Wednesday, April 4, 2012, 08:53 PM - Political developmentsThey will.
They, the Workers' Compensation Insurance Rating Bureau of California, will do a mid-year filing seeking an increase in the "pure premium rate". This requested change in the advisory, non-binding comp rate will be done in a rate submission that will be flied with California's Insurance Commissioner Dave Jones within the next several weeks.
Here is the statement released by the WCIRB today:
"Earlier today, the WCIRB Governing Committee met to review the Actuarial Committee analysis of December 31, 2011 experience (See April 2, 2012 Wire Story Actuarial Committee Continues Review of December 31, 2011 Experience) and determine whether the WCIRB should submit a mid-year pure premium rate filing."
"The indicated July 1, 2012 average pure premium rate based on the methodologies recommended by the Actuarial Committee is $2.51 per $100 of payroll. This indication is 7.7% above the average pure premium rate of $2.33 proposed by the WCIRB in the January 1, 2012 Advisory Pure Premium Rate Filing. "
"The continued deterioration in the indication since the last filing was largely due to increases in loss development on the 2010 accident year, increasing allocated loss adjustment costs, and lower forecasts of wage growth in the still-sluggish California economy. "
"The Governing Committee expressed concern about the ongoing escalation in several key system cost drivers and, as a result, directed the WCIRB to submit a July 1, 2012 advisory pure premium rate filing reflecting the indicated pure premium rate of $2.51 per $100 of payroll. "
"The WCIRB anticipates submitting the filing by April 13, 2012. The filing and all related documents will be available in the Regulatory Filings section of the WCIRB website (www.wcirbonline.org) and the WCIRB will issue a WCIRB Wire Story once the filing has been submitted to the California Department of Insurance. "
While it is not a surprise to many observers that carriers would seek to hike comp rates (something that has already been happening with some carriers) until recently it appeared that the WCIRB might forgo a mid-year filing.
Insurance carriers are not required to track the pure premium rate, so some carriers will hike rates less than or more than the 7.7% requested pure premium hike , which itself is subject to the scrutiny of the Insurance Commissioner. Former Insurance Commissioner Steve Poizner rejected repeated requests for large hikes in the pure premium rate, and Jones is likely to look carefully at this rate filing.
Here is a link to the slides from the WCIRB's April 2, 2012 Actuarial Committee Meeting, detailing trends in claims and loss expenses, medical loss trends, indemnity loss trends, claim severity by region, etc etc:
Jones is likely to schedule a hearing on the rate filing, giving interested stakeholders another avenue to raise questions about the filing and actuarial assumptions.
This proposed advisory increase will add further fuel to the brewing debate over the future of California's comp system.
If benefits to workers remain mired at levels that are around 60% lower than before SB 899 (documented by Frank Neuhauser of UC Berkeley), medical costs and medical containment costs continue to rise, and premiums start to rise, the pressure will really be on to do something to shed costs.
Saturday, March 31, 2012, 09:14 AM - Political developmentsIs the future of the healthcare system in the USA dependent on whether a handful of Supreme Court Justices think Obamacare expands federal power to the point that the government can force you to eat broccoli or buy a cell phone?
So it would seem. That's scary.
What result the Supreme Court reaches is of great importance to many of California's injured workers. After an injury, many of those workers lose insurance coverage. And even if they can find individual coverage-which many can't-the cost is likely to be prohibitively expensive.
The forced broccoli purchase argument was at the heart of what by all accounts was a disastrous session at the Supreme Court this week, as the Solicitor General struggled to make the case distinguishing how the mandate to purchase insurance can be viewed as consistent with some limits on federal power.
It set up a bizarre situation where even detractors of the law seem to agree that Congress could tax to set up a healthcare system (?single payer?) but where they question a mandate to purchase insurance in the private market.
Which of course lo and behold is a Republican idea that had been advanced by the Heritage Foundation.
And at one time by Mr. Romney.
This is our Alice in Wonderland politics.
But requiring individuals to purchase insurance is not like requiring them to buy broccoli or drink cod liver oil or cell phones or flashlights.
Unlike those other items, individuals without healthcare coverage put a direct financial burden on all of us as citizens and taxpayers. They'll seek care eventually and we all pay. At the county level, the state level and yes, the interstate level.
But given the interstate nature of the healthcare market, it's hard for individual states to enact a comprehensive solution that works.
As Law Professor Jeffrey Rosen notes in The New Republic:
"The Supreme Court endorsed an argument along these lines when it upheld Social Security in 1937. In Helvering v. Davis, which should have been front and center during the health care oral arguments, Justice Benjamin Cardozo wrote that a state might have resisted providing broader benefits or coverage to its neighbors out of fear that it would become “a bait to the needy and dependent elsewhere, encouraging them to migrate and seek a haven of repose.” For this reason, the Court viewed income for the elderly as a national problem that needed a national solution. In the same way, affordable health care—unlike guns in schools or violence against women, subjects traditionally regulated by state and local criminal law—is an essentially national problem."
