Businesses speak out against I-1082

YAKIMA, Wash. -- Two Yakima businesses expressed opposition Wednesday to an initiative that would privatize the workers compensation insurance market.

Initiative 1082, which was sponsored by the Building Industry Association of Washington, allows private insurance companies to sell workers compensation insurance.

Several business industry groups, including the National Federation of Independent Businesses and the Association of Washington Businesses, say the initiative would provide much-needed competition for state Labor & Industries, which runs the workers compensation insurance program.

Such competition, supporters argue, would lead to lower rates.

The initiative, however, does not prevent L&I from competing under a privatized system.

Representatives from the Vote No on I-1082 campaign and the businesses opposed to the initiative said its passage would create extra costs for small businesses, with no guarantee of lower rates.

One of the points of contention for the opposition is a provision that would remove the employee share of workers compensation premiums.

Ryan Low, co-owner of Essencia Artisan Bakery in Yakima, where a news conference was held, estimates that the provision would cost his business an extra $2,000 to $3,000 a year, making the total workers compensation cost at around $12,000 if the initiative passes.

"A small startup business like this can not swallow (the extra costs)," he said. 

Ron Bonlender, a former Yakima City Councilman and the owner of the Sub Shop of Yakima, also expressed concern about going from a government-run workers compensation system to a system of private insurers, which he argues are driven by profits rather than worker safety issues.

He is also bothered that voters might be drawn to catch phrases rather than what the initiative will
actually do.

"A lot of people who vote will give 60 seconds to consider something as big and game-changing as this," Bonlender said.

Supporters of I-1082 said that small business owners are tired of the lack of action to change the inefficiencies in the L&I system, noting that it has cost L&I about 50 percent more in the last decade to deal with claims, which have dropped by about 52 percent during
the same period.

Any extra cost that employers will incur when they begin paying for all the workers compensation premiums is small compared with the opportunity for better competition and, ultimately, lower premiums -- not to mention greater efficiency in getting workers back on the job, said Patrick Connor, Washington State Director for the National Federation of Independent Businesses in Olympia.

And with employers having to pay for the entire workers compensation insurance premium, about $315 million would go back to workers' pockets, Connor said.

He points to states like West Virginia, which supporters say yielded a 44 percent decrease in workers compensation premiums after privatizing its system in 2006.

The initiative, he says, simply aligns Washington to other states that already have privatized systems.

"We don't hear of (other states) clamoring for a government-run system to replace their private
system," he said.

Both sides believe that the support of small businesses will be a key component to success.

Alex Fryer, spokesman for Vote No on I-1082, said the opposition is working with community organizers and several labor and small business organizations to gain the support of small businesses around the state.

The initiative will ultimately benefit insurance companies, who will cherry- pick safer employers and raise prices for everyone else, he said.

"The message is that you have to read the fine print," he said.

Those who support the initiative are continuing to mobilize their small business supporters with the message that the opposition is only preserving the interest of union bosses and trial lawyers.

"I think it's nothing more than fear-mongering to claim that one (insurance) company is going to come in and create problems for workers compensation," Connor said.

* Mai Hoang can be reached at 509-577-7685 or mhoang@yakimaherald.com.

This story has been updated to correct a statement by Ryan Low.