Workers' Compensation Reform Being Teed-Up at the Statehouse

Bruce Rauner has been talking about the need for changes to Illinois' Workers' Compensation Act ever since he declared himself a candidate for Governor. Illinois has one of the most expensive comp systems in the nation, and the high costs impose significant barriers to recruiting businesses and job growth.

Even though the data is beyond dispute, organized labor and its allies in the General Assembly are pushing back by arguing that the comp reforms enacted in 2011 provided plenty of savings. The problem, they contend, is that insurance companies and doctors aren't passing the savings along to employers. But this argument ignores the fact that the 2011 reforms, while a step in the right direction, were never viewed by employers as substantial enough to really solve the problem of excessive comp costs.

Part of the problem was that the 2011 reforms were crafted based upon the realities of interest group politics. Savings can be wrung out of the comp system using different mechanisms. One way is by addressing benefit levels and eligibility. This approach is opposed by labor unions and trial lawyers. Both of these groups are supporters of the Illinois Democratic Party. Cost reductions can also be found by addressing medical costs and reimbursement rates. This approach is opposed by insurance companies, hospitals, and doctors. These groups typically support the Illinois Republican Party.

So when it was time to pass workers' compensation reform back in 2011, the majority-Democrats protected their supporters with a bill that squeezed some savings out of groups that support Republicans. The resultant reforms therefore fell short and left a great deal of savings on the table. This isn't intended to be a criticism of the Democrats as much as a lament about what can happen during periods of single party rule. 

Flash forward to 2015. Illinois still has high workers' compensation costs (one study ranks us as 7th highest in the nation) and a Republican Governor determined to extract savings with the passage of reforms that will rile traditional Democratic constituencies. Probably the most significant reform being sought is a change to the causation standard. The Governor and business community want to require that an injury actually occur on the job as a prerequisite for comp benefits. Under current law, someone can injure themselves playing softball on a weekend, and successfully file for comp benefits if they later aggravate the injury while at work. The Governor, Republican legislators, and employer groups want to change this policy. And this change needs to happen.

One might appropriately consider any enacted reforms in 2015 as "Workers' Compensation Reform 2.0," or a natural continuation of the 2011 reforms with Republicans having a much more prominent seat at the table.