Calif. Commissioner Looking Forward to Working with Gov. for WC Reform

November 18, 2003

Calif. Insurance Commissioner penned the following letter to Governor Arnold Schwarzenegger on the day of his induction into office:

Dear Governor-Elect Schwarzenegger:

Congratulations on your upcoming inauguration! In following the media in recent days, I am very pleased to see that you are determined to move expeditiously toward solving California’s most serious and immediate problems. I am particularly delighted that you have identified a program of workers’ compensation reform that relies primarily on the package of reforms that I put forward during the last session. I look forward to working with you in a bipartisan effort to realize this ambitious agenda.

As we discussed during our initial meeting, I believe that at a minimum we must take on some thorny issues and enact serious reforms including addressing the difficult issue of permanent partial and total disability (PD). We must implement sound utilization management through the use of Independent Medical Review (IMR), undertake State Compensation Insurance Fund reform, address fair controls of physicians’ fees, rationalize the current irrational penalty structure, create sound incentives throughout the system for return to work, reform the information collection process, and guarantee immediate medical treatment for injured workers. California’s economic recovery depends not only on realizing substantial savings for employers, but also on assuring that injured workers are efficiently and effectively treated, and set back on track for healthy and productive lives.

I have attached a summary of my initiatives. Within a few days I will send you language that I am currently discussing with several potential authors.

These initiatives will complete the substantial gains that we made in the last session with the passage of AB 227 and SB 227. As I am sure you know, my recent pure premium decision indicates that our work so far could result in pure premium rates that will be nearly 15 percent below current levels. My analysis also indicates that employers could realize savings of nearly $5.5 billion on an ongoing basis as a result of our recent reforms. As I have said repeatedly, this will only be possible if everyone in the system works in good faith to implement the new law expeditiously.

In moving boldly forward to complete the reforms, we shouldn’t forget the housekeeping chores involved in cleaning up last year’s measures. To this end I have submitted a letter to the chairs of the relevant committees in each house outlining necessary technical changes. This letter was widely circulated and is attached for your review.

Let me end by acknowledging what everyone knows. Reform of the disability portion of the system, although crucial, will be very difficult to achieve. For this reason I intend to convene a summit on this issue soon to develop a real solution. In addition to the familiar California experts, I plan to include expertise from other jurisdictions where structural changes in PD have been pursued. I hope the Commission on Health & Safety & Workers’ Compensation (CHSWC) Rand study will provide a starting point that will enable all the relevant stakeholders to achieve consensus on reforms for California that can be enacted through bi-partisan cooperation. I look forward to your valuable participation in such an effort.

Again, I extend my heartfelt congratulations and a warm welcome to the world of California policy making.


Insurance Commissioner

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