Noting that New Yorkers had been treated last week to “almost daily political perp walks” involving “a parade of office-holders,” an editorial in Saturday’s Wall Street Journal pointed out: “The bigger scandal in the Empire State continues to be what the politicians do that’s legal.”
Case in point: the new state budget’s diversion of $1.75 billion in technically excess reserves from the State Insurance Fund (SIF), the off-budget, non-profit, government-owned carrier that now covers nearly 40 percent of the New York market for workers’ compensation insurance. The Journal noted (alas, behind its online paywall):
Note: These reserves [being shifted to the state budget] are merely an accounting charade concocted by Albany. The state has hitherto required policyholders to pre-fund liabilities for “second injuries,” which workers re-aggravate on the job. By eliminating this requirement, lawmakers have created a $1.75 billion reserve that they can now tap to finance their sundry desires. Mr. Cuomo calls this reform.
Lawmakers claim no-harm-no-foul since many employers prefer to pay second injury claims as they are filed rather than pre-fund the liabilities. But then why not return the “reserves” to policyholders or use them to reduce future premiums? Or let the insurer keep the cash for a rainy day, which may be more imminent than they expect.
The Journal’s criticism echoes what I had written here, and here.
By the way, New York’s workers’ compensation premiums — a key cost of doing business — were ranked fifth highest in the country last year, 150 percent of the median for all states in a study conducted by the Oregon Department of Consumer and Business Services. Financially weakening SIF certainly won’t promote comparatively lower rates in the future.
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