July 10, 2003
Council: Despite '96 reforms, comp costs remain too high; more reforms would help
Despite real savings created by reforms in 1996, New York's workers' compensation costs remain far above the national average and a significant competitive disadvantage for the state, The Business Council has told state officials in testimony.
"The cost pressures have risen for businesses, municipalities, and not-for-profits and the need for another round of fundamental reforms has increased," The Council said in testimony submitted to the state Insurance Department July 9. The testimony was offered in response to an increase in workers' compensation rates proposed by the New York Compensation Insurance Rating Board (CIRB).
The reforms championed by Governor Pataki "brought real savings to the system" in 1996, the testimony noted. But overall comp costs have been increasing nonetheless.
The testimony cited a 2002 study by the Workers' Compensation Research Institute, which identified New York as a high-cost state. That report blamed New York's high costs and far-above-average costs of claims for which benefits are not prescribed by statutory schedules.
These claims account for 71.6 percent of all comp costs in the system, but represent only 12.4 percent of claims, the testimony noted. The discrepancy stems from the fact that the duration of these benefits is unlimited.
"This is far outside the norm of virtually every other state in the country," the testimony said.
The testimony also cited other cost drivers:
- In some cases, workers who return to work before scheduled
benefits expire nonetheless continue to collect the maximum
scheduled benefits - meaning some workers receive benefits
even as they collect their salary.
- Many employers are finding that workers use the workers'
compensation to supplement retirement and health insurance
coverage. "A growing number of our members have told us
there has been a rise in the number of workers' compensation
claims for employees who are of retirement age," The Council's
- The lack of a requirement that objective medical guidelines
be used to determine the degree of disability drives costs
up. Forty-two states use such guidelines to determine "medical
impairment ratings," the report said; in 39 of those states,
the American Medical Association's guidelines are used.
"Adopting objective medical guidelines would provide a fair and consistent method for evaluating functional impairments," the testimony said. "Ensuring that the system of evaluation is consistent for all claimants should be a priority for all parties."
The Council's testimony praised a bill (S.5320-Libous, A.8862-Schimminger) that would change the handling of these cases. It would:
- Limit, to 10 years, the duration of benefits given to
injured or sick workers in cases in which benefits are not
prescribed by statutory schedules. The goal is to give workers
both ample benefits and sufficient time to seek retraining
to return to work.
- Provide for Social Security and pension offsets-that
is, reductions in workers' compensation benefits applied
when workers receive Social Security and/or pension benefits.
- Give injured workers only half of remaining scheduled
benefits if they return to work before scheduled benefits
- Implement objective medical guidelines.