Examine SAIF's role.
Oregon is having a Goldilocks debate over SAIF Corp. Some of the questions are too big: Should the state's workers' compensation insurer be sold? Others are too small: How much did SAIF spend on lobbying? Oregonians, the governor and the Legislature will eventually need to focus on the question that's just right: Who should SAIF serve?
The small questions have been in the headlines recently, with the Government Standards and Practices Commission deciding last month to launch a formal investigation of allegations that SAIF under-reported its lobbying expenses. The turmoil is widely characterized as smoke billowing from a blazing feud between SAIF and its main competitor in the workers' compensation insurance business, Liberty Northwest Co., which advocates privatization of SAIF. The characterization is accurate as far as it goes, but SAIF's role would merit examination regardless of Liberty Northwest's interest in the results.
The State Accident Insurance Fund was created in 1913 as Oregon's workers' compensation insurance provider of last resort. An employer who could not find workers' comp insurance elsewhere could go to SAIF, guaranteeing that all workers injured on the job would have insurance coverage. SAIF became a public corporation in 1980, transforming it from a state agency into an organization more closely resembling an insurance company.
The depth of the transformation became apparent in 1990 when SAIF, responding to a financial crisis, dropped coverage for about 10,000 businesses. Those employers, mostly small businesses, obtained workers' compensation insurance from what's called the Assigned Risk Pool. The cost of covering these hard-to-insure employers is shared among all workers' compensation companies doing business in Oregon - including SAIF and Liberty Northwest. The number of employers in the Assigned Risk Pool peaked at 18,000 in 1994, declined to 7,000 in 2000 and has since climbed back above 10,000.
Liberty Northwest believes Oregon should sell SAIF, as a few other states have done with their public workers' compensation insurers. A sale would bring a windfall to the state, and would leave Liberty Northwest without a competitor that enjoys the advantage of tax-free status. SAIF counters that any advantage it gains as a result of public ownership is returned to employers in the form of low workers' compensation rates.
Most employers, meanwhile, are content to leave things as they are - Oregon's relatively low workers' compensation rates are one of the sunniest features of the state's business climate. For that reason, privatization proposals are not likely to get far in Salem.
If SAIF is to remain a public corporation, however, Oregonians ought to discuss how the benefits are distributed. As it is, the benefits flow mainly to policyholders, and only indirectly to businesses in the Assigned Risk Pool and to the state as a whole. The publicly owned company might be assigned a broader public responsibility. It could resume its former role as the insurer of last resort, ensuring that all workers have affordable and adequate coverage. It could offer discounted rates to new businesses, or to employers in economically distressed parts of the state.
If SAIF is not cleared of the charge that it misreported its lobbying expenses, it will be made to reform its practices. Privatization is likely to remain a goal of SAIF's competitors, but the idea hasn't caught on in Salem. While those small and large matters percolate, the medium-sized question of SAIF's public responsibilities is waiting to be explored. It's far from certain that all of SAIF's owners are getting the benefits they deserve.
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|Title Annotation:||Editorials; Who should benefit from public insurer?|
|Publication:||The Register-Guard (Eugene, OR)|
|Date:||May 4, 2004|
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