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Kasich Seeks $1B Workers' Comp Rebate, Lower Rates
YOUNGSTOWN, Ohio -- Gov. John Kasich proposed Thursday that the Ohio Bureau of Workers Compensation rebate $1 billion to 210,000 private employers, triple funding for the BWC safety and wellness program to $15 million, and lower the rates private employers pay by 2% and public sector employers by 4%.
The board of the BWC will consider his proposals May 29 when it next meets. One director, Tracie Sanchez, CEO of the Lima Pallet Co., Lima, subsequently endorsed the proposals in a conference call with reporters. So did the administrator/CEO, Steve Buehrer, and director David Caldwell, a member of the United Steel Workers Union 37 years.
Buehrer was at Homage, a T-shirt retail store in the Italian Village of Columbus, when Kasich made his proposals, the BWC administrator said. Homage, which makes and sells vintage T-shirts, was founded in 2007 in the garage of the owner’s parents, Buehrer said, and has grown to two outlets today
Kasich’s proposals wouldn’t take effect until July 1, the beginning of Ohio’s 2014 fiscal year.
Also quickly endorsing the governor’s initiative, in nearly identical language to Sanchez, was Roger Geiger, vice president and executive director of the National Federation of Independent Business/Ohio.
In a prepared statement, Geiger noted, “The additional dividend this summer will immediately allow business owners to hire additional employees, purchase new equipment and grow their businesses to improve Ohio’s economy.”
Sanchez also endorsed Kasich’s proposals, which include a reforming the agency so it charges premiums on a prospective basis rather than a retrospective basis, because the reform would give business-owners “more flexibility to pay their BWC premiums,” that is, in an annual lump sum or monthly.
Ohio is one of only three states to charge for premiums retrospectively, Buehrer told reporters. “Under the current outdated system,” he explained, some customers [employers] don’t pay their bills for coverage already received, which drives up the cost for other customers [employers]. Customers would pay in advance of their coverage periods instead of after them.”
Since Kasich took office, the assets of the BWC have grown to $8.3 billion, Buehrer said, “far in excess of the target funding ratio of assets to liabilities established by the BWC board in 2008.”
The $1 billion rebate would equal about 56% of employers’ most recent annual premium, the agency says, and assuming board approval, each of the 210,000 affected employers would receive a check.
The BWC is not overcapitalized by $3 billion, Buehrer told a reporter for a trade publication who asked why so little would be returned to employers. Revenues from premiums and disbursements to injured and disabled employees remain about even at $1.9 billion to $2 billion a year. What happened, Tracy Valentino, chief financial officer of the BWC noted, is the investments the BWC makes have risen “11.4% annualized over the last three years,” that is, rebounding stock markets have increased the value of BWC assets.
Also being held in reserve is $860 million to pay the lawsuit the BWC lost in Cleveland Municipal Court. That suit, San Allen Inc. v. Buehrer, orders the BWC to return $860 million to employers overcharged across the state because, the judge found, it severely mismanaged its group rating program.
“Now is the time for the [Kasich] administration and the bureau [of workers’ compensation] to recognize that it continues to hold on to another $$860 million that was illegally charged to 270,000 employers and comply with the court order to repay those funds,” said Earl Stein, president of Pay Us Back Ohio BWC, in a prepared statement after Kasich’s appearance at Homage.
Buehrer said the reserve was established last December. “We believe the case was wrongly decided,” he added, and the bureau is “pursuing an appeal.”
In light of the rebate Kasich wants, the proposed reduction of $900 million in premiums and the potential for “medical inflation,” Valentino is loath to return more than $1 billion immediately. She also noted the accounting system the BWC uses differs from Generally Accepted Accounting Principles that private business owners and insurance companies follow and that markets go down as well as up.
State Rep. Tom Letson, D-Warren, attacked Kasich’s proposals as “irresponsible.” In a prepared statement, Letson said, “The Workers’ Comp fund is on the hook for $860 million because of previous Republican administrations’ gross mishandling of the Group Rating Program. …
“It is troubling that Gov. Kasich is following the same path of previous Republican governors who doled out cash-back rebates immediately before an election year. The massive corruption scandal at BWC may be a distant memory for some, but that doesn’t mean we should let that culture of corruption creep back into state government.”
The increase in assets would allow the BWC to fund $15 million in fiscal 2014 for safety and wellness programs, Buehrer said, three times the $5 million appropriated this year. For every dollar spent on safety measures and safety instruction, Caldwell said, $3 is saved in BWC payments to injured workers who suffer injuries from accidents in the workplace.
“Ohio’s safety grant program has proven effective,” the administrator of the BWC said. “In companies receiving grants [of up to $40,000] claims frequency has decreased 66% and claims costs per full-time employee has decreased 86%.”
The additional $10 million would pay for a “new safety education program for employees and workers,” and he suggested, allow for more imaginative efforts.
Copyright 2013 The Business Journal, Youngstown, Ohio.
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