Tag Archives: ARAWC

Opt-Out: The Final Word?

For the first post of the new year, I want to return to a well-worn subject, thanks to Joe Paduda, who published his predictions for workers’ comp last week: Opt-Out in workers’ comp.

In part 2 of Joe’s predictions, he predicted that Opt-Out will not gain any traction, and that Opt-Out is a solution in search of a problem. By that, Joe means that workers’ comp is working well overall, and that costs are under control, employers don’t see it as an issue, and there is no political constituency that wants to make it happen.

Joe rightly points out that the problems facing work comp are tiny compared to other issues state legislatures are dealing with — such as taxes, school funding, gerrymandering, Medicaid expansion, rural hospital funding, industrial and economic development, natural disaster preparation and recovery.

However, Joe’s friend, Jennifer Wolf Horesjh, Executive Director of the IAIABC (International Association of Industrial Accident Boards and Commissions) believes that advocates are working diligently to promote Opt-Out/Non-subscription.

In my comment to Joe, I said the following: “The Koch Brothers and the companies behind ARAWC are free-market, libertarians who don’t want government social insurance programs like work comp. You are probably correct that it won’t happen, but that won’t stop them from trying.”

Whether Joe is right or wrong in his prediction, will have to wait until the end of this year. But since it is only a prediction, time will tell if Opt-Out moves forward. Thus the title of this piece has a question mark, because we don’t know what the final word is on the subject.

ARAWC Strikes Again: Opt-out Rolls On

“Just when I thought I was out… they pull me back in.”

Michael Corleone, Godfather, Part III

Source: https://www.pinterest.com/Mamzeltt/famous-movie-quotes/

When Michael confronts Connie and Neri in the kitchen of his townhouse, he warns them to never give an order to kill someone again (in this case, it was Joey Zaza), and goes on to state that when he thought he had left the mob lifestyle, they pull him back.

Thus, is the case with opt-out, as I discussed in my last post on the subject.

Kristen Beckman, in today’s Business Insurance, reminds us that opt-out, like the Mob, is pulling us back into the conversation.

As I reported last time, a bill in Arkansas, Senate Bill 653, pending in that state’s legislature’s Insurance & Commerce Committee since the beginning of March, proposes an alternative to the state system.

Ms. Beckman quotes Fred C. Bosse (not Fred C. Dobbs), the southwest region vice president of the American Insurance Association (AIA), who said that the bill is an attempt to keep the workers comp opt-out conversation going.

Mr. Bosse said that the AIA takes these bills seriously (good for them) and engages legislators to dissuade progress of such legislation the AIA believes could create an unequal benefit system for employees. (They haven’t drunk the Kool-Aid either)

Arkansas’ bill is the only legislation currently under consideration, but a state Rep in Florida, Cord Byrd (there’s a name for you), a Republican (it figures) from Jacksonville Beach, promoted legislation last year, but never filed it.

South Carolina and Tennessee, where bills were previously introduced within the past two years has gone nowhere.

And once again ARAWC rears its ugly head. For those of you unfamiliar with ARAWC, or the Association for Responsible Alternatives to Workers’ Compensation, it is a right-wing lobbying and legislation writing group based in Reston, Virginia. (see several other posts on ARAWC on this blog)

A statement ARAWC sent to BI said that these bills are beginning to pop up organically to model benefits that companies have seen from Texas’ non-subscription model. (Organically? That’s like saying mushroom clouds organically popped up over Hiroshima and Nagasaki)

Here’s a laugh for you, straight from the ARAWC statement:

Outcomes and benefits for injured workers have improved, employers are more competitive when costs are contained and taxpayers are well served by market-driven solutions,” They further said, “We recognize that each state is different and that the discussions at the state level will involve varied opinions.”

Of course, we cannot really know if injured workers are benefitting, or just being denied their rights, and it seems that opt-out is only to help employers and taxpayers get out of their responsibility to those who sustain serious injuries while employed.

In another post, the notion that Texas’ system could serve as a model for other states was outlined in a report by the Texas Public Policy Foundation (don’t you just love the names of these reactionary groups?)

