Tag Archives: Texas

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.

Arkansas Next in Line to Drink the Kool-Aid on Opt-Out

As follow up to my post yesterday about Texas’ opt-out system and other states, here is a link to another article in Business Insurance that says neighboring state, Arkansas is considering a bill to allow their employers to opt-out of the state system.

You would think given Oklahoma’s experience next door, that Arkansas would not follow suit and pass such a bill, but you would be wrong.

They are first in line to drink the kool-aid. Or is is poison?

For injured workers sake in the Clinton home state, it would be like drinking poison.

Opt-out: The Thing That Will Not Die

An article in today’s Business Insurance magazine, Texas comp opt-out model could spread to other states: Report, said that the Texas Public Policy Foundation, a free enterprise research and advocacy group, released a report that analyzed the Texas nonsubscription system, and said the other states may try to emulate the model.

Folks, we’ve been down this road before as I wrote last August.

The report is called, “The Lone Star Model for Helping Injured Workers,” [really?] says that the competition between the state’s system and the nonsubscription system has led to improved claims handling, cost control and better return-to-work rates.

I have no way of knowing if this is true, but if it is, then how come no other state is following suit? Could it be that it doesn’t do what they say it does?

The report also says that 78% of Texas employers, who represent 82% of the state’s private-sector employers are covered by the state system, and five percent of employees are not covered by workers’ comp or an alternative system. This was reported in my earlier posts.

In previous posts, I have said that there are unanswered questions as to how well injured workers would be treated, and I have also said that opt-out is just a way to tear down the entire workers’ compensation system nationwide.

Even the late David De Paolo wrote that the comp industry should not drink the kool-aid on opt-out.

And given the fact that the Oklahoma law was declared unconstitutional, and the other states that were considering it have pulled the legislation back, means that opt-out is not what its defenders claim it to be.

ARAWC, the organization behind much of the legislation has not been successful in getting other states to follow Texas’ lead.

Why is that?

It is because no one wants to go back to the 19th century where workers were without any protections and had to go to court to get any sort of benefits should they be injured on the job.

The Oklahoma law proves that it just does not have the welfare of the injured worker in its best interest, and that opt-out is only a means by which an employer can get away without any liability or responsibility for taking care of the worker.

Taking back the country before the Socialists took over is a powerful, right-wing talking point and meme, but no way to move a technologically advanced country forward into the 21st century.

 

And Then There Was One

In what may well be one of the last posts written about opt-out for workers’ comp, Joe Paduda today reports that Oklahoma is opting out of opt-out.

That leaves the Lone Star State as the only state that allows employers to “opt out” of the statutory system, but as Joe indicates, most Texas employers opt in.

There is a strange relationship in Texas between opting out and insurance premiums that runs counter to what many might think natural otherwise. Large employers opt out when the rates are low, and small employers opt out when the rates are high, a point I highlighted in the post, “Large Employers in Texas Opting Out of Work Comp.”

So as rates are decreasing in Oklahoma, according to Joe, employers there are opting out of opting out.

Maybe at last we are seeing the end of this extremist, turn-the-clock-back to the 19th century way of providing workers’ compensation to injured workers.

And amen to that.

 

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.

WCRI: Day One, Part Three: The 2nd Opt-Out Session

Bruce Wood, of the American Insurance Association, led off the second Opt-Out session by reminding participants that the 1972 National Commission “considered and rejected employer or employee…

Source: WCRI: Day One, Part Three: The 2nd Opt-Out Session

No one should drink the kool-aid on this idea just yet.

Large Employers in Texas Opting Out of Work Comp

In two separate articles on Tuesday, David De Paolo and Stephanie Goldberg, mentioned a biennial report by the Texas Division of Workers’ Compensation that stated that even with some of the most favorable rates in the country, Texas employers still have issues with work comp.

According to De Paolo, about 2/3, or 67% as reported by Ms. Goldberg, of Texas employers carry workers’ comp coverage, which means an estimated 80% of the state’s workers are covered by the Texas system.  In 2004, 62% of employers were covered, according to Goldberg.

About 75% of the employers, De Paolo said who don’t subscribe have some alternative plan. This means, that 95% of private-sector employers have some form of work injury protection.

The remaining 5% of private-sector employees who are not covered total about 470,000 workers, or 30,000 fewer than in the last report in 2012. The percentage is the same in both reports.

Stephanie Goldberg reported that this is due to lower insurance premiums and an increased availability of workers’ comp health networks, as stated in the report.

Yet, as both De Paolo and Goldberg state, larger employers are choosing to opt-out of the state system.

Quoting from the report itself, De Paolo writes, “Despite lower workers’ compensation insurance rates in recent years, it appears that an increasing number of the largest employers in Texas have begun to opt out of the workers’ compensation system since 2010, while an increasing number of small and mid-sized employers have increased their workers’ compensation coverage rates.

TX Non-Subscribers Pct

In the prior report from 2012, the non-subscribing rate among the largest employers also increased from the 2010 report. The rate, De Paolo says went from 15% in 2010 to 17% in 2012.

The 19% figure in the table above, is still significantly lower, De Paolo said, than what was reported in 2008, when 26% of employers with 500 or more workers were non-subscribers.

The odd thing, De Paolo said, was that there was a slight decrease in non-subscription for employers with 5 to 9 employees, from 29% in 2012 to 27% in 2014, and for employers with 50 to 99 employees, 19% in 2012 and 18% in 2014.

So what does this mean for the implementation of medical travel, i.e., medical tourism into workers’ comp for expensive surgeries?

It means that as more states follow Texas’ and Oklahoma’s lead in expanding opt-out programs, as I mentioned in my article, Options for Workers’ Comp Getting National Attention, the focus of the medical tourism industry in going after this market is to target large employers, as far as Texas is concerned, and to research the non-subscription rates of all employers in those states that will follow Texas and Oklahoma’s example.

But it does not mean that as far as Texas is concerned, you should not try to go after smaller employers as well. Steven Bent, the executive director of the Texas Association of Responsible Nonsubscribers, and another connection of mine on LinkedIn, said that “…workers’ comp rates have been somewhat cyclical historically, and if rates were to go up again in the future, we would hope that the ability to provide benefits outside of workers’ comp exists as a check valve or as a pressure valve for higher workers’ comp rates.

And it does mean that there is a market to go after, with large, small, and mid-size employers. The best way to do so is to approach insurance brokers who have experience with international travel insurance and workers’ comp, and even health care. And you should go directly to the employers themselves by finding out who opts out and who does not.

You don’t need thousands of client employers, a few dozen or so large employers will do for a start. Texas is pointing the way.