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Gov. Rauner: Why the General Assembly must reform workers’ compensation

The following is an excerpt of an op-ed written by Governor Rauner that was published this morning byCrain’s Chicago Business:

 

Illinois has every reason to succeed. We have the hardest-working people in America, the best infrastructure in America and the best location of any state. We have unlimited economic potential. Yet, despite these advantages, the state’s economic policies have led to very weak economic growth and massive manufacturing job losses. […]

Nearly two years ago we unveiled an ambitious 44-point plan to create more jobs and spur economic growth. Since then—in the spirit of compromise—we’ve narrowed our focus to the most critical priorities—term limits, more jobs, lower property taxes, better schools and real pension reform. When it comes to job creation, we have continued to advocate for changes to the workers’ compensation system because of its direct impact on state government and job creation. As part of a balanced budget, workers’ compensation reform should be a core part of a comprehensive agreement.

When I meet with employers, both in Illinois and across the country, they cite two primary challenges for businesses in Illinois: the highest property tax burden in the nation and our uncompetitive workers’ compensation system. Those costs are particularly harmful to businesses with large physical footprints and large workforces. So it shouldn’t be a surprise that Illinois has lost 34 percent of its manufacturing jobs since 2000 alone, while other states, like Michigan, Indiana and Kentucky, are growing.

Workers’ compensation is not just a business issue. It directly impacts taxpayers by costing state, county and municipal governments more than $400 million every year, plus additional costs for school districts and special purpose districts. Government employees file workers’ compensation claims for injuries and illnesses more than 50 percent more often than private-sector workers.

Illinois employers spend approximately $3 billion per year on workers’ compensation, including medical expenses and disability benefits. The most widely used national study, conducted by the state of Oregon, shows that Illinois jumped from 23rd to the third most expensive state in the nation following 2005 changes to the law. Bipartisan reforms in 2011 helped to reduce costs, butIllinois remains the most expensive state in the Midwest and is tied as the seventh most expensive state in the nation. […]

The workers’ compensation system has been forced to absorb the growing costs of obesity, heart disease, diabetes and other degenerative conditions. Most other states, including blue states like Massachusetts and Oregon, have responded by reforming their causation standards—a reform that Attorney General Lisa Madigan said in 2012 would “exclude those conditions which are primarily caused by the natural degenerative process which occurs during aging” and was necessary “to protect taxpayer dollars.” […]

Many other good ideas have been proposed to make the system more efficient. Ultimately, we will all benefit from balanced reform: Employers will save costs, Illinois will be a more attractive place in which to create jobs, workers will still be protected in the case of a workplace injury while enjoying greater job opportunities, and the state and local governments will experience a broader tax base through growth.

If we cannot provide Illinois residents with good jobs and expand our tax base, the state will never be able to properly support education and human services to the level they deserve, and our pension liabilities will look even more daunting.

Change is not easy, but the status quo is unacceptable. We cannot afford to fail.