Washington rises to 15th costliest premium in latest Oregon Study

Oct. 25, 2016

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Every two years in October, the Oregon Department of Consumer and Business Services publishes its workers' compensation premium rate rankings. Just last week, the 2016 edition came out. Washington has climbed up to 15th highest premium in the country, according to the Oregon study.

Oregon's rate study is closely followed by the national workers' comp industry, since for most states it is an accurate picture of where pure premium rates rank. Washington, a special snowflake in the workers' comp world, is alone in charging premium by the hour rather than by payroll, and uses unique, rather than standard, industry classifications. A lot of assumptions and conversions have to be made to translate Washington's system into something that can be compared countrywide. Further, as one of the four monopoly states, Washington has a very substantial self-insured community, covering about a third of the workforce, whose claim costs are not accounted for in the study.

Back -- way back -- in the day, in the late 90s and early years of this millennium, Washington used to rank alongside Oregon in the high thirties out of fifty states for highest premiums, prompting the improbable rallying cry at the Department of Labor & Industries of that era, that the secret sauce of Washington's monopoly made us a "high benefits, low cost" state for workers' comp.

Even today you hear vestiges of that mantra echo in labor union leaflets and legislative committee debates, although no employer who has ever paid premiums or underwritten claims costs in Washington has ever thought it was a low cost state.

We don't hear as much about the Oregon Study from the Department or worker advocates as we used to. Starting in 2010, Washington jumped from the 38th highest rated premium to the 26th; and then to the 13th in 2012. In 2014, Washington slid down a few spots to 17, but now in 2016 is back up to 15, holding steady now for three study cycles in the top third for state costs.

The employer community has never been a huge fan of the Oregon rate study, mostly because of the apples to oranges conversions, caveats, and omissions necessary to even rank Washington.

We've tended to watch the annual reports published by the National Academy of Social Insurance (NASI) that track benefit levels and employer costs. As the Washington Research Council points out, NASI data show that Washington expends the highest benefits per covered employee each year of any state in the nation, and has for quite some time.

As the Research Council contends, "benefit costs are the best indicator of the costs of the workers' compensation system and the best way to compare our system to other states."

This is certainly true of our state's self-insured employers, who do not pay premiums but instead pay the benefit costs directly.