By Phil Drake | Montana Watchdog
HELENA — Nearly 18 months after Montana cut its workers’ compensation rate, the Treasure State no longer has the most expensive rate in the nation.
Instead, it has the eighth highest premium rate after sweeping reforms reduced the rate by 20 percent, according to the “2012 Oregon Workers’ Compensation Premium Rate Ranking Summary.”
But lawmakers said additional changes are needed to strengthen the system and save money.
For the moment, though, “we got it moving in the right direction,” said Keith Kelly, commissioner of the Montana Department of Labor and Industry, which worked with labor, management and the Legislature on workers’ compensation reform in the 2011 session.
Montana officials use the national study by the Oregon Department of Consumer and Business Services to gauge how workers’ compensation rates compare with other states. Alaska had the highest rate at $3.01 per $100 of payroll, and North Dakota had the lowest at $1.01.
Montana’s rate dropped from $3.33 per $100 of payroll in 2010 to $2.50 in 2012. The state estimated that it spent nearly $400 million on workers’ compensation in 2010.
Changes to workers’ compensation began in 2006 when Gov. Brian Schweitzer started the Labor-Management Advisory Council, made up of labor and management representatives. In 2011, the committee’s proposal was bumped in favor of House Bill 334, a Republican-backed measure, which made deeper rate reductions and incorporated many of LMAC’s ideas, including the closure of claims and fee schedules.
The National Council on Compensation Insurance estimated HB 334 would bring savings of 20 percent to 44 percent in the first year alone, or $84 million to $183 million.
Within weeks of its passage, the state’s largest workers’ compensation insurer, the Montana State Fund, cut rates that kicked in July 1, 2011, and then announced in April that the rates would remain the next fiscal year that began July 1.
“It’s certainly what we hoped for in terms of movement,” said Laurence Hubbard, executive director of the Montana State Fund.
But he warned that Montana also needed to keep its eye on costs for injuries and losses as well as workplace safety.
One of the biggest reforms called for the closure of medical benefits five years from the date of permanent partial injury.
Hubbard said that alone made up 12 percent of the 20 percent decrease. The first claim to hit that threshold should be in 2016, which Hubbard said is when insurers would see savings, if any.
State Rep. Scott Reichner, R-Bigfork, who sponsored HB 334, said officials need to be patient with the law and let the guidelines work.
He and Hubbard said Montana would have to continue with reforms, monitor court decisions and other places in which Reichner said could “open up holes in the system.”
“We need to treat this as a success,” Hubbard said. “This is positive news and Montana is a better place to do business in.”
A summary of the study was released Wednesday, but the full study will be posted early next year, Oregon officials said.
Contact Phil Drake at email@example.com or (406) 442-4561.