Bill Minick, president of PartnerSource, praised the report, according to Ms. Beckman, and said that competition has driven down insurance premium rates and improved benefits for Texas workers. (That’s what he says, but is any of it true, I wonder? I doubt it.)

ARAWC has listed a laundry list of benefits they say responsible alternative comp laws could provide:

  • Better wage replacement
  • Reduced overall employer costs
  • Faster return to work
  • Fewer claims disputes (yeah, because they would be denied)
  • Faster claim payouts
  • Faster closure (well, when you deny claims, they can be closed faster, duh!)

It is good to know that the AIA is critical of the report, and that in their opinion, it is unworkable to allow employers to adopt a separate, but unequal system of employee benefits.

And as we have seen with the defeat of the AHCA, leaving a government-sponsored program up to market-driven forces is a recipe for disaster that should not be repeated in workers’ comp, no matter what flavor the Kool-Aid comes in.

Opt-Out: Here We Go Again

Once again, we have to look at the issue of opt-out. This time in the land of Lincoln.

“Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.”

Abraham Lincoln

Yet, it seems that Capital is still trying to stick it to Labor by dismantling the workers’ comp state systems.

Stephanie Goldberg, writing yesterday in Business Insurance, reported that the Illinois Policy Institute, an organization the Republican Governor, Bruce Rauner, has previously donated to, issued a report last month calling for “updates” [Emphasis added] to the state’s more than 100-year-old system.

The author of the report and the director of the institute’s regulatory reform, Mark Adams, said in an phone interview that, “the system that is in place isn’t serving workers effectively.”

He acknowledged that it is difficult to reform the system because there are so many stakeholders (a point made by myself and others).

Yet, the report goes on to say that, “the most effective way for government to protect workers is not by a restrictive one-size-fits-all system, by by creating broad rules of the game that give workers more freedom to contract with employers for a deal that is better suited to their own situation.”

On the one hand, what the report is stating makes sense, and seems to agree with the idea of opening up the system to new ways of providing care to injured workers, but if we look deeper at the alleged success of opt-out in Texas, Oklahoma, and the failure to get it passed in Tennessee and South Carolina, we find that the proponents of opt-out have not been very up front and honest on the subject.

What they really want is to blow up the entire workers’ comp system nationwide, and take us back to before Triangle, a point they seem to be making quite successfully in some quarters of the work comp industry because of the apolitical and ahistorical atmosphere in which this issue is often discussed.

We recently lost one brave soul who fought the temptation to drink the kool-aid on opt-out, and we cannot let his memory pass without remembering that he was not fully convinced that opt-out had proved itself.

In my last post, I mentioned what happens to closed systems if they do not change. With opt-out, we would not be seeing an opening of the system that still offers protections to injured workers, albeit with more options and more flexibility, but rather a complete and utter destruction of the entire system, which is what ARAWC and the Illinois Policy Institute wants, so that the employer is the one who benefits, not the employee.

Mark Adams stated that the system they have looks like it deals with the 19th Century, and not with telecommuters, or people who balance caring for a child, an elderly relative, and work responsibilities. True, but going back to the 19th Century when workers had to sue for benefits, if they were lucky to get to court, is not the answer.

One reason why opt-out has not been successful outside of Texas and Oklahoma, is as Stephanie Goldberg, says, the potential for constitutional challenges to opt-out laws could give pause to states considering legislation, as what happened in February when the Oklahoma Workers’ Compensation Commission ruled that provisions of the state’s Employee Injury Benefit Act deprive workers of equal protection and access to the courts, and to unfairly allow employers to define “injury.” The Supreme Court in Oklahoma is reviewing the case.

One wonders what the old railsplitter would think about the idea to deprive Labor of its rights to equal protection and access to courts, and to benefits they deserve when injured on the job. Lincoln would be horrified to learn that Capital has become superior to Labor.

