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GOVERNOR REACHES DEAL ON BENEFIT INCREASE
The Gray Davis administration confirmed Friday that the governor reached a deal with labor leaders and top Democrats late Thursday to sign a $3 billion-plus increase in workers' comp benefits.
Department of Industrial Relations Director Steve Smith said negotiations wrapped up on Wednesday night. On Thursday, Senate President John Burton gutted language in Assembly Bill 749 by Manny Diaz, D-San Jose, and inserted a benefit increase very similar to the package that Davis vetoed last year.
Smith, however, said the governor this year insisted on cost-saving reforms that will shave $1.5 billion off system costs. He said the benefits will increase system cost by $2.4 billion, creating a $900 million net increase to insurers and employers.
That number does not include any estimate for increased utilization, which employers and insurers regard as inevitable. The Workers' Compensation Insurance Ratings Bureau predicted last week that the Legislature's previous proposal, SB 1156, would increase system costs by $4.2 billion including utilization. That estimate did not include any offset for cost-saving reforms.
Insurance-industry lobbyist Peter Gorman said the governor's savings
estimates are unrealistic, so the final cost is likely to be higher than
$900 million. He acknowledged, however, that Davis had succeeded in getting
some real reforms, such as the end to the presumption of correctness for
treating physicians who are not pre-designated by employees.
Taken from: FLASH REPORT
For more information, go to:
The California Workers' Compensation Insurance Rating Bureau's article on AB 749.
Businesses Fear Unknown Impact of Benefits Increase
last updated: February 15, 2002
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