Solomons’ Bill Calls for Overhaul of Texas’ Comp System

February 11, 2005

State Rep. Burt Solomons (Carrollton) recently filed a bill that would make major changes to the workers’ compensation system in Texas. According to an announcement released by the House of Representatives, House Bill 7 abolishes the Texas Workers’ Compensation Commission (TWCC) and focuses on four main system improvements: streamlining the regulatory process by moving regulatory functions to the Texas Department of Insurance (TDI), allowing workers’ compensation networks, applying group health laws and rules to the workers’ compensation system, and focusing the entire system back on the injured worker.

“Today, with the filing of HB7 and under the leadership of chairs Burt Solomons and Helen Giddings, we will begin taking strides to reform a crippled system. I applaud their initiative and that of the committee members, and look forward to the results of their combined efforts in the coming weeks,” stated House Speaker Tom Craddick (Midland). Rep. Solomons stated that HB 7 will help improve premium and benefit costs by allowing private managed care, improving assurance of prompt medical care and cutting bureaucratic red tape for all system participants.

The legislation will likely be referred to the House Committee on Business and Industry where Solomons will work with Rep. Helen Giddings (Dallas) on crafting the language that will ultimately be considered by the full House.

“The fine-tuning of our workers’ compensation system in Texas is by far one of the most difficult tasks which members of the 79th Legislature will be confronted with, but solving complex problems is what the people of Texas elected us to do,” Giddings stated. “There are, of course, several actors on the workers’ compensation stage and we must effectively coordinate the many moving parts in order to ensure that what we finally come up with will be a system that provides injured workers with the health care that they need, at the lowest reasonable cost, so that they may return to work as quickly as medically possible. That way, both the employee and the employer are best served. This bill initiates our deliberations which will then lead to a final product.”

Although Texas rates of occupational injuries have declined 33 percent over the last decade, according to the TWCC, the amount of time injured workers remain off work in Texas has doubled over the past five years. The average amount of time that an injured work will remain off work in Texas is 21 weeks. However, in a study by the Workers’ Compensation Research Institute (WCRI), Texas workers were found to be less satisfied by the access to desired medical care and had poorer overall physical recovery.

“In Texas today one in four injured workers do not substantially return to work.” Solomons said. “The cost of a failing workers’ compensation system to these Texas families and our State’s economy is immeasurable.”

However, Texas employers have had no problem identifying the costs of the workers’ compensation system. Employers in the system pay the third highest insurance rates in the nation. Rates are based on claim costs, which include medical costs and indemnity costs, which represent the income benefits paid to injured workers while they are off work. In a WCRI study the average cost per claim was the highest of 12 states studied. Medical costs in Texas were 78 percent higher than the median and indemnity benefits have increased 38 percent over the past four years the fourth highest increase in the nation.

“These rapid premium increases, coupled with an inability to control medical costs, are forcing more and more Texas employers to opt out of the system altogether,” Solomons stated.

Texas is the only state in which employers can effectively choose not to subscribe to workers’ compensation insurance. The percentage of nonsubscribers has been increasing. According to the Texas Department of Insurance (TDI), approximately 38 percent of businesses, employing 24 percent of the state’s workforce, carry no workers’ compensation insurance. This represents the largest percentage of employees not covered by workers’ compensation since subscription has been tracked.

Other employers are choosing to relocate. For example, a Union Tank Car Company spokesman said a significant reason why Texas lost out to Louisiana for a new $100 million manufacturing plant and its 850 new jobs was because of this state’s higher workers’ compensation costs. The company’s current Texas employees—roughly a fourth of their overall workforce—represent half of its workers’ compensation costs.

“Employers and employees should demand better from a system that is supposed to get workers working again,” Solomons said. “When it comes to being treated for injuries, it shouldn’t matter whether you break your arm at work or in your garage. But in Texas, it does matter, and we can’t stand for that anymore. Workers’ compensation insurance needs to operate more like group health insurance, which does a better job of containing costs and achieving better health outcomes.” Rep. Solomons said that HB 7 concentrates on four main issues to correct the failing workers’ compensation system.

First, it streamlines the regulatory process by abolishing the TWCC and moving its regulatory functions to the TDI. This allows the agency that holds the license of many of the system participants to regulate the system. Further, the dispute resolution process is streamlined, eliminating many of the lengthy and costly administrative burdens.

Secondly, the legislation allows for workers’ compensation networks. Twenty-five other states allow workers’ compensation to be offered through networks, which help control over and underutilization. Further, managed care networks allow for certainty between carriers and providers regarding the coverage of treatments and assurance of payment.

The legislation also applies group health laws and rules to the workers’ compensation system. The legislature has almost unanimously voted in the past for prompt pay for doctors and consumer protections for patients like continuity of care. But in those laws, workers’ compensation was always exempted. Rep. Solomons stressed, “It’s time we eliminate the separate and different medical systems for our employees and doctors.”

Lastly, the legislation focuses the entire system back on the injured worker. The bill enumerates an injured worker’s “bill of rights” and mandates that the focus of the system be on the injured employee. To fulfill these goals, the legislation creates a consumer protection agency that will focus on helping injured workers through the system. The bill also increases income benefits for injured workers by approximately $200 a week to meet the State’s average weekly wage. Rep. Solomons stated there has been concern from many legislators over whether the income benefits provided to injured workers are sufficient.

Craddick emphasized the importance of this issue for this session stating “Texas ranks as one of the worst in the nation when it comes to many issues under the Texas workers’ compensation system. That is just not acceptable.”

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