Pushback on ARAWC’s Attempt to Expand Opt-Out To Tennessee

David Fish wrote an opinion piece last week in The Leaf-Chronicle that stated there is no need to change that state’s workers’ comp program, as had been discussed previously by numerous bloggers, including yours truly, and that ARAWC has been advocating, by actually writing the legislation for Tennessee and South Carolina.

It is such an excellent article, and makes the point so clearly, that I am going to let David Fish speak for himself.

Here is the link:


Workers’ Comp Plans Can Be Dumped in TX and OK

To follow up on previous posts about the opt-out option in workers’ comp, a shout-out goes to JJ Schmidt, Senior Vice President at WellComp for bringing the following NPR report to my attention.

Here is the link to the NPR report and audio:


I have already said that opt-out is not all that its proponents say it is, but as we get more into the motivation behind the expansion of the option through various state legislatures, where the actual legislation is being written by an organization called ARAWC (A-Rock), it is not hard to see that workers’ comp is under serious threat from the right-wing, anti-union, anti-worker, Corporatists who are funnelling huge sums of money into this expansion.

This is something that was not brought up in last night’s Democratic debate, but should be on the minds of all those who want to protect the rights of workers.

Options for Workers’ Comp Getting National Attention

Richard’s Note:

All those who read my previous post, Letting Problems Fester, learned that my father was admitted to the hospital the day before I wrote the post. I would like to take this opportunity to thank those of you who sent me condolences, as my father passed away on September 14th. The medical care he received while in the hospital was certainly not a factor in his passing, as one of his doctor’s knows my brother, and the other doctors did whatever they could to help my father. The fact remains that when you leave problems to fester, they eventually catch up to you. That is the case with the workers’ comp industry, as the following post will discuss.

Today’s Health Wonk Review on Workers’ Comp Insider, posted an article from Roberto Ceniceros called, National Employers Push for Comp Options. The article appeared last week in Risk & Insurance.com.

Ceniceros wrote that national employers are benefiting by opting out of the Texas workers’ comp system, and are pushing for “free market alternatives” to traditional state workers’ comp systems.

These employers have launched a new organization called the Association for Responsible Alternatives to Workers’ Compensation (ARAWC), and plan to lobby state legislators to allow employers to develop new options for delivering medical and wage replacement benefits to injured workers.

Some of the members of this organization are: Wal-Mart, Lowe’s and Sedgwick Claims Management Services Inc. They are frustrated with being forced into “entrenched” workers’ comp systems that prevent them from adopting practices that could benefit them and their employees, according to Richard Evans, executive director of Austin-based ARAWC.

I have written before about opt-out programs in Texas and in Oklahoma, and my all of my articles have made the point that medical travel can be beneficial to employers, especially in dealing with the high cost of surgeries under workers’ comp.

Mr. Evans has expressed many of the things I have been saying when he stated in Roberto’s article that traditional state systems, influenced by various interests, make it impossible to adopt medical delivery practices that can lower costs and speed employee return to work. State administrative burdens, for example, he adds, discourage the best doctors from treating workers’ comp cases.

One of the other issues Evans echoes from my previous posts, is that “Workers’ comp is slow to change,”…“There are a lot of stakeholders involved and it’s hard to make those changes.”

It is worth noting that two of the members of ARAWC (pronounced a-rock) have already explored medical travel for their group health plans, albeit as far as domestic medical travel is concerned, and not international or cross-border medical travel.

If ARAWC is successful in lobbying state legislators to allow employers to seek alternatives to traditional workers’ comp, it would be in ARAWC’s interest to also consider medical travel, in both its domestic and international aspects.

This is what I have said all along. There needs to be movement on the part of employers, large ones such as Wal-Mart and Lowes, and smaller ones as well, such as HSM in North Carolina, and all other employers around the country to seek free market alternatives to high cost workers’ comp medical benefits. Medical travel is a free market alternative because it takes advantage of one of economics’ chief rules: goods and services will go to those markets that can provide them at lower cost at the same or better quality than what is currently available in the local market.

Those who pooh-pooh this are not only wrong; they are flying in the face of those like Mr. Evans and his organization and their members who are seeking to escape the padded cell.