Privatization – on or off the table?

Public administration of workers’ compensation  and collective liability are core Meredith principles frequently challenged.

In New Zealand, the governing National party’s election pledge to introduce private sector competition into work injury compensation appears to be no longer under consideration. Vigorously opposed by the NZ Council of Trade Unions, privatization is now ‘off the agenda’ according  to ACC’s Chief Executive.. (source: Grant Duncan’s blog Policy Matters, Aug.  29, 2013)

In Australia a 2012 Ernst Young newsletter asks if privatization is on the table? Pointing to the June amendments to New South Wales compensation system, it notes that “While the focus has been on the legislative amendments to benefits, the surprise was the amendment that enables the Government to privatise the Scheme by allowing new insurers – without the need to pass further legislation”. It suggests the insurance industry take advantage of this new window of opportunity to lobby ….

Concerns over a privatization agenda are not new to those familiar with reforms and policy changes over the past few years to Ontario’s compensation system.  And in the run up to elections, Ontario’s Progressive Conservative party, in its 2012 White Paper, has called for the government to allow private insurance firms to compete with the Workplace Safety and Insurance Board  in providing coverage for injured workers  [read here] and continues to press in this direction, opposing also mandatory coverage.

Meanwhile in the U.S. recent initiatives see Maryland joining states that have privatized their workers’ compensation insurance funds  and Oklahoma joining Texas in favouring opting out. Illinois, on the other hand,  introduced legislation in 2013 to create a state workers’ compensation fund to compete with the private insurers, while Washington State has successfully rebutted attempts to privatize their popular workers’ compensation system.

In his article “Opting Out is the New ‘In’ Thing”, John Stahl  (LexisNexis workers’ Compensation Law , Jan. 14, 2013)  discusses the 2012 Rousmaniere study on privatization and alternatives to workers’ compensation.  Stahl concludes by urging caution:  “Employers should recognize as well that many pro-labor forces may consider opting-out as putting the fox in charge of the henhouse…The final word of caution is that a state legislature’s duty to protect the health and safety of the workers in its jurisdiction trumps lawmakers’ responsibility to support local businesses.”  Tom Domer, in the second of his two-part series on opting-out,  starkly outlines how this alternative can hurt both employer and employee: “the dangers of opting out of the system means a retreat to harsh industrial conditions, producing  the same kind of inequities  that workers’ comp remedied over a century ago.”