Workers’ comp board to decide on reducing premium discount
The 90 percent discounts reward businesses that have a spotless safety record.
COLUMBUS (AP) — Ohio is poised to shrink the deep discounts on injured-worker insurance it’s been offering certain businesses for years, setting off tensions among participants in the nation’s largest state-run workers’ compensation system.
The board of the Ohio Bureau of Workers’ Compensation is expected to decide today whether to adopt a recommendation to reduce its highest discounts from 90 percent to 87 percent.
It would be the first reduction in more than a decade but still nowhere close to what experts on insurance rate-setting have been recommending for 15 years.
About 250 people packed a hearing on the matter last week, alternately attacking and praising the system. The process handsomely rewards groups of businesses pooled together that maintain spotless safety records while financially crippling companies that experience a single serious accident.
A third of the 6,800 businesses that lost their group rating last year because of an employee’s serious accident or death have either been unable to pay their new, higher premiums or have filed bankruptcy, said bureau spokesman Keary McCarthy.
Employers not participating in the group-rating program argue such a slight change won’t go far enough to offset the $200 million a year raised through their premiums. That money offsets losses in the group-rating program.
Bureau Administrator Marsha Ryan, appointed by Gov. Ted Strickland to carry the bureau past several years scarred by scandal, supported taking the discounts down as low as 80 percent. Any further and she feared such a dramatic shift might destabilize the market.
Today’s discounts are so deep that money paid in premiums doesn’t cover the cost of claims, McCarthy said.
However, a three-member actuarial committee that included two members whose businesses are covered by the discounts recommended the smaller reduction.
McCarthy said there is nothing comparable in the private sector to Ohio’s group rating system, through which pools of employers band together to lower their risk and their rates.
Three separate actuarial firms have issued nine different reports since the program’s inception in 1991 questioning the depth of the discounts. They recommended bringing the discounts for good safety records to around 60 percent off base rates.
The program also faced allegations last year that it was subject to political influence after a state senator successfully lobbied the bureau for a discount on behalf of his own gas station company.
A state inspector general’s investigation concluded in August that the bureau had done nothing improper by arbitrarily reducing rates for some companies and not others with the use of no objective criteria and little documentation.
However, Ohio Inspector General Tom Charles recommended that the bureau tighten its policies on appeals and give equal consideration to all requests, whether they are made through lawmakers or not. Charles also urged the bureau to apply industry-approved standards to make the group-rate program more equitable.
The investigation grew out of a 2006 audit that found rates on injured-worker insurance were inexplicably lowered for 27 Ohio employers. The audit, covering January 2003 through September 2005, found no written policies or procedures to determine when workers’ comp administrators would override the computer system to lower rates.
The bureau’s finances faced scrutiny because of a state investment scandal that reached to former Gov. Bob Taft and stripped the once powerful Ohio Republican Party of significant clout in the 2006 elections. To date, 20 people have been convicted as part of the scandal.