The System Needs Work

California’s faltering economy will be the victim if lawmakers squander an opportunity to fix a workers’ compensation system that charges some of the nation’s highest premiums yet delivers some of the weakest benefits to injured and disabled workers.

The state Senate and Assembly failed to reach agreement on needed reforms before their summer break, but a legislative conference committee could still finish the job. Democrats and Republicans will have to set aside recall politics long enough to make a deal.

The first step for legislators is to establish controls that will slow dramatic increases in medical payments. Many employers -- including school districts, nonprofit organizations and cities -- are being forced to cut payrolls to pay their soaring premiums.

Incredibly, some parts of the medical-care industry, most notably outpatient surgical centers, are free to charge whatever they want because the state has failed to create payment rules. Legislation introduced this year by Sen. Richard Alarcon (D-Sun Valley) provided a cost-containment framework for conference committee members. State Insurance Commissioner John Garamendi supports fee schedules based on the federal Medicare and Medicaid programs.

Fee schedules alone, though, won’t be enough. California also needs to keep unscrupulous medical-care providers from charging for unnecessary treatment. Something’s wrong when, as Times staff writer Marla Dickerson reported Sunday, injured Safeway workers in California visit chiropractors an average of 40 times -- or four times as often as the grocery store chain’s checkers, meat cutters and bakers in other states. Says Garamendi: “Either we’re a very fragile society or somebody’s gaming the system.”

Other states use “utilization reviews” that allow workers a set number of visits but require an independent monitor to assess subsequent treatment.

Workers’ compensation is also supposed to limit litigation, yet a third of injured workers who are out sick for more than a week end up hiring lawyers. Cutthroat competition has forced two dozen private insurance providers into bankruptcy. Nearly 60% of the state’s employers now buy their coverage from a public insurance fund that is struggling to fill the gap as private insurers abandon the state.

Workers’ compensation reform will be difficult to separate from the bitter political infighting leading up to the October recall vote. But California employers are paying exorbitant fees, employees are being short-changed and the economy suffers an unnecessary extra burden.

Members of the state Legislature can surely summon the will to act for the good of California.