Assembly approves workers’ compensation plan

Thursday, May 27, 1999 | 9:23 a.m.

The governor's office worked out the plan with labor organizations, system administrators and lawmakers - all of whom had some reservations about transforming the Employers' Insurance Company of Nevada into a private company.

The privatization plan passed Wednesday will restore workers' benefits to early 1990 levels, create a cabinet-level health care consumer advocate and sell off the state's $600 million insurance liability to a private company.

The state's liability had peaked a few years ago at about $2 billion and was partially due to mismanagement, skyrocketing medical costs in the 1980s and a rebate given to all policy holders.

"This takes our existing system and makes it public. In the process, the debt will be sold, allowing the state to escape this liability," said Assemblywoman Barbara Buckley, D-Las Vegas.

Buckley, chairwoman of the Assembly Commerce and Labor Committee, was skeptical of the plan but eventually was persuaded by the addition of the consumer advocate provision.

SB37 would make EICON, the current monopoly that operates the workers' compensation system, a private firm that can better compete with existing private insurers, the administration says.

As a result of the system's huge debt, in 1993 workers gave up 23 percent of benefits overall and some employers were forced to boost their premium payments, said Danny Thompson of the state AFL-CIO.

Thompson, who once called the privatization effort "union-busting," now backs the plan.

To help bring labor into the agreement, the maximum length of vocational rehabilitation for injured workers would be increased by six months and some benefits also would be increased - estimates range from between $25 million and $40 million.

Once the market is open, insurers will compete for $440 million a year in premium income. The state's current share amounts to $385 million in premiums from 46,000 employers. The rest goes to companies who can create and manage their own self-insurance programs.

The bill also shifts the burden of proof for denying claims on the basis of pre-existing conditions from the worker to the insurer.

Still, it has been estimated that between 350 to 600 employees of the state system could be laid off as EICON goes private.

But under terms of the agreement, the employees won't face pink-slips until next October.

SB37 also provides assistance to state employees who lose their jobs, partially by giving them preferential hiring status at other state agencies.

Only a handful of lawmakers voted against the bill.

One, Assemblywoman Chris Giunchigliani, D-Las Vegas, said the state still has a role to play in the industrial insurance market.

The bill returns to the Senate for concurrence.