By Patrick Yeagle
Gov. Bruce Rauner on Friday vetoed earlier this month a bill which would have created a state-run insurance provider for workers' compensation.
The veto comes amid debate over whether private insurers bilk employers through allegedly outsize premiums.
In 2011, Illinois adopted several changes to its workers' compensation system, including lowering reimbursement for doctors by 30 percent, standardizing disability ratings and putting time limits on wage differential awards, among other provisions. Since those changes were enacted, Illinois has seen a decrease in benefit payouts, a decrease in premiums and an increase in insurer profits, according to annual reports from the Illinois Workers' Compensation Commission.
Despite the changes, some employers have voiced concern that premium rates are still too high. They say the system is too quick to blame employers and too generous with benefits, keeping premiums artificially high. The Illinois Trial Lawyers Association, a group of lawyers representing injured employees and consumers, instead blames the insurers themselves, saying the insurers have pocketed savings from the 2011 changes instead of passing them along to employers. That controversy is at the center of debate in the Illinois statehouse over whether and how to make further changes to the Illinois workers' compensation system.
House Bill 2622, which Rauner vetoed on Aug. 18, would have created the Illinois Employers Mutual Insurance Company, which would have been run as a nonprofit, independent corporation selling workers' compensation policies on the open market alongside private insurers. The Illinois Department of Insurance would have loaned the company $10 million in seed money. The concept behind the proposal was that a state-run insurer would operate without a profit motive, creating downward pressure on premiums in the rest of the market.
Insurers opposed the bill, saying Illinois' market is already competitive and has the most insurers of any state.
In his veto of HB2622, Rauner echoed those criticisms, saying the bill directs attention to a "fabricated problem."
"Illinois currently has the most competitive market for workers’ compensation insurance in the country with over 300 participants," Rauner said. "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."
The bill passed the House in April with a 67-51 vote and passed the Senate in May with a 32-20 vote. Both votes were primarily along party lines, with Democrats voting in favor and Republicans voting against. Sen. Sam McCann, a Republican from Plainview who has voted against Rauner on some key issues, was the only Republican to vote for the bill in either chamber, while two Democrats in the Senate voted against the bill.
Rep. Laura Fine, a Democrat from Glenview, sponsored HB2622 in the House. Fine couldn't be reached for comment on whether she would seek a legislative override of the veto.
On Aug. 25, Rauner also vetoed House Bill 2525, which would have required workers' compensation insurers to file premium rates with the Illinois Department of Insurance before the rates took effect and would have given the department power to stop "excessive" rates from taking effect.
Speaking with regard to both bills, Jeffrey Junkas, assistance vice president for state government relations for the Property Casualty Insurers Association of America, called the bills "ill-conceived" and said they "were not true reforms."
“The bills presented to the governor amounted to a massive government intrusion in the workers compensation system," Junkas said. "They would have had profound negative consequences for injured workers, the business community and the state’s economic competitiveness."
Contact Patrick Yeagle at patrick@springfieldbusinessjournal.com.
