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Wall Street Journal pits Oregon vs. Washington

October 27, 2010

Last Saturday the Wall Street Journal printed this editorial over the State of Washington’s initiative I-1082.  The editorial is below.

Oregon Vs. Washington
By Wall Street Journal Editorial Board

In the battle to promote growth and job creation, Washington state is especially important this election year. While the Bill Gates family and government unions work together to impose a state income tax, the business community is bidding to bust the state monopoly over workers’ compensation insurance.

The fight is over ballot initiative I-1082, which would allow private insurers to compete in the market for insurance providing medical benefits and wage replacement to workers injured on the job. Many large Washington companies self insure, but others are required to buy this insurance from the state Department of Labor and Industries. Washington is one of four states that retains a monopoly, with predictable results.

The average worker in Washington with a time-loss claim misses 270 days of work, twice the national average. Nearby Oregon, which privatized workers’ comp long ago, averages 70 days. Washington’s rate of awarding lifetime pensions for workers it deems permanently disabled is also the highest in the nation. In 2007 and 2008, Washington pensioned 3,600 workers. Oregon pensioned 24. The Olympia agency’s administrative costs continue to balloon, up 82% in 10 years.

There’s more: Despite a 52% decrease in job injuries since 1990, Washington’s insurance taxes have climbed 53% in 10 years. These premiums are borne by employers and employees, as Washington is the only state in which workers must still pay a portion of workers’ comp premiums. Last year the Labor and Industries department hit the business community with a 7.6% premium increase, essentially a $117 million tax hike. Oregon hasn’t raised its premiums in two decades and this year it returned $100 million to employers.

And more: Washington’s state auditor reports that the Accident Fund—which covers nonmedical claims, such as wage replacement—has a 74% chance of insolvency within two years and would need another 33% rate increase to break even. No wonder the workers’ comp agency postponed its annual rate proposal until after the election.

The Building Industry Association of Washington, one of the state’s few free-market groups, was moved to push this initiative after the legislature again punted on reform. What’s astonishing is the wide and deep support BIAW has received from the rest of Washington’s business community, which often sits out these fights lest it upset its union and Democratic masters. The presence of a separate ballot initiative—which would impose a crushing new income tax—appears to be waking up employers to the reputation Washington is getting as hostile to business.

Washington employers would be better to live in West Virginia, where five years ago the legislature began a transition to a competitive market. Some 200 insurers have moved into the market, and premiums have dropped 30%, or more than $150 million.

Unions are fighting the Washington workers’ comp initiative with millions of dollars, as are trial lawyers who’ve created a tidy business representing “pensioned out” workers—a portion of whose checks they receive for the pensioner’s lifetime. It says something about their motives that these groups are fighting a measure that would help Washington workers by exempting employees from further workers’ comp premium contributions.

Credit here goes to the Building Industry Association of Washington, which helped to put the workers’ comp reform on the ballot. If it passes, everyone wins save public unions and the plaintiffs bar.

  
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