Don't make New York's already expensive Workers' Comp system more expensive

ALBANY, NY (06/14/2012)(readMedia)-- Two bills before the State Legislature could rollback cost savings created in the 2007 Workers' Compensation reforms.

S.3749-C (Robach)/A.5183 (Simotas) would allow an injured employee to utilize any pharmacy that matched the state's "published prices," regardless of whether such pharmacy was in an employer's network and offered "volume discounts" often significantly below "published prices". The authorization of these pharmacy networks is one of the few parts of the system reform that was showing modest cost-savings of between 10 percent and 20 percent. This legislation would largely negate any benefit from the reform, by eliminating the basis on which networks would provide discounts.

Another attempt to rollback savings realized in the 2007 reforms, S.3741 (Maziarz)/ A.6294 (Wright), would prohibit any New York State Medical Treatment Guideline adopted by the Workers' Compensation Board from being applied to injuries that occurred before the guideline's adoption date. The guidelines, adopted in 2009 after a three year process involving input by a joint business/labor medical advisory committee and extensive public review and comment by all categories of medical professionals, are standards of care, identifying specific medical treatments that are considered appropriate and effective. Standards of health care are neither prospective nor retroactive, and any legislated arbitrary timeframe is completely contrary to evidence-based medical principles.

Regard of the outcome of these two bills, Workers' Compensation rates continued to rise in New York. The amplified cost is driven by increases in maximum benefits indexed to increases in the state's average weekly wage, and to the extremely slow pace and inefficient implementation of key system reform measures.

For example, in October 2011, the New York State Insurance Department approved an average rate increase of 9.1 percent, on the heels of a 7.7 percent increase in 2010. All told, between 2009 – 2012, rates have increased by 32.9 percent. Workers' Compensation Board assessments, essentially a tax on workers' compensation premiums have increased by 10.4 percent and 27 percent, respectively for the last two years. Employers are paying nearly 50 percent more of their compensation dollars in assessments to fund the system than they did three years ago.

These recent cost increases to the Workers' Compensation system do nothing to help improve our states economic competitiveness and hurts New York-based businesses ability to create private-sector jobs. If we want to make New York a more business friendly state, we can start by letting the cost saving components of the 2007 Workers' Compensation reforms take effect.

The Business Council has issued bill memos in opposition to these bills. Click S.3749-C (Roback) /A.5183 (Simotas), for Restrictions on Workers' Comp Pharmaceutical Networks memo, and S.3741(Maziarz)/A.6294(Wright), for Timeframe for Application of Medical Treatment Guidelines in Workers' Compensation memo.