Critics say workers' comp bill shows Davis money strategy

AP via Mercury News ^ | 5/27/02 | AP

[NormsRevenge]

SACRAMENTO (AP) - After vetoing workers' compensation reforms for three years, Gov. Gray Davis this year declared the legislation long overdue and signed the labor-friendly bill into law.

Why the change?

Finally, Davis said, he received a reasonable compromise after the first, second and third measures would have cost businesses and insurers too much.

[NormsRevenge]

``But to solidify his support, he needs labor,'' Stern said. ``These are people who get out the votes, and in an election year, votes are even more important than money.''

How about 20 years Hard Labour in Leavenworth :-?

DUMP DAVI$

GO SIMON

[ZOOKER]

In one of his books, R.A. Heinlein commented on a certain gov't official:

"He's a good politician---he stays bought."

Davis doesn't seem to be a "good" politician --- you can buy him (cheaply), but you can't trust him.

[Swordmaker]

The new reforms, which take effect on Jan. 1, 2003, will eventually pump an extra $2.5 billion into the statewide compensation system, raising maximum benefits for injured workers from today's $490 a week to $602 next year and $840 in 2006. After 2006, automatic hikes would follow the state's average wage increases. The bill also doubles death benefits to a maximum of $320,000.

Where, pray tell, is this money to come from??? The state is $27 Billion in the red! This benefit increase is pasted into the system with no funding source or premium increases.

[Fish out of Water]

*Index Bump and fyi

[Neanderthal]

"Where, pray tell, is this money to come from??? The state is $27 Billion in the red! This benefit increase is pasted into the system with no funding source or premium increases."

Workers' Comp is paid by employers, not the state. This doesn't cost the state of California a penny, except in its direct role as an employer. Workers' Comp premiums paid by employers to insurance companies have skyrocketed as a result of this bill, but it has no effect on California's state budget.

[Swordmaker]

Nea,

I know what you are saying... but the bill does not increase the premiums enough to cover the benefit increases... and the bill allows the funds to call on STATE funds for the shortfall!

[Neanderthal]

"I know what you are saying... but the bill does not increase the premiums enough to cover the benefit increases... and the bill allows the funds to call on STATE funds for the shortfall!"

You must mean the insolvency fund for bankrupt insurance companies. If any more insurance companies go broke because of higher benefits and not enough increase in premium an insolvency fund administered by the state pays the bankrupt company's claims. However the insolvency fund gets its money by assessing the remaining solvent insurance companies a percentage of all premiums. There is no state money at risk unless the insolvency fund goes broke and for some reason can't raise assessments high enough on the remaining insurers.

In that case I guess that state money might come into play, but it's a very long shot. They'd raise the assessments on employers/insurers through the roof before they bailed out the insolvency fund with taxpayers money.

[okie01]

"but the bill does not increase the premiums enough to cover the benefit increases... "

Employers pay the premiums to the insurance company who is handling their workers' comp policy. The state sets the mandated pay outs, but the insurance company sets the premium rates necessary to cover them.

Thus, employers will pay for the higher pay outs. Which means, in the end, it will be the employees who end up paying -- with their jobs or lower wages. Along with the consumers, in the form of higher prices.

The only costs to the state (and the taxpayers) will be higher premiums to their workmens' comp provider -- who is, doubtless, a large Gray Davis contributor.

[Ernest_at_the_Beach]

Thanks!