NYT: Rate Cut for Workers’ Insurance Will Save Employers $1 Billion

[Omaha Steve]

http://www.nytimes.com/2007/07/12/nyregion/12insurance.html?_r=1&oref=slogin

Rate Cut for Workers’ Insurance Will Save Employers $1 Billion

By NICHOLAS CONFESSORE
Published: July 12, 2007

ALBANY, July 11 — New York businesses will save roughly $1 billion a year in insurance costs as a result of a 20 percent rate cut in the state’s much-criticized workers’ compensation system, officials said on Wednesday.

Gov. Eliot Spitzer called the savings a significant boon for the state’s business community, describing the lowered insurance costs as “in essence a $1 billion tax cut for the businesses of the State of New York,” money that he said would become available for capital investment, hiring new employees and research and development.

The officials said the savings represented more than a 20 percent drop in rates for workers’ compensation insurance, which is believed to be the largest cut in the system’s history, based on rate reductions ordered by the state insurance superintendent, Eric R. Dinallo. The new rates, he and Mr. Spitzer said in a conference call with reporters, were based on an analysis of the impact of legislation passed in February to overhaul the system, and on market trends.

The cuts represent a larger savings than the 10 to 15 percent drop that officials predicted in February.

The system, established in 1914, provides medical benefits and replacement wages for employees who are injured on the job or have work-related illnesses. Under the changes approved in February, maximum workers’ benefits were increased significantly and the rates paid by businesses will be cut. The savings come chiefly from caps on benefits to workers with partial disabilities, like back injuries, as well as from tougher antifraud measures and the expectation of less claims litigation.


FULL story at link.

[mrreowwr_kittty]

1. I'm sure those business owners will pass those savings right along...

...to the employees in the form of pay raises, right? :sarcasm:

Yeah, didn't think so. It'll go to 'capital investment' all right. Invested right into the paychecks of executives.

[aquart]

2. Never run a business, have you?

Workers comp in New York is why untold numbers of small businesses pay employees off the books instead of on. It insists on the same deduction for a part time as a full time employee.

It might help if you stopped envisioning every business as Microsoft or Exxon. Most of us are damn small and struggling not to be eaten alive. But we're all corporations because state law insists we incorporate.

[mrreowwr_kittty]

3. Well, I did say executives

So I thought it was obvious I wasn't really referring to small business owners. Generally speaking, any kind of tax breaks, subsidies, or rate reductions tend to disproportionately favor big companies over small, local ones.

And you know what? You might hate me for saying this, but anyone who is paying employees off the books because of workers comp is hanging by a pretty slim thread (not to mention breaking the law) and maybe ought to either re-think their business model or not be in business at all. It reminds me of lame objections against things like employer sanctions for hiring undocumented workers, raising the minimum wage, and even the estate tax. "Oh noes!! The poor small business owners will be ruined!"