Sen. Alarcón Responds to Schwarzenegger’s Comments About WC Reforms

In an obvious gaffe in the Sept. 24 recall debate, Arnold Schwarzenegger called the recently passed Workers’ Compensation Reforms, “pre-election bogus.” Senator Richard Alarcón (D-Van Nuys) the Senate Chair of the Workers’ Compensation Conference Committee responded to Schwarzenegger’s comments.

“It’s un-nerving that a gubernatorial candidate knows so little about one of the most pressing issues facing the California economy,” said the Second-term State Senator. “When the Hollywood static has been quieted, the fact is – this landmark reform legislation will reduce premiums for employers while protecting the rights of injured workers.”

It’s estimated that the reforms in SB 228 and AB 227 will cut several billions of dollars in costs to the system initially and another several billion dollars annually. In the debate, Schwarzenneger said that workers’ compensation premiums would rise next year; but in fact, the Insurance Commissioner and the workers’ compensation Insurance Rating Bureau have publicly stated that enactment of the legislation will stave off the recommended 12 percent increase to the pure premium rate scheduled for January.

Garamendi has also stated that the savings generated by the reforms – which are awaiting Governor Davis’ signature – will further halt the 8 percent pure premium rate increase previously approved by the Insurance Commissioner which became effective last July 1st.

Alarcón said, “We have been working on these reforms for two years. We relied on some of the best minds to research the subject.” The legislation was based on the prize-winning RAND/Commission on Health, Safety and Workers’ Compensation report and the findings of the State Auditor General – both of which Senator Alarcón requested almost a year ago. “We lived and breathed every intricacy of the complex Workers’ Compensation system, tweaking and crafting this legislation to the last minutes of the last day before the deadline. For someone with little knowledge of this multifaceted system to cavalierly discredit this work is disingenuous at best. Governor Davis and I will be happy to educate Mr. Schwarzenegger on the workers’ compensation system and reforms.”

The sweeping reforms will streamline and simplify the system, which has become a wasteland of middleman abuse and misuse.

Among the major reforms: (partial list)

– Creation of a multi-pronged control system on the overuse of medical services to inflate costs, (otherwise known as utilization control,) through adoption of a set of limits – which can only be appealed in court. The legislation also calls for second opinions for spinal surgeries, mandatory adoption of utilization review protocols by insurers and employers and hard caps on chiropractic and physical therapy visits. The projected savings are over $1 Billion Dollars-annually.

– Adoption of a Medicare based fee schedule to reduce over-billing by outpatient facilities. The projected savings are $800 million dollars annually.

– Adoption of a Medi-Cal based fee schedule for pharmaceuticals and the use of generic drugs whenever applicable. The projected savings are $400 million dollars annually.

– Replacement of the costly and ineffective vocational rehabilitation program with an education specific “voucher” program, estimated at saving $1.2 billion dollars annually.

Alarcón said, “These are major reforms. While other reforms are necessary and are being considered, experienced public servants know that passage of this legislation is a major accomplishment. But Mr. Schwarzenegger calls it ‘trickery.’ His characterization is an obvious attempt to gain political momentum through Chicken Little tactics. Arnold is claiming that the workers’ compensation “sky” continues to fall, when the Worker’s Compensation Insurance Ratings Board, the Insurance Commissioner and everyone else who is actually familiar with the system know relief is on the way.”