Here is a link to an article by Duke University Law School Professor Neil S. Siegel which outlines the legal underpinnings of the notion of collective action federalism:
http://scholarship.law.duke.edu/faculty ... ship/2386/
Floyd Norris, chief financial correspondent of the New York Times and International Herald Tribune, has an interesting take on the dispute about the mandate. Norris suggests that if the justices are so disturbed by the mandate, then there should be an "opt out" provision along with a "do not treat provision".
Here's the argument Norris makes:
"if someone is morally offended by the idea of buying health insurance, he or she should be given counseling about the risks but then allowed to decide.Persons who decline insurance would be allowed to provide details of how they intended to pay for care otherwise, if they wished to do so, and to name a person who would be responsible for paying for the care if the patient were unable to direct payment, much as many people now have health care proxies.Anyone who chose not to have health insurance, and not to indicate how they would otherwise pay, would be put on a “Do Not Treat” list. Hospitals could simply refuse to offer any treatment, respecting the person’s wish to make his or her own decisions free of an intrusive government trying to keep them alive.I doubt many people would sign up for such a system, but it would certainly overcome the alleged constitutional flaw in the current health care law.Some people might be concerned that such a system would amount to voluntary euthanasia or assisted suicide. But surely they would put aside such qualms when they understood this was necessary to preserve our freedom not to be forced to buy something we do not wish to purchase."
Presumably Norris would support subsidies for those who wanted to purchase insurance but could not pay the full boat.
But for those who can pay and simply refuse, his idea is intriguing.
We'll know how all this turns out in a few months.
Meanwhile, California's injured workers should take a moment to reflect on how they have a dog in this hunt.
Thursday, March 29, 2012, 09:41 PM - Political developmentsEye opening and transformative.
That's how Angie Wei of the California Labor Federation described her visit to some hearings at the San Francisco and Oakland Workers' Compensation Appeals Board.
Wei was among the speakers at a legislative hearing this week on the future of California workers' comp.
Wei described the scene that so many workers' comp claimants and judges know.
Crowded hallways of negotiating attorneys. Small courtrooms filled with
overworked judges, waiting claimants and defense attorneys who appeared to be engaged in a strategy of delay.
Exhibiting passion that was in short supply during the legislative hearing, Wei described several cases she observed which led her to recommend that
people go down and take a look for themselves to understand the system better.
I was thrilled to hear her testimony.
Frankly, the disconnect between policymakers and the real world of injured workers is often a wide gulf.
I'm a bit of a wonk myself, else I would not be pounding these keys week in and week out for over half a decade, covering the workers' comp scene.
But I've often had the feeling that some of the policymakers, stakeholder
advocates, and think-tank folks need to get a better grip by coming to the WCAB and meeting some claimants, lawyers and judges.
If nothing else, it might make them more cautious in advancing reforms that have repeatedly....reform after reform....led to unintended consequences.
I also liked Wei's call that stakeholders consider that they may need to consider taking a haircut to deliver a package that will benefit workers.
Wei asked that providers ...."Defend what is defensible and walk away from what is indefensible because some of these expenses and the greed that is in the system is simply indefensible."
The key will be in identifying what is defensible and what is not, of course.
Wei, legislative director for the Cal Fed, produced a position paper on workers' comp. Here's the link:
http://www.calaborfed.org/index.php/sit ... gers_rules
In future posts I'll look at some of the Cal Fed's suggestions.
Wednesday, March 28, 2012, 10:36 PM - Political developmentsToday's workers' comp hearing held by the legislature was nothing short of fascinating.
There they were, all testifying.
The key players in California workers' comp.
Insurance Commissioner Dave Jones. Brown Administration Workforce Agency head Marty Morganstern, DIR head Christine Baker, and DWC Administrative Director Rosa Moran.
Mike Nolan and Alex Swedlow from the California Workers' Compensation Institute.
Frank Neuhauser, UC Berkeley researcher, testifying about the decrease in permanent disability benefits the 2004 reforms.
Angie Wei, from the California Labor Federation. Sean McNally of Grimmway Farms, speaking on behalf of California employers. Brad Chalk, current president of the California Applicants Attorneys Association.
The hearing was live streamed.
My last post said that the hearing would be posted on the California Channel (www.calchannel.com). As of the time of this post it has not been uploaded there, but if that changes I will post a link.
In coming posts I'll reflect on some of the issues that were raised at the hearing.
Tuesday, March 27, 2012, 10:16 PM - Political developmentsOn Wednesday March 28 a hearing on workers' comp is scheduled in Sacramento at the Capitol.
The hearing, held by the Senate Industrial Relations Committee and the Assembly Insurance Committee, will focus on the impact of SB 899.
The hearing is slated to start at 9:30 Wednesday.
It will be viewable online in realtime via the following link (choose Senate Committee Room 2040):
http://senate.ca.gov/listentorooms?utm_ ... dium=email
If you can't catch the realtime broadcast you will also probably be able to find it on the California Channel website .Here is that link:
With rumors about further reform efforts swirling around the system, it will be interesting to see some researchers and commentators reflect on where we are now and what solutions might be advanced.