Bismarck Tribune - North Dakota News - Workers comp managers say privatization beneficial

Workers comp managers say privatization beneficial

Jul 11, 2008 - 04:06:07 CDT

By DALE WETZEL
Associated Press Writer

Complaints about North Dakota's Workforce Safety and Insurance agency may not translate into support for making WSI a private business and allowing competition from other insurers, state lawmakers say.

The Legislature's interim Industry, Business and Labor Committee, which is studying the system, quizzed Nevada and West Virginia officials on Thursday about those states' recent switch from public to private control of workers' compensation insurance.

Douglas Dirks, president of Employers Holdings Inc., of Reno, Nev., and Bill Kenny, the deputy West Virginia insurance commissioner, said serious financial problems in their states prompted lawmakers to support the changes.

Nevada's system had a projected unfunded liability of $3 billion in the early 1990s, when momentum for privatization gained steam, Dirks said.

Kenny said West Virginia's liability was $3.1 billion three years ago, when the West Virginia Legislature approved converting the state's workers' compensation fund into a private mutual insurance company.

North Dakota's compensation fund was in the red more than a decade ago. It is now healthy, with a surplus of almost $500 million. Its board of directors recently approved payment of $77 million in dividends to employers over the next year.

"Our situation is kind of unique," said Sen. Arthur Behm, D-Niagara. "We have money, but we have a lot of unsatisfied workers."

Barry Llewellyn, an executive for a workers' compensation data collection business, said he knew of no state that approved converting its system into a private business when it was financially sound.

North Dakota is one of four states that maintains a state-run fund as its only provider of workers' compensation insurance. The others are Ohio, Washington and Wyoming, said Llewellyn, who is an executive with the National Council on Compensation Insurance Inc.

North Dakota does not allow businesses to finance their own workers' compensation coverage or buy coverage from private companies.

Management problems at North Dakota's WSI resulted in the dismissal of its chief executive officer last December. Critics are circulating a proposal they hope to put on the November ballot to give the governor power to hire WSI's director, a job now left to an appointed board of directors.

Rep. Rick Berg, R-Fargo, the Industry, Business and Labor Committee's chairman, said putting North Dakota's workers' compensation insurance business in private hands could result in lower costs, better service and more coverage choices for businesses.

North Dakota's WSI must serve any business, regardless of size, while private companies sometimes specialize in coverage for small businesses, Berg said.

However, Berg said he was unsure whether there would be a groundswell of support for privatizing WSI. Some of the existing agency's most vocal critics also are skeptical of privatization, he said.

"Unfortunately, in government, typically change doesn't happen until there's a crisis," Berg said. "In order for us to move to a more competitive market, we may not have the crisis we need to typically move in that direction."

The workers' compensation system is meant to provide insurance for employees who are injured on the job, with medical, wage and other benefits provided regardless of whether the worker was at fault. Businesses are required to buy coverage and get protection from injury-related lawsuits.

In both Nevada and West Virginia, the state workers' compensation fund gradually was converted into a private mutual insurance company, owned by the businesses that paid into the fund, officials said.

In West Virginia, the fund became BrickStreet Mutual Insurance Co., which was established in January 2006. Legislators gave the company a monopoly on workers' compensation coverage for 2½ years. This month, private companies were allowed to begin selling coverage, and more than 160 have signed up to do so, Kenny said.

Dirks said Nevada's state fund also was converted into a mutual insurer. Last year, Employers Holdings Inc. became a stockholder-owned company, and distributed $850 million in stock and cash to the 6,600 Nevada businesses that had been its owners, Dirks said.

Kenny and Dirks said private companies are generally more flexible than state-run businesses. It is often in the interest of private insurers to offer more specialized medical care to injured workers because doing so can save money in the long run, they said.

"They know that if they get an injured claimant healed and back to work, that is going to reduce the overall cost of that claim," Kenny said. "It is bottom-line driven, but it is not contrary to providing good care."

Llewellyn said insurance companies are not likely to seek money savings by denying claims or skimping on medical care.

"They're likely to find themselves involved in much more litigation, and insurers don't like to get into litigation," Llewellyn said. "They also don't like to have their insured employers calling in and saying, 'Why haven't you taken care of my injured worker?'"

