Saturday, April 25, 1998 | 4:02 a.m.
AS 1993 unfolded, the 80-year-old state workers' compensation fund was nearly on its deathbed.
An independent audit of the State Industrial Insurance System found a $2.2 billion debt facing the agency that provides benefits for workers injured on the job. To put the debt into perspective, at the time its size was about the same as the state's two-year general fund budget. Along with the looming financial disaster, the state workers' compensation fund was plagued by charges of poor customer service.
Gov. Bob Miller and the Legislature stepped up to the plate, however, and passed reforms in 1993 that have given the agency the tools it needed to turn itself around. Five years later, the state workers' compensation fund is hardly recognizable. On the financial side, the fund is doing incredibly well, registering record net income for the last four years and creating a surplus of $250 million. Customer service also has improved dramatically. One example of its concern for the welfare of injured workers was its response to a devastating explosion at a Northern Nevada chemical plant that killed four people and injured others. State fund employees were some of the first people at the scene, even offering the services of a translator to help law enforcement sort out the details from the Spanish-speaking survivors.
Starting in July 1999, private insurers will compete against the state fund, writing workers' compensation policies. To give it an equal shot at competing with private insurers, the 1997 Legislature allowed the state agency to create a separate fund to pay off claims before July 1995 totaling $1.6 billion; to service that debt, $650 million was set aside in the old fund and interest earned from that money should pay off the debt in the next 30-40 years.
Even with its improvements and the advent of competition, there is still talk of privatizing the state workers' compensation fund or abolishing it altogether. These scenarios, though, could be devastating to businesses, especially smaller employers. Unlike a state fund, which is required to provide coverage for all employers regardless of risk, private insurers can pick and choose who they will insure. Big private insurers can also drive other companies out of the market, leaving employers at the whim of a few insurance companies, forcing them to pay higher rates.
Maintaining a healthy and robust state workers' compensation fund that offers reasonable premiums is vital for the business community. The turnaround at the state workers' compensation fund is a government success story. The agency faced long odds in 1993, but has bounced back by 1998 to provide the kind of top-flight service Nevadans have come to expect from a public agency.
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