Workers’ compensation programs are a multi-billion dollar business. Take Illinois they spend just shy of 2.5 billion dollars a year in premiums.
The total workers' compensation premiums written for Illinois employers:
“2011: $2.42 billion
2010: $2.25 billion
2009: $2.35 billion
Source: Workers' Compensation Commission”
Unfortunately for the people in Illinois it’s not made them very competitive and gives Indiana a way to attract business.
“Before the reforms went into effect, Illinois ranked third in the nation in workers’ compensation rates, according to a 2010 study by the Oregon Department of Business and Consumer Services. Bordering Indiana ranked 50th, Iowa ranked 36th, Missouri ranked 33rd, Michigan ranked 23rd, Wisconsin ranked 19th, and Kentucky ranked 15th out of 50 states and the District of Columbia.”
The Illinois legislature attacked mostly the medical costs although awards will also be affected and reduced under a new system that has been described by a colleague as similar to what we use in Iowa.
“The legislation made several major changes that are already in effect:
►It called for the hiring of new arbitrators who are licensed attorneys to decide workers’ comp cases. Those have been appointed by Gov. Pat Quinn and confirmed by the Senate.
►New staff have been hired at the commission to focus on efficiency, preventing fraud and internal audits.
►Medical fee schedules have been slashed by 30 percent, and wage differential awards have been capped. Under current law, if an employee’s earnings are reduced because of an injury, they’re entitled to receive two-thirds of the difference between their new wages and old ones. The new law ends that provision five years after the employee receives the award or at age 67, whichever comes last.”
My guess is businesses are not going to move to Indiana or Iowa from Illinois, especially the Chicago area because of cultural differences and costs to rebuild improvements and infrastructure. But that doesn’t mean Springfield can ignore that they have a problem with costs to the employer to fund this program. Businesses can and will move south if things don’t change.
See, Check’s in the mail on workers’ comp reform, State says still too early to test progress of reforms, by PJSTAR, Journal Star with reporters Chris Wetterich and David Thomas, GateHouse News Service.