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Comments

System Improvement wrote on Jul 14, 2008 9:26 AM:

" Any system for worker's comp depends on the integrity of the people behind it. That's the problem with the current system and WSI. A poor benefit system devised by short-sighted special interest-driven forces being administered by an agency with questionable ethics. Citizens should be outraged to the point of forcing change in the election booth. No one should believe too much of what comes out of the IB&L meetings, it's an orchestrated event with a lot of posturing and playacting. You haven't fooled everyone. "

Could Change wrote on Jul 14, 2008 8:29 AM:

" "Rep. Rick Berg, R-Fargo, the Industry, Business and Labor Committee's chairman, said putting North Dakota's workers' compensation insurance business in private hands could result in lower costs, better service and more coverage choices for businesses." I love statements like this. The key is the word in the middle, "could." Yes it could. It could also result in higher costs. worse service and less coverage choices for business. It could also reslut in evel poorer service to workers. Could. It's an interesting word that you really have to watch out for, because there is no evidence that an improvement "will" occur. "

Bergs interesting passions wrote on Jul 12, 2008 10:35 AM:

" Rick Berg supported an initiated measure to allow legislators to apply for jobs that were recently legislatively approved for higher salaries. ND voters defeated this measure soundly in June 2008. Now, if Mr. Berg can privitize WSI and send the interim director Mr. Furness on his way with a nice thank you, then Mr. Berg can promote himself for the head of the privitized version of WSI...with even a higher salary than is currently being paid in this state-affiliated agency. "

Living It wrote on Jul 11, 2008 11:39 PM:

" In my opinion rick berg is pushing for PRIVATIZATION because he is losing control over his baby which is wsi-if blunt is found guilty then he is going to take down everyone thats near him or ever been involved with him-and also seeing 500 million and having to give back 77 million has got to be tearing them apart-but what gets me is why have'nt these employers been screaming why their injured are being treated so badly-if I were a employer an knew just how I've been treated I would be outraged-hopefully this November there will be CHANGE!!! "

Dear Ann wrote on Jul 11, 2008 11:15 PM:

" You speak volumes. I'm sorry our law makers have let you down.

You are absolutely right.

Seriously injured workers don't get sure and certain relief. Now that, is for certain.

Voters need to step up to the plate and fix this mess. Vote yes for the initiated measure, vote out some Republicans. "

MIKE wrote on Jul 11, 2008 9:58 PM:

" Rep. Rick Berg. how much lower premiums can business want?
The failure here is the legislators not doing their job to provide and protect.
I don't know what tail is wagging the dog. Like the saying goes "follow the money". Investigate the safety grants. "

W.J. Hinrichs wrote on Jul 11, 2008 8:09 PM:

" In my opinion, the citizens of North Dakota will be better off is the politicians do their job and fix the system rather than turning it over to a private operation that operates to make a profit. Private insurance companies have share-holders to satisfy, agents, executives and support personal to pay, the injured worker's well-being is lower on the list.

The last eight years have illustrated the disaster of trying to have private contractors try to do the work of the government and the contractors involved in the Iraq war have ripped us off for billions of dollars and are still doing so. The Federal Reserve is a company not a governmet agency, Fannie Mae and Fannie
Mac are also private compaies.

Capitalism must be controlled by Democracy not the other way around which the
current administration in Washington has been promoting and has driven our country to the verge of Economic Depression!

Sincerely,

W.J. Hinrichs "

Ann wrote on Jul 11, 2008 6:02 PM:

" The end game is to give fair and just, sure and certain relief to the injured worker. Privatization will help very little until the legislators step up and do right. The mess starts there. Then from the top down change the attitude. WSI is an insurance company not welfare. Treat me with respect. I did not choose this. Do right by me and mine. I have lost more than you can imagine. Remember tomorrow it could be you. "

What wrote on Jul 11, 2008 4:11 PM:

" To ND Native:

How can you contradict yourself so bad in just two short sentences?

In your first sentence you say you would vote against privitization, and in your second sentence you say that you think the best solution is to let private carriers provide the coverage.It's a good thing you didn't add a third sentence. "

ND Native wrote on Jul 11, 2008 3:34 PM:

" I would probably vote against privatization if this came up and I was still living in ND. I still believe a far better long-term solution to this whole mess is to allow private carriers to provide worker's comp insurance in ND - let the businesses decide for themselves. "

Living It wrote on Jul 11, 2008 1:58 PM:

