Significance

Costs to businesses for workers' compensation insurance are dramatically higher in New York than in other states. At more than $16,000, New York's average workers' comp claim is the second highest in the nation - 86 percent above the national average.

Costs to employers vary greatly depending on the type of business, but to illustrate the difference: a road-paving business with 10 employees in New York would pay more than $84,000 a year on workers' comp insurance. That's $46,500 more than in Ohio and $29,300 more than in Pennsylvania. A machine shop with 10 employees pays about $22,100 year in New York - $7,600 more than in Ohio and $6,700 more than in Pennsylvania. Lifetime benefits to workers with permanent partial disabilities are a key factor - these cases make up 13 percent of the total but 76 percent of total costs.

Impact

Businesses, the overall economy and workers suffer. The out-of-line costs make it more difficult for businesses to stay afloat. Workers' comp, in combination with other high expenses, make New York a less attractive place in which to locate or expand companies. We can see the impact in job statistics, especially Upstate, where the number of private-sector jobs grew just 3 percent from 1990 to 2004, compared to 21 percent for the nation.

Workers don't benefit either; the maximum weekly benefit of $400 hasn't increased since 1992.

Solutions

The workers' compensation reform package passed by the Legislature and signed by the governor in March 2007 is an important first step toward making the system more effective and affordable. The legislation imposed a cap on permanent partial disability benefits and raised the maximum benefit to workers, which hadn't gone up since 1992. The cap and other reforms are promised to deliver savings of as much as 10 percent to 15 percent for employers. But much work needs to be done to ensure that employers receive the savings necessary to help boost New York's economy:

• Clear and objective medical guidelines must be adopted to ensure that injured workers have their cases properly classified and treated fairly without prolonged battles before the Workers Compensation Board and costly litigation.
• Treatment guidelines should be established that set standards of care for practices among health-care professionals.
• State agencies must design a streamlined docket to expedite claims and resolve cases quickly, and develop return-to-work protocols that assist injured employees in getting the necessary help to re-enter the workforce as soon as possible.