California Gov. Arnold Schwarzenegger has another accomplishment under his belt: passage of landmark reforms to California?s costly and economically debilitating workers? comp system. The labor unions fought him ?big time,? as the Veep might put it, and lost.
A word is needed on the policy side of this. Workers? comp is one of those subjects that usually gets little attention outside of wonk and business circles, but it matters a lot. Ideally, the state shouldn?t be setting benefit levels and eligibility guidelines for such insurance in the first place. In a critical early lurch towards big government, states in the early 1900s began to mandate workers? comp coverage for accidents at the workplace, and to set benefit levels and rules, because ?progressive? courts were unwilling to enforce voluntary agreements between employers and workers to handle the problem. At least the new programs were not (usually) government monopolies; employers could choose from competing insurers to cover their risk, unlike in the future Social Security and Unemployment Insurance programs, which as government monopolies were even worse.
Still, the deal behind workers? comp was that workers would be treated quickly and returned to work in return for employers not being sued later. Of course, this deal broke down over the years because of eager attorneys and compliant judges. So policymakers have to strike balances and facilitate as much competitive pressure as possible on rates ? and it looks like California is making progress in this area.
