A State-Run Workers’ Compensation Insurer for Connecticut?

An effort to create a state-sponsored, non-profit fund for workers’ compensation insurance has failed in Connecticut. The bill would have shifted from a private workers’ comp insurance marketplace to a state-sponsored fund for businesses denied or unable to procure the required insurance through private companies.

Nationwide, most businesses must obtain workers’ comp insurance for their employees if they want to sell goods or services to the public. With the exception of six states that have government-run programs, employers buy their insurance through private companies. However, private insurers are not obligated to insure every business, and can reject businesses if the company is engaging in high-risk dealings, such as construction or window washing, or has an active history of claims.

Connecticut legislators thus proposed a bill that would create a “last resort” fund for businesses denied or unable to afford private workers’ compensation insurance.

However, opponents say because of Connecticut’s vibrant and competitive insurance market, the creation of the fund is unnecessary and could potentially lead to a state monopoly. They also fear that the state-run fund would create an unfair advantage over private companies.

Advocates argue, without a last resort fund for companies unable to buy insurance, they would be forced to refrain from conducting business. In some cases, businesses might continue in violation of the law, potentially leading to injured workers who are left without medical care unless they took out their own private policy which may or may not insure them if they sustained a work-related injury.

Supporters also claim the unlikelihood of a Connecticut state-sponsored program elbowing out private insurers. They say, if anything, competition might lower premium costs and at least offer businesses a choice of a private or a public option — especially if it is a fledgling enterprise engaged in what might be considered a high-risk endeavour. In West Virginia, for instance, competition between the private and state-run workers’ compensation systems reportedly result in better treatment for injured workers and a 30 percent reduction in rates.

The majority consensus indicates most businesses would probably opt for a private plan since most businesspeople seem to view any government-run operation with skepticism and believe private plans are probably more efficient.

Currently, only six states carry state-sponsored workers’ compensation insurance, and 13 states offer both. For now, Connecticut will remain in the majority of states and continue to operate in a private workers’ compensation market.