Fittest loser
Article posted: 3/25/2013 5:00 AM

Insurance fund plan harmful to state

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The Illinois legislature is considering a bill, HB 2919, that would create a state workers' compensation insurance fund. The proposal would put the state in the business of operating an insurance company that would compete with private carriers. There are three key reasons why this is unnecessary and harmful to taxpayers, injured workers and employers.

First, with the numerous and unending economic crises already confronting Illinois taxpayers, and with Illinois having the worst credit rating of any state, the legislature must not take on such a huge cash flow drain and new future liabilities. Illinois already faces a pension crisis that burdens taxpayers for generations. It makes no sense to then add the potentially limitless liability of long-term and often lifelong medical claims for injured workers, as well as lost wages. Can the state guarantee these payments?

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Second, with 324 workers' compensation insurers, there is no lack of workers' compensation options for Illinois employers. Equally important, the state's record of competing with the private sector does not inspire confidence; witness the struggles of College Illinois, the state's failed college tuition plan.

Third, there is no credible evidence that creating a state fund will lower the cost of coverage. A state's relative workers' compensation costs are unrelated to the nature of the insurance mechanism, and proponents' attempts to sell legislators and employers on the merits of a state fund based on these assertions are wrong. There are other ways to lower costs that do work. Moreover, self-insured employers have the same cost drivers in Illinois as private insurers.

Illinois public policy must encourage private enterprise and free markets. The best way to address escalating costs is to attack the cost drivers.

Deirdre Manna

Vice President of Industry, Regulatory and Political Affairs

Property Casualty Insurers Association of America

Chicago

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