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Journal Tribune
Posted
Updated June 1, 2019
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State lawmakers will move forward on proposed workers’ comp reform

The Legislature’s Labor and Housing Committee is expected to send an omnibus bill to the full House and Senate that contains several – but not all – of about two dozen proposed workers’ compensation system reforms submitted in separate bills this legislative session.

Supporters of the reforms say the system has become unfair to workers thanks to past reforms designed to lower insurance costs. Opponents say the current system has provided much-needed stability to employers following a crisis period in the late ’80s and early ’90s.

Democrats and Republicans in the Legislature have failed so far to reach an agreement on how liberal the reforms should be. A compromise version of the omnibus bill was worked out among representatives of business, labor and insurance interests, but Republican lawmakers have so far rejected it. Democrats have made it a condition of supporting the compromise bill that at least some Republicans must also support it.

It is not yet clear whether the committee will endorse the compromise bill, a more liberal version drafted by Democrats, or some amalgamation of the two. Republicans also drafted their own “minority report” version, but it’s not expected to receive majority approval from the Democratic-controlled committee.

Business and insurance groups involved in drafting the compromise bill said Republicans on the committee would be well-advised to endorse it, since the likely alternative is sending a bill drafted by Democrats on to the Democratic-controlled Legislature and Democratic Gov. Janet Mills.

“That’s why we were so enthralled by the compromise bill, because we had stakeholders that represented both sides of the table and the governor … and we had been led to believe she was fully supportive of the compromise,” said Tony Payne, senior vice president of Maine Employers’ Mutual Insurance Co., or MEMIC, the state’s largest provider of workers’ comp insurance with about two-thirds of all Maine workers under its coverage.

An example of the difference between the compromise and Democratic-drafted versions of the bill is that in the compromise version, the maximum weekly benefit for workers’ compensation would become 120 percent of the state average weekly wage – a 20 percent increase over the current maximum – whereas in the Democrats’ version, the maximum would be increased to 125 percent of the state average weekly wage plus 100 percent of the value of lost benefits such as health insurance and retirement benefits, Payne said.

COMPETING MEASURES

Peter Gore, executive vice president of the Maine State Chamber of Commerce, said the Democrats’ reform bill is far more abhorrent to Maine businesses than the compromise version. Gore said the Democratic version contains several “nonstarters” that would undo many of the past reforms that helped bring Maine workers’ comp insurance costs into line with the rest of the U.S.

“That’s just an absolute ‘no’ from the business community,” he said.

Matt Schlobohm, executive director of the Maine AFL-CIO labor organization, said the compromise bill contains “modest but important improvements” to the state’s workers’ comp system. However, his organization favors the more liberal reforms proposed by Democrats.

“The key framework for us on this is that there quite literally has not been a single meaningful improvement for workers in the workers’ compensation system in 25 years,” Schlobohm said. “We have had steady cost declines in the system – costs are down 60 percent over that 25-year period.”

The bill would implement three key areas of reform, he said: Increasing the maximum weekly workers’ comp benefit, reinstating a cost-of-living adjustment for those receiving long-term benefits, and improving benefits to workers with partial disabilities.

FALLING COSTS

The current push for workers’ compensation reform by pro-labor groups comes more than 25 years after Maine imposed various restrictions on compensation to alleviate a situation in which the state’s workers’ comp insurance had become the most expensive in the nation and insurers were leaving the state in droves. Since the reforms of 1992, workers’ compensation costs in Maine have fallen toward the middle of the pack – to No. 12 by one measure and No. 19 by another.

In the past year alone, workers’ comp insurance costs have decreased by nearly 20 percent in Maine, said John Rohde, executive director of the Maine Workers’ Compensation Board. Rohde said that based on a preliminary analysis, it does not appear that even the more sweeping reforms proposed by Democrats would increase insurance costs enough to fully offset that one-year decrease.

“It would seem to us that any additional costs … would be less than the combined 19.5  percent decrease in rates that occurred between 2018 and 2019,” he said. “As it stands, if the bill passes, I think Maine’s workers’ comp system will still be more affordable in 2020 than in 2017.”

But Payne disagrees with that assessment. He said it is impossible to accurately predict what the cost increase will be, because proposed changes to the system are likely to have compounding effects that are not fully understood.

“I don’t think anybody can say that with confidence,” he said.

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