into the system," he said.

Brent Hunsberger: 503-221-8359; brenthunsberger@news.oregonian.com; http://atwork.blogs.oregonlive.com