The Department of Labor & Industries has proposed a 7.6 percent average increase in workers’ compensation premiums for 2010. The insurance, funded mostly by employers, pays for medical care, pensions and lost wages for injured workers.

2010 is a difficult year for a tax increase for any business. The construction industry has a relatively high rate of workers’ comp claims because of the nature of the work; however, this tax hike also applies to any employer that buys its insurance from the state, such as a hospital or school.

The National Academy of Social Insurance reports that Washington’s per employee workers’ compensation costs are the second highest in the nation. Because of improvements in workplace safety, injury claims have dropped 55 percent since

1990. However, claims are taking longer to resolve and costs skyrocket as those claims stay in the system longer.

In Washington, injured workers miss an average 266 days of work, almost three times the national average. Washington also leads the nation in the number of expensive, lifelong pensions awarded each year, a rate that has increased more than 300 percent since 1996. And while the overall number of claims has decreased, L&I’s administrative costs increased $39 million in the last year alone.

The state can dip into reserves to maintain the system. However, this is just a temporary fix. The 7.6 percent increase is just an arbitrary number, and doesn’t solve any of the fundamental problems in the workers’ comp system. L&I officials have indicated that the costs of our state’s workers’ comp system are expected to rise 19.4 percent next year.

Several changes are sorely needed to improve Washington’s system. Washington is only one of four states with a state monopoly of workers’ compensation insurance. Except for a select group of large self-insured businesses, all employers are required to purchase their insurance from the government. This is a poor business model. Competition reduces costs and improves the quality of products and services.

Nevada recently privatized their failing state insurance monopoly. According to the Council of State Governments, privatizing Nevada’s workers’ comp system erased a $2 billion liability. Washington should join with 90 percent of the nation that allows private-sector competition in order to reduce costs and improve service in our workers’ comp system.

A settlement option should be included in the workers’ comp system. Workers, employers, and L&I should have the option to settle and release claims for a lump sum, like the vast majority of states.

Washington also needs to revise their current definition of occupational disease, and narrow the scope to only work-related conditions. Finally, the maximum benefit to an injured worker should be set at 100 percent of the state’s average monthly wage, rather than the current 120 percent.

Employers, legislators and regulators should all have the same goal: to get injured workers the benefits and treatment they need to get them back to work at costs that are fair and affordable for employers and workers. The current system does not accomplish this.