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Workers' compensation changes have ushered in lower premium rates, state officials say.
(FILE | MLive.com)
LANSING, MI – Michigan employers are paying 28 percent less in premiums for workers' comp insurance since reforms in 2011, the state says, but some believe that’s at the expense of injured workers.
The drop in rates is due to workers' comp reforms in 2011, according to information provided by Michigan’s Department of Licensing and Regulatory Affairs (LARA), but others say the rates started dropping before that.
Workers’ compensation is an overhead cost for businesses, and covers things like lost wages and medical costs when a worker is injured at work. Businesses can either opt to purchase workers’ compensation insurance or self-insure.
The pure premium advisory rate will drop by an average of 6.5 percent in 2015, the department says. That makes a 27.7 percent decrease in rates since 2011, which saves Michigan employers an estimated $227 million.
“Michigan’s considerable reduction in workers’ comp costs is great news for our employers, employees, job seekers and any company looking to move here,” said Gov. Rick Snyder. “These significant savings are a real asset in terms of growing and retaining jobs, and give us an advantage over competitor states in attracting new businesses.”
Michigan Workers' Compensation Director Kevin Elsenheimer pointed to reforms in 2011 that laid the foundation for the rate to decrease.
Data from the Compensation Advisory Organization of Michigan shows that the rates had decreased even before the 2011 changes. In the last 15 years, from 1999 to 2014, the rate has gone up in four years: 2003, 2004, 2007 and 2009.
According to LARA, Michigan’s cumulative pure premium decrease this year bucked the trend in other states. The national average premium rate increased 10.8 percent.
At the time the 2011 legislation passed, unions and others argued against the changes, particularly one that required injured workers to work if they're offered a job within their skill set they can perform or risk losing benefits.
Now Richard Warsh, a workers' compensation attorney in Southfield who has been practicing for 37 years, says it's virtually impossible to win a case. He has people in his office who can barely get out of bed in the morning but are expected to find work, he said.
"It has turned into truly a tragedy for the injured workers," Warsh said.
But for businesses the decreasing rates have decreased costs, and it's noticeable.
“We are without a doubt seeing a huge improvement.”, said Delaney McKinley, Michigan Manufacturers Association Director of Human Resource Policy.
Lower costs for Michigan businesses means companies have more disposable income, said Chuck Hadden, Michigan Manufacturers Association President & CEO.
“The state’s big drop in workers’ compensation rates gives our businesses more resources to start and expand their operations,” said Hadden. “Our companies invest this additional money into new equipment and facilities, and put it directly into the pockets of their employees. My counterparts around the country are envious of the work that Governor Snyder and the Workers’ Compensation Agency have done to reduce costs for our job providers.”
http://www.mlive.com/politics/index.ssf/2011/12/gov_rick_snyder_signs_bills_lo.html
Emily Lawler is a Capital/Lansing business reporter for MLive. You can reach her at elawler@mlive.com, subscribe to her on Facebook or follow her on Twitter: @emilyjanelawler.