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Widespread Focus on Ohio’s Workers’ Compensation Program

Recent maneuvering and rhetoric by Ohio Gov. John Kasich and others concerning the state’s workers’ compensation system is merely indicative of the fact that the state’s Bureau of Workers’ Compensation (“BWC”) is seldom far from the minds of politicians, business leaders, labor organizers and a host of other interested parties.

Kasich recently proposed a four percent rate cut in the BWC’s budget, which he says will not reduce benefit levels for employees, and he voices strong interest in investigating privatization options for the entity.

The very word “privatize” elicits strong opinions from many quarters. As an initial matter, Ohio law requires that the state maintain and administer a workers’ comp program, so privatization would first need approval through a constitutional amendment.

That has been tried before, and it failed. In 1981, a broad coalition – ranging from labor unions and the state’s Democratic Party to former Republican Gov. James Rhodes – successfully warded off a privatization attempt that sought to sell workers’ comp coverage to private insurers, many of them out-of-state entities.

There are only four states in the country – Ohio included – that don’t offer private workers’ compensation insurance. Critics of that omission in Ohio contend that this makes the program in Ohio inordinately expensive and inefficient and serves to discourage out-of-state companies from establishing a business nexus within Ohio.

Many groups – including the Ohio Chamber of Commerce – dispute that notion. In Ohio, businesses pay an average cost of $1.95 per $100 of payroll for workers’ comp insurance. This is a lower outlay than in neighboring states, including Michigan, Pennsylvania and Kentucky.

Tim Burga, president of the state’s AFL-CIO, says that, “As soon as you go down the road of privatization, you lose control of the system.” Burga states that unions strongly favor working with all interest groups to ensure that the BWC operates efficiently.

“We have no evidence that is not happening,” he says.

Related Resource: The Columbus Dispatch, “Changing workers’ comp an old battle” May 2, 2011