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Workers compensation rate increases would have been 3% higher for California employers in 2013 if reforms had not been enacted, according to a report released Thursday by the state’s Department of Industrial Relations and its Division of Workers’ Compensation.
S.B. 863, a California workers comp reform bill that passed in 2012, was intended to reduce workers comp costs for employers and insurers and increase permanent disability benefits for workers. When it became a law on Jan. 1, 2013, the state’s Department of Insurance approved an 11.3% rate increase. Without S.B. 863, rates would have increased an additional three percentage points to 14.3%, according to the progress report assessing California’s workers compensation reforms.
“Despite the successes of S.B. 863, it could not entirely prevent the inevitable rise in premium costs, driven by long-term cost trends that had not been reflected in market prices,” the report states.
The law did increase permanent disability benefits by 30% in two years, but “it is too soon to determine the net effects, primarily because it takes up to two years or more for permanent disability to be determined,” according to the report.
“(The Department of Industrial Relations) took a balanced approach to putting S.B. 863’s reforms into practice,” Christine Baker, director of the department, said in a statement. “The priority was to increase the benefits in 2013, reduce frictional costs and implement the cost savings efficiencies through regulations, a process that started as soon as the law was signed. We have laid the groundwork for the next stage of improvements and expect more gains in the years ahead.”
California workers compensation reforms could lead to increased prices for office visits and physical medicine and decreased prices for surgeries based on trends from other states, according to a Workers Compensation Research Institute study.