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How Privatization of Ohio Workers Compensation Harms Ohio’s Economy

On Behalf of | Jan 26, 2011 | Workers' Compensation

Presently, a proposal to privatize a portion or all of the Ohio worker’s compensation system is under review by both a task force and some Ohio legislators. Under the proposed privatization, Ohio would open worker’s compensation insurance opportunities to private companies, in contrast to the existing state run monopolistic system established under Ohio’s constitution. Advocates for privatization suggest that it would increase competition thereby lowering the cost of worker’s compensation insurance to Ohio’s employers and stimulating Ohio’s economy.

Presently, Ohio worker’s compensation premiums are paid into a trust fund here in Ohio, managed in Ohio and whose economic benefits are all self-contained within the Ohio economy. All benefits paid from the fund go to Ohio employees, and the local medical practices and facilities providing authorized care and treatment. This system keeps every financial benefit related to the system within the economic influence and to the benefit of the State of Ohio. This trust fund is not under the management of or authority of the Treasurer of the State of Ohio, and therefore it cannot be used or manipulated to provide benefit to the State in any other way.

Ohio is home to more than a dozen substantial insurance companies who provide tens of thousands of Ohio jobs, and who contribute substantially to Ohio’s economy as well as providing a substantial tax base. These insurance companies have historically opposed the privatization option. Privatization would attract national and international insurance companies such as AIG and Liberty Mutual. These are not Ohio companies, and when premiums are paid they would immediately leave the State of Ohio to the benefit of employees and companies in other states or countries. The presence of AIG and Liberty Mutual could actually harm existing Ohio based insurance companies affecting Ohio jobs and the resulting tax revenues and economic benefits.

Finally, there is no evidence to suggest that privatization would actually lower the rates paid by Ohio’s employers. In many cases, competitive private worker’s compensation insurance premiums have risen over the past several years, while Ohio’s rates have been substantially lowered. Ohio’s voters soundly rejected this type of scheme when presented with the issue in the recent past, and the risks to our economy and the benefits provided to our states injured employees are not worth the “future possibility of lowered rates” to Ohio’s employers.