Workers compensation costs in Illinois, long a discouragement for business planners, is improving after reforms signed in 2011 by Gov. Pat Quinn.
That’s good news, but there is still work to be done.
According to a report last week by the Illinois Department of Insurance, employers in the state have saved $315 million since reforms were passed and signed by Quinn. Illinois insurers have been advised to cut their rates by another 4.5 percent this year. That would bring the total reduction to 13.3 percent since the law was passed.
The 2011 law made some important changes. It included a 30 percent cut in the workers compensation medical fee schedule and instituted a program that ensured employees received cost-effective medical treatment. In addition, the appointment and training of arbitrators were improved. That resulted in some arbitrators leaving the system, and higher standards for the new ones.
That’s all good news.
But set up against that positive news was the dismal news on employment from the U.S. Department of Labor. The jobless rate in Illinois increased slightly in July, to 9.2 percent. That’s the second-worst unemployment level in the nation. Nevada has the dubious distinction of the highest unemployment rate.
So far, the workers compensation reforms have not passed the ultimate test — creating more jobs.
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There are, of course, other factors that cause the state’s high unemployment rate. While surrounding states are cutting taxes, Illinois has increased them to the point that tax revenues have doubled in the last five years. Although the tax hikes were labeled as “temporary,” few business leaders trust that the state will actually roll back the taxes. Another contributing factor is the state’s overall financial problems, fueled by the massive unpaid pension obligation. Illinois also has a well-earned reputation for a difficult state in which to conduct business.
Businesses don’t want to expand or locate in a state where already-high taxes might increase, the state government can’t manage its financial affairs and decisions are based on political clout.
In addition, there’s also more to accomplish on workers compensation reform. The state still has relatively low standards for proving an injury was workplace-related. Employees can collect benefits, even though work is not the primary cause of an injury.
Everyone agrees that workers should be compensated for injuries that occur on the job. But Illinois allows workers to claim injuries that are not directly work-related. Gov. Quinn says he is open to more reform.
Strengthening those rules would help Illinois businesses.
And it would result in more Illinois jobs.