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Cap comp hike at 15 percent

June 12, 2003

West Virginia lawmakers struggling with a 299-page bill to reform the state's workers' compensation system got an unexpected interruption this week when the old system sent out invoices with increases far higher than expected. Anything over 15 percent, the increase previously advertised, should be rescinded immediately.

Legislators are in a special session dedicated to workers' comp because unless something is done, the system will be bankrupt in 2006, with a $4 billion deficit. With no workers' comp system, it would be next to impossible to attract new firms to the state - or retain many that are there now.

In the search for a fix, there are no easy choices. Though the state can shift $150 million of the $225 million needed from the black lung fund, which is said to be overfunded, it's all uphill from there. Another increase in the cigarette tax is not drawing much support and other possibilities, like the $60 million, one-time payment from the federal government to compensate for tax changes, will only fix the program in the short term.

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In the midst of all this, the workers' comp system sent many companies notices that said due to a little-known provision called CMIA - claims management incentive assessment - their premiums would go up even more than the 15 percent all businesses had been told to expect.

According to the Associated Press, some businesses which received the CMIA boosts had actually improved their records on worker safety. Enraged owners and managers began calling lawmakers to vent.

As a result, the workers' comp bill is now in jeopardy, with Republicans threatening to oppose the entire reform package. That can't be allowed to happen, for all the reasons Gov. Bob Wise has outlined previously.

The system is in financial trouble now, but it cannot expect businesses to bail it out before any reforms are passed. State officials must cap the increase at 15 percent, or face the possibility that they'll get nothing at all.

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