Governor Rauner's Veto of Hb 2622 Hurts Small Businesses Save on Work Comp Costs
PRESS RELEASE: LETTER TO EDITOR
Governor Rauner, on August 18, 2017, vetoed House Bill 2622, which was designed to help small businesses reduce workers' compensation insurance premiums. HB 2622 would have created a not-for-profit workers' compensation insurance company charter by the State of Illinois. Governor Rauner's reasons for veto of HB 2622 were released as follows:
"Today I veto House Bill 2622 from the 100th General Assembly, which will create a state-sponsored workers' compensation insurance company. This bill will also require the Department of Insurance to provide a loan of $10 million out of the operations fund of the Workers' Compensation Commission to capitalize the new organization. Illinois currently has the most competitive market for workers' compensation insurance in the country with over 300 participants. Maintaining this state of affairs is in the best interest of every employer and job creator required to purchase this insurance.
This legislation would instead disrupt the functioning market by inserting new and unnecessary layers of government interference due to an unfounded belief that the current competitive system is broken. Furthermore, this bill would divert needed funds from the Workers' Compensation Commission, which could impact the backlog of cases and increase the cost of claims. The $10 million loan that this legislation demands of the Commission is not likely to have any meaningful impact in providing better access to affordable insurance.
This bill does nothing to address the actual cost drivers and broken aspects of our workers' compensation system, which are significant contributors to the flight of businesses and jobs from Illinois and obstacles to the efficient and effective system that injured workers deserve. Instead, it directs attention at a fabricated problem.
Therefore, pursuant to Section 9(b) of Article IV of the Illinois Constitution of 1970, I hereby return House Bill 2622, entitled "AN ACT concerning regulation," with the foregoing objections, vetoed in its entirety."
Governor Rauner has missed an opportunity to help small businesses reduce workers' compensation premiums as follows. Historically, in 2011, Governor Quinn and the State Legislator passed workers' compensation amendments, which would substantially reduce benefits to employees and reimbursement rates to medical providers for work-related injuries. The NCCI has now recommended over a 30% reduction in workers' compensation insurance premiums in the State of Illinois, which has gone unrealized because the workers' compensation insurance industry has continued to raise premiums to increase their profit margins and have not passed on any of the benefit of the 2011 changes to small businesses.
HB 2622 would have leveled the playing field by creating a not-for-profit workers' compensation fund to provide workers' compensation insurance at a fair and reasonable rate to small businesses and provide needed competition to the over 300 workers' compensation insurance carrier who have failed to pass savings from the 2011 changes as encouraged by the NCCI ratings organization.
Governor Rauner's reasoning is flawed. Specifically, in the last ten years, the filings at the IWCC for work-related injuries have dropped from roughly 75,000 claims to 38,000 claims per year. As a regular practitioner before the IWCC, I can indicate that there is no current backlog of cases currently pending. The IWCC currently has 30 arbitrators and 9 commissioners to adjudicate workers' compensation claims. Ten years ago, the Commission operated with roughly 25 arbitrators and 6 commissioners for roughly 75,000 claims per year and operated efficiently.
Governor Rauner's veto of HB 2622 does nothing more than protect bloated insurance companies' bottom line profit margins.
This veto demonstrates that Governor Rauner is more interested in helping large insurance companies than small businesses and employees. This Bill would not have impacted any self-insured companies like Caterpillar, our hospital employers, or Government employees.