" This is to (not a lot) I do'nt know where you get your information from but Mr.Behm is correct-there are a lot of very unhappy injured workers because wsi is NOT holding up their end of the bargain-wsi has teamed up with the chamber and berg-walt-ruby-kieser and have voted in laws that only help wsi-I called the two insurance companies today and did you know that neither one of them make their injured workers become telemarketers,why do'nt you go a take a real good look and see the laws that the wsi board has dreamed up to help the injured workers -you will find empty page after page-now look up an see the voting records of berg-walt kieser-ruby and see the damage that they have done against the injured workers.. "

MIKE wrote on Jul 11, 2008 1:38 PM:

" With laws as they are now, any company takes over will have a cash cow. "

TO Not a lot wrote on Jul 11, 2008 1:03 PM:

" It seems you have been reading a WSI website to confirm the survey that was conducted about WSI treatment of workers. Maybe you should really look at it, and find out what kind of questions were asked to get the rating WSI did for this research. I found a website that has the questions asked, its right on the front page of this place http://iwofnd.tripod.com/. Maybe you could tell us how they failed doing the questions they did. "

Not a Lot wrote on Jul 11, 2008 11:06 AM:

" Art Behm is way off in his a lot comment. There are not a lot of unsatisfied workers. In fact it came out that about 1% of the claims filed each year are the ones that are judgment calls and cause all the raucous. The rest are injured workers who think they should be able to do whatever they want without regard to the law. Like the guy at the last Workers Compensation Review Committee meeting who wanted WSI to pay for him to get a four year degree when he already has a four year degree in another field he can use. When they surveyed WSI claimants both approved and denied they gave WSI a 4.3 rating on a 5 point scale. The management, governance or structure of the organization has little to do with results. The agency can only do what is allowed in law and this would also apply to a private carrier, but let me assure you that the private carrier who is having a good year would not return a surplus to employers or workers, that money would quickly go into the pockets of their shareholders. Everyone needs to start thinking about how good the system is and can be and not hacking away at the details. "

Privatize wrote on Jul 11, 2008 9:10 AM:

" WSI has been too short-sighted and one-sided. You don't save business money in the long-run by shortchanging the workforce. The quote in the article about private insurance recognizing you can't skimp on medical care is dead on. Not only are the laws in ND where IW's are concerned beyond ridiculous, WSI seems to have issues in not wanting to provide the skimpy benefits required by law. Not only that, their fraud efforts are focused almost exclusively on injured workers when Marsh stated publicly 'Injured worker fraud is RARE.' Our legislators, WSI management, and WSI board should be ashamed. "

NDr wrote on Jul 11, 2008 8:32 AM:

" We could only hope for privitization!!! While I'm not sure if it would save my businesses money, I really don't care at this point. I'm tired of paying premiums to this little thiefdom. This board is out of control and has completely lost sight on it's mission. It's mission is to take care of ND's injured workers. If WSI doesn't want or can't fulfill this mission, then trash it and let's move on. Privitization CAN NOT be worse than what we have now. "

Schmiddy wrote on Jul 11, 2008 8:32 AM:

" Privatize it! The legislators are treating WSI like their own pet company, and the legislation they are creating (or not creating) is very protective of WSI.

By opening it up to privatization, the legilators will not need to feel any ownership or loyalty to WSI, and will then be able to make better decisions regarding the injured worker.

Competition in the open market is the only way to bring a close to this crisis. "

Just have to say wrote on Jul 11, 2008 8:00 AM:

" Private or State run workers compensation in this state will make no difference with the laws that are in place to hurt the injured workers. Private insurance will have to fallow the same rules in place now. Either way the injured workers are still going to be hurt by the system. Until the laws are changed, the system works against the injured workers!

Rick Berg if you want to show change fixed the laws you voted for that stopped giving the injured workers "sure and certain relief", then talk to use about private insurance companies taking over workers compensation. Until then nothing will change. I wonder also is this being pushed due to a measure being pushed to be on the ballot this fall. "

Cheney wrote on Jul 11, 2008 6:37 AM:

" Give the contract to halliburton! "

WSI money wrote on Jul 11, 2008 6:24 AM:

" I do believe that WSI has extra money becuase of the way they treat workers. I wokred a business that when they were told WSI insceptors were coming. We put all the safety guards back in place and overone would put on the hard hats. That is until WSI left. Then everthing went back to normal. If the employers are going to get all that money back over the next few years. What about the injuried workers that have gotten turn down or told just to forget it. They have families that need food and everthing else. I ask the govenor and that state to look at the injured worker. But, I believe they just care about the rich business men that give to thier campians for office first. "

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