WORKER'S `COMP' BILL PASSAGE PREDICTED

JEFFERSON CITY - Before lawmakers adjourn Friday, state Rep. Dennis Ziegenhorn predicts legislation will pass to ease the burden of skyrocketing costs of worker's compensation insurance on employers.

"We're going to have a bill; there's too much at stake for us not to pass one," said Ziegenhorn.

The Sikeston Democrat predicted that between now and Friday's 6 p.m. adjournment, there will be hours of meetings trying to resolve differences between the bill passed April 13 by the House and one that will be passed soon by the Senate.

As chairman of the House Insurance Committee, Ziegenhorn will be one of five House members serving with five senators to resolve differences in a conference committee between versions of the bill.

Ziegenhorn said the whole worker's compensation issue is complicated, but most legislators understand something needs to be done this year.

"There are too many people that don't understand the problem totally, but what they do understand after hearing from their constituents is that there is a problem," said Ziegenhorn. "I think they will vote for anything that will help contain rates."

Labor groups are generally opposed to the House bill; however, Ziegenhorn said there are enough legislators concerned about the problem who will act.

"The strong labor people do not want it, but everyone else does," he said.

Worker's compensation rates increased 38 percent in the last year and are estimated to go up another 15-20 percent this year.

The House bill puts a freeze on rate increases, except for a 7 percent cost-of-living increase.

"There are no rewards right now for trying to have cost containment for an employer because his percentage is going up 38 percent regardless of the claims he has," said Ziegenhorn. "We are seeing more and more people grouping together to self-insure, and that will become the answer if we don't do something."

The problem with self insurance, he said, is that most smaller companies cannot afford to take that approach and could still be subjected to massive rate increases.

Several insurance companies have been suggesting that if the House bill passes they may have to quit writing worker's compensation insurance in the state.

Liberty Mutual, headquartered in Boston, has sent a letter to clients indicating that if there is a freeze on rates without reforms that address medical costs, "this legislation may limit the availability of insurance in Missouri."

In the letter, a company official said: "This legislation purports to be a worker's compensation reform bill. This, however, is not the case. House Bill 975 contains little in the way of measures that will reform the underlying costs that are driving up worker's compensation rates in Missouri. HB-975 will restrict rates without providing the offsetting cost savings."

Ziegenhorn said he interprets Liberty Mutual's letter as a threat that it will pull out of the state if any kind of freeze is enacted. He said some companies are concerned about action Liberty might take since state law requires them to have worker's compensation insurance coverage.

Ziegenhorn said he understands the concerns of employers, but they should not be fooled by threats from insurance companies.

"We're not trying to hurt them; we just want to bring rates under control," said Ziegenhorn.

He also took issue with Liberty Mutual's contention that the House bill does nothing to address health costs. Although the bill does not establish fee schedules, Ziegenhorn said it does work toward cost containment by cutting back on some of the "red tape" in processing claims, making it easier to settle claims without involving attorneys, and provides incentives for having a safer work place.

"If we pass a bill restricting rates and companies do pull out, we'll find ourselves back in special session this summer addressing a statewide worker's `comp' pool, the same way we did in 1975 when no companies would write malpractice insurance," said Ziegenhorn.

"Then, in a few years, the market will open up and the companies will be back in the state and be mad because the state is in the insurance business."

Ziegenhorn said it is not necessary to provide a cost-of-living increase in premiums this year. He said, however, that a final bill this week likely will have the cost-of-living provision.

"I don't think insurance companies have been losing as much as they say they have been losing," said Ziegenhorn. "Insurance agents have been told by companies they are losing money every year on worker's `comp,' but they have had the privilege of having the person who sets the rates to take into account lost experience from the previous year."

He explained that rates are set by the National Commission on Compensation Insurance (NCCI) in cooperation with the Division of Workers Compensation and the Department of Insurance. Ziegenhorn said he can't believe a profit margin is not built into the rates for companies.

"There is nothing wrong with making a profit, but we have to get a cost containment on medical, on attorneys, and other areas," said Ziegenhorn.

One component of the final bill could be eliminating the role of NCCI in rate setting and letting the market set the rates. Ziegenhorn said he might be receptive to that approach.

Ziegenhorn said there will be some distinct differences and expects the bill that finally wins approval to be filled with compromise. "I'm not going to say our bill is the best, but I don't think there can be a bad bill if anything can be done for cost containment," he said.

"Whatever we pass must be fair for employees as well as employers."