June 13, 2002
Council: Any changes to workers' comp must have goal of reducing overall costs
Workers' compensation costs in New York remain a competitive disadvantage for the state, and any changes to the system should strive to reduce overall costs, Business Council President Daniel B. Walsh has told legislative leaders.
"A report recently released by the Workers' Compensation Research Institute (WCRI) shows that New York's system has the unfortunate dual distinction of being high-cost and low-benefit," Walsh wrote in a June 12 letter sent to Senate Majority Leader Joseph Bruno and Assembly Speaker Sheldon Silver. "We would like to work with you to help change both those areas."
The Council is urging lawmakers to focus on concerns about workers' comp costs as they consider any program changes. It is widely reported that labor interests are pressuring lawmakers to increase workers' comp benefits.
New York's employers face significant pressure from rising costs of employee benefits and other insurance programs, he noted. Particularly troublesome are rapidly rising costs of health insurance and general liability insurance.
"Adding to these costs, in the form of higher workers' compensation benefits, without substantial offsetting savings would jeopardize future growth opportunities for many New York businesses," Walsh wrote.
"Any contemplated change to the workers' compensation system should not reverse the economic progress of the last seven years," he said. "Changes to the system should not be one-dimensional; offsetting savings must be a component in any workers' compensation benefit package."
Essential reforms: New York business community believes that more reforms could significantly reduce New York's workers' comp costs. The first would entitle workers to a maximum of 500 weeks of benefits more than 13 years in cases of partial disabilities not covered by a statutory payment schedule. The second would require the use of objective medical guidelines to determine the degree of disability in these cases.
Both of these reforms have already been enacted in most other states. Cases of partial disability are significant because they account for more than half of New York's workers' compensation claims costs. Most other states have a maximum duration of benefits on benefits in such cases. Most have also required the use of objective medical guidelines to determine the degree of impairment in these cases.
The WCRI report is Revisiting Workers' Compensation in New York: Administrative Inventory, by Duncan S. Ballantyne. The report concluded that:
- New York had the second highest incurred cost per worker in policy year 1996, the last for which comparable data were available, among the 20 jurisdictions with seven-day waiting periods for benefits.
- New York incurred costs per worker that year were fourth highest among all 44 jurisdictions considered.
- This cost in New York is 60 percent higher than the median of the 20 states with a seven day waiting period
- Even adjusting for differences in wages among all states, New York would remain a high-cost state.