Last week, Illinois Governor Bruce Rauner gave his annual budget address to the state. In the lengthy speech, Governor Rauner spent most of the time addressing the need for job creation in the state and the reasons for businesses leaving. Spending only one sentence of his entire address on workers’ compensation, Rauner stated that high workers’ comp insurance costs are causing higher property taxes and businesses to leave Illinois. What Rauner didn’t say should speak louder than the few words he actually expressed. There’s one type of business that’s flocking to do business in Illinois. Our state has the most workers’ comp insurers of any state in the country. 332 insurers, to be exact.
Illinois a Favorable Environment for Insurers
In Illinois, profits for workers’ comp insurers have been on the rise since 2010. Since 2011, however, the dollar amount they’ve paid out for claims has decreased while their premiums have steadily gone up. So where is all the extra money going? It’s probably not a shock to hear that insurers are pocketing the extra income instead of passing on the savings to businesses in the form of lower premiums. Insurers are also empowered by state legislation that allows them to deny claims and cut back on available benefits. However, businesses see workers’ comp as a necessary evil. By providing workers’ comp insurance, they are essentially free of responsibility for injuries sustained on the job. Governor Rauner hopes that by cutting back on workers’ comp premiums and payouts, companies will see Illinois as a favorable place to do business and will set up shop in the state.
The Lure of Job Creation Masking Other Potential Problems
Think of the cycle: An employee is injured on the job and has medical costs, only some of which are covered by their workers’ comp benefits. The employee also is faced with reduced pay, but has mounting bills and a family to still care for. It only makes sense that many of the injured receiving workers’ comp have had to turn to public assistance, which in turn costs taxpayers more. It’s a vicious cycle in which insurers are passing the cost onto businesses and the injured, who have to lean on taxpayer-funded benefit programs to stay afloat. Why is it that they can deny claims, contribute less to medical costs and still charge businesses more?
Governor Rauner should focus less on further cutting workers’ comp benefits and spend more time targeting insurer greed. Only then would premiums shrink in a way that could still preserve benefits for those injured on the job and bring back jobs to Illinois.