Speaking at The Business Council's annual Small Business Day, Governor Pataki today proposed a workers' compensation reform package that would increase benefits while enacting reforms that would ultimately cut employers' costs by 15 percent.
"We know that enacting tax cuts and lowering the cost of doing business is a proven way to create new jobs," the Governor said. The workers' comp reforms championed by the Governor in 1996 have helped, he added, thanking The Business Council for its role in helping him enact those reforms.
"But that was 1996, and it's now 2004. And I know we can't simply say, 'Look at what we did back then,'" he added. "We do understand that high workers' comp rates are part of the problem you face in your desire to grow."
"A 15 percent improvement in costs would be welcome news for the business community and would show the type of progress are have long sought from workers' comp reforms," said Business Council President Daniel B. Walsh. "We look forward to working with the Governor and the Legislature to achieve real reform again this year."
The Governor's proposed changes include:
- Expanding
the range of injuries for which benefit levels are scheduled
in accordance with the severity of the disability. Currently,
cases in which benefits are not scheduled account for 13.6
percent of claims but more than 76.6 percent of overall
costs.
- Reducing
the surcharges now imposed on employers' premiums, called
assessments, by adjusting the calculation used to determine
assessments. Currently, assessments are based on 150 percent
of the previous year's disbursements from a special fund.
The proposed change would lower that rate to 125 percent.
The Business Council has strongly supported such a reduction
in assessments.
- Allowing
employers and workers in unionized factories to negotiate
benefits and case resolutions under the Alternate Dispute
Resolution (ADR) program. This program allows employers
and unions to include alternative administrative methods
for providing comp benefits. It is currently available only
to the unionized construction industry.
- Authorizing
a pharmaceutical fee schedule.
- Increasing benefit levels by 25 percent. The maximum benefit would increase from $400 to $500 per week.
Workers' compensation is a system of employer-funded "no fault" insurance designed to ensure that workers injured on the job receive both medical assistance and weekly support payments, generally until they can return to work. Under the agreement, which was established in 1914, employers assumed all liability, regardless of fault, for all job-related injuries. But the law also set monetary limits on employers' liability. Workers receive prompt, specific and adequate payment for injuries, but relinquish the right to sue for more.
In 1996, New York State lawmakers enacted historic reforms to workers' compensation that were championed by Governor Pataki and strongly supported by The Business Council. These reforms were designed to rein in New York's workers' compensation costs, which then were some 56 percent above the national average, while preserving fundamental protections for workers.
The 1996 reforms limited the ability of third parties to sue New York State employers, mandated safety programs for some employers based on safety records, created new anti-fraud protections, and helped reduce costly delays in the workers' comp system.
The Business Council has identified further workers' comp reform as one of its top legislative priorities. The Council is strongly supporting a bill (S.5320-Libous, A.8862-Schimminger) that 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 expire.
- Implement meaningful objective medical guidelines to determine the degree of disability and the ability of workers receiving benefits.
To advance its case for workers' comp reform, The Council this spring has launched a new Web-based electronic-advocacy campaign to urge lawmakers to reject a costly union-backed bill and support cost-cutting workers' compensation reform. As of Wednesday, March 17, more than 1,200 visitors to The Council's Web page (or to the Web pages of more than 50 participating regional chambers around the state) had generated more than 6,000 letters to elected officials in Albany urging them to enact cost-cutting reforms, and to reject a benefit-increase bill that proposes no meaningful reforms.
The Council is also strongly opposing a bill (S.6135-Velella/A. 9736-John) that would raise benefits substantially without enacting any of the critical cost-cutting reforms. The Council's preliminary estimate is that this bill would worsen employers' cost burden by 25 percent or more.
Also at Small Business Day:
- Senate
Majority Leader Joseph Bruno addressed a variety of issues,
including the Senate's proposal to create a new health-insurance
tax credit for some small businesses, the Governor's workers'
compensation reform proposal, the challenge of enacting
a state budget on time, and the Senate's job-creation proposal.
"Nothing is more important that helping small businesses be competitive and grow," he said.
Senator Bruno warned that education-spending pressure groups are intensifying their pressure on Albany to increase state aid to schools - even though New York already spends more per pupil than any other state. As New York debates how to respond to a court order to improve the quality of education in New York City schools, Bruno said, businesses must remember that "new costs will com from your businesses and your paychecks."
He added: "We already spend the most per pupil. We're not just going to throw money out there - because we already know that money alone doesn't get it done."
- State
Senator James Seward (R-Oneonta) and Paul Macielak, president
and CEO of the New York Health Plan, discussed the challenge
of making health insurance more available and affordable
for smaller businesses. Sen. Seward reviewed a new Senate
majority proposal, of which he is prime sponsor, to create
a 50 percent health-insurance tax credit for some small
businesses.
- E.J.
McMahon Jr., senior fellow at the Manhattan Institute, argued
that New York's state budget is growing at a rate that the
state's economy cannot and will not be able to sustain.
- Michael
Misenhimer, executive director of the Empire State Subcontractors'
Association, and Philip LaRocque, executive vice president
of the New York State Builders' Association, reviewed how
skyrocketing costs of general liability insurance are hurting
New York's construction industry.
- Joseph DiGiovanni, vice president for public affairs for the Liberty Mutual Group, discussed the case for workers' comp reform.