W.S. Libbey Co. of Lewiston, National Sea Products of Rockland, Ethan Allen of Burnham — these are just a few of the companies that have cited the high cost of Maine’s Workers’ Compensation system as a major reason for their decision to shut down plants in our state.
These three plant closures alone cost hundreds of Maine workers their jobs. Time and again, the high expense of Workers’ Compensation has been identified as a significant barrier to keeping good jobs in Maine and to expanding employment opportunities for our citizens. Simply put, high workers’ comp costs result in lost jobs and lower wages for Maine workers.
Maine has come a long way since 1987 when insurance coverage for our workers was in jeopardy and the system on the verge of collapse. The landmark reforms Gov. McKernan initiated that year prevented an availability crisis, stabilized the insurance market, and averted the need for exorbitant rate increases.
Nevertheless, workers’ comp costs remain much higher in Maine than in other states, placing our businesses at a competitive disadvantage. The average per capita cost of Workers’ Compensation in the United States is about $100. By contrast, the per capita cost in Maine is about $260 — the highest in the continental United States and far higher than any other state in New England. It is not surprising that several firms have cited high workers’ comp costs as a reason for their decision to close their doors in our state or not to expand here.
Moreover, Maine’s workers’ comp system is too litigious. Connecticut has four times as many lost-time accidents as Maine but only half as much litigation. Unlike many other states, Maine litigates medical issues. The result is a complex, cumbersome, contentious system that fails both workers and employers.
Now is the time to bring our costs more in line with our neighboring states. If we care about Maine jobs, if we want Maine to be competitive, if we want to help the economy turn around, we must reform our workers’ comp system.
Toward that end, in September Gov. McKernan appointed the Governor’s Task Force on Workers’ Compensation Reform, a 19-member committee charged with identifying problems in the system and developing possible remedies. Having undertaken a comprehensive review of the system during the past four months, the task force is currently exploring ways to:
decrease costly litigation and streamline the system;
focus compensation on work-related injuries and illnesses;
reduce fraud and abuse;
ensure appropriate utilization of medical services;
improve insurance company claims handling;
promote workplace safety, and
return injured employees to work as soon as possible.
The task force is likely to recommend far-reaching changes in the system which will provide the basis for reform legislation to be proposed by Gov. McKernan during this legislative session. The governor’s goal is to reduce costs while preserving a fair level of benefits for injured workers.
Working with the governor, the Legislature will have the opportunity to make comprehensive improvements in our workers’ comp system. As Maine copes with the recession, it is more important than ever before that we act to retain and promote good jobs for Maine people. Reforming our costly, complex, and cumbersome Workers’ Compensation system is the essential first step.
Susan M. Collins is Maine’s Commissioner of Professional and Financial Regulation.