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Legislative Memo

T 518.465.7517

BILL:

A.6255

Support

SUBJECT:

Benefit Increase

 

DATE:

March 12, 2003

 

The Business Council strongly opposes this proposal to increase the maximum weekly workers' compensation benefit from $400 to $625, an increase of 64 percent. We oppose this bill because it contains no cost-saving reforms, which we believe are imperative if the state is going to increase benefits.

Any benefit increase that is not accompanied by cost-cutting reforms would be a dramatic economic setback for New York because comp costs are paid fully by employers and have historically been a major competitive disadvantage for New York State.

The 2002 WCRI report Revisiting Workers' Compensation in New York: Administrative Inventory, concluded "...we estimate that New York had the second highest incurred cost per worker in policy year 1996 (the most recent year for which comparable data are available) among 20 jurisdictions with 7-day waiting periods, like New York (it is fourth highest among 44 jurisdictions considering all waiting periods). It is 60 percent higher than the median of the 20 states...New York also has the highest share of claims that receive indemnity benefits, a much higher frequency of PPD claims relative to the other states, and a much higher average cost of claims with PPD and lump sums." An increase in workers' compensation benefits without meaningful cost savings will only exacerbate this situation.

The proposed benefit increase would have an especially adverse effect on manufacturers and other high wage industries. These businesses would face extreme increases in their workers' compensation costs. When workplace injuries occur, these businesses generally pay their employees at the highest maximum benefit level.

Specifically, the bill would increase maximum workers' comp benefits in steps to $475 per week (on December 1, 2003 ), to $550 per week (on December 1, 2004), and to $625 per week (on December 1, 2005). This bill also would permanently index comp benefits to equal two-thirds of the statewide weekly wage beginning on December 1, 2005. We oppose any such automatic increases in benefits.

The business community cannot support a benefit increase without fundamental system reforms. In particular, The Council urges Albany to embrace two fundamental reforms that already have been embraced in most other states:

Thirty-seven states have limited the duration of benefits in such cases in this way. This is important to New York because such cases account for approximately 10 percent of cases and 60 percent of cost. Giving benefits on these partial-disability cases for 500 weeks would provide claimants with nearly 10 years to recover and to secure retraining.

Forty-six other states use objective medical guidelines, which ensure that medical providers evaluate similar cases using consistent criteria. At present, different medical providers reach different conclusions about the extent of impairment in similar cases. This tends to inflate costs.

Before 1996, many businesses could not afford the cost of workers' compensation. In 1996, historic reforms helped bring down the cost of doing business in New York. This legislation would send New York spiraling back towards the bottom of the rankings of all states in workers' compensation costs – right where it was before the 1996 reforms.

The Business Council, a broad-based, statewide membership organization of over 3,600 companies, chambers of commerce and trade associations has reviewed the aforementioned legislation and opposes its enactment.