Government Bytes


It's time to privatize workers' comp in Washington State

by john stephenson / /

Taxes and bonding are not the only fiscal policy issue that Washington voters will decide on Tuesday, November 2nd. With Initiative 1082, Washingtonians will have an opportunity to end the state’s costly monopoly on workers’ compensation insurance.


As we stated in our 2010 Ballot Guide: The Taxpayers Perspective, Initiative 1082 would allow privatize the workers comp insurance market in Washington by allowing private insurers to compete to sell the insurance products that provide medical benefits and wages to employees who are injured on the job. Some larger businesses in Washington are able to self-insure. But others must buy their workers comp insurance from the state’s Department of Labor and Industries because Washington is one of four states nationwide with a monopoly on workers’ comp.


The cost of a government monopoly for workers’ comp compared to a private market is striking. In Washington, a worker with a time loss claim misses an average 270 days of work. But in the neighboring state of Oregon, which relies on privately-provided workers’ comp, that same worker misses an average of only 70 days of work. Moreover, Washington has the nation’s highest rate of lifetime pension awards for permanently disabled workers.


Despite a decline in the numbers of claims, insurance taxes have climbed 53% over the last decade. Meanwhile, Oregon hasn’t increased its premiums for almost two decades. Washington increased premiums eight percent last year, yet Washington’s auditor reports that the state’s accident fund will likely become insolvent in two years and requires another larger premium increase to remain viable.


While the legislature has dithered, businesses have moved to privatize and save the workers’ comp market in Washington by getting Initiative 1082 on the ballot. Special interests, including organized labor and trial lawyers, have predictably lined up against the measure, claiming that private industry cannot be trusted. But has the government done any better? The facts do not suggest it. Fortunately, voters will have the final say on Tuesday.