By Paul R. Dionn,Special to the Sun Journal

The myth persists, but the truth about workers’ compensation in Maine is one of continued improvement.

In many of the best measures on how the state is doing to reduce the cost of workers’ compensation, the state is improving. But the effort goes beyond a better system. It is an important component in improving Maine’s competitive rankings against other states in the the high-stakes business of attracting and building new businesses.

Gov. Baldacci recently introduced the fiscal years 2006-07 budget and said that it does more to provide tax cuts and investments that will improve Maine’s competitiveness, broaden our economic base and create more opportunities for Maine people. He also expressed that Maine’s overall state tax burden has fallen during his first two years from 8th to 13th place nationally.

The governor’s desire to make Maine more “competitive” has permeated all areas of government. In our world of workers’ compensation, Maine, as recently as a decade ago, was branded as one of the most costly states in the nation. Thanks to the efforts of the governor’s office, the Legislature, MEMIC, the Bureau of Insurance, a competitive market, employers throughout the state, and the board, the landscape has changed to the point where it no longer holds that onerous distinction.

It is obvious that the costs of workers’ compensation play a major role in economic development, business relocations, job increases, broadening the economic base and employer-employee relations. In this regard, the last decade has been one of challenge and opportunity.

In 1992, a Blue Ribbon Commission made a series of recommendations that were ultimately enacted. Inflation adjustments for compensation benefits were eliminated. The maximum benefit was set at 90 percent of the state average weekly wage. A limitation on entitlement to incapacity benefits (currently at 364 weeks) was established for partial disability cases. Access to legal representation was changed, making it more difficult for injured employees to secure the services of private attorneys. (A Worker Advocate Program was later implemented to provide representation for injured employees.) And Maine Employers’ Mutual Insurance Company MEMIC was established.

Employers throughout the state embraced the changes and added to the impact of the reforms through the creation of both safety and return to work programs. For a time following the reforms, the crisis in workers’ compensation abated. But the costs of workers’ compensation in Maine remained high. Many claimed that Maine had some of the most costly workers’ compensation premiums in the country.

The reforms, however, brought stability to the system at a time when new pressures on workers’ compensation systems began to build nationwide. Against a backdrop of escalating health care costs, runaway benefits and a sluggish economy, many state systems were brought to the brink of bankruptcy. California, Alaska, Florida, Hawaii, Ohio and Kentucky had the highest premium rates in the country, and all were seeking legislative changes to bring workers’ compensation costs in line with other states.

How has the state of Maine faired during these tumultuous times, when only a few years ago our system was reputed to be one of the costliest in the country?

The Oregon Department of Consumer and Business Services prepared a 2004 report comparing workers’ compensation costs by states (the same study that cited California, Alaska, Florida, Hawaii, Ohio and Kentucky to have the highest costs in the country). Premium rate indices (per $100 of payroll) ranged from $1.06 in North Dakota to $6.08 in California. Maine’s index is $3.08, and its ranking is 13th among the 50 states and the District of Columbia. In New England, only Massachusetts has a better ranking than Maine. In 2002, Maine’s ranking was 8th.

An article written by John Burton, a recognized leader in the field of workers’ compensation, and published in the Workers’ Compensation Policy Review, provides a summary of cash benefits, medical benefits and total (cash plus medical) benefits per 100,000 workers for up to 47 states.

Remember, higher is better. Maine’s rank among 47 states for cash benefits was 24th. Connecticut was 11th, Massachusetts 14th, New Hampshire 30th, Rhode Island 3rd and Vermont 8th. Maine’s rank among 47 states for medical benefits was 24th. Connecticut was 28th, Massachusetts 46th, New Hampshire 7th, Rhode Island 37th and Vermont 14th.

Maine’s rank among 47 states for total benefits was 26th. Connecticut was 20th, Massachusetts 34th, New Hampshire 13th, Rhode Island 7th and Vermont 9th. In this study, Maine faired better overall than 25 states and only Massachusetts (ranked 34th) faired better than Maine in New England.

That’s a far cry from the claim that Maine has some of the highest workers’ compensation costs in the nation.

The Burton article goes on to highlight Maine’s achievements during the past decade.

“Four states had cash benefits relative to the national average that varied among four categories during the 15 years. Maine was well above average for seven years, and then dropped to below average in 1994, before moving to average cash benefits. … The experiences in Maine, Minnesota and New Mexico clearly demonstrates that significant reductions in cash benefits are possible. … The experiences in Hawaii, Louisiana, Maine, Minnesota, New Mexico and Pennsylvania clearly demonstrate that significant reductions in medical benefits paid to workers are possible. … The experience in six jurisdictions – Hawaii, Louisiana, Maine, Oklahoma, Oregon and Pennsylvania – that had average benefits in 1999 following well above average benefits in at least one earlier year make clear that significant reductions in total benefits provided to injured workers are possible.”

In order to maintain the positive momentum, the governor introduced a bill to promote the efficiency of the Workers’ Compensation Board. The governor worked diligently with both labor and management organizations in formulating legislation that would assist the board in overcoming recent gridlock and meeting its statutory responsibilities. The bill was passed by the Legislature, signed by the governor, and became effective April 8, 2004. The legislation changed the structure of the board, and provided the mechanism to avoid gridlock and promote efficiency.

Maine has gone from one of the costliest states in the nation to one that is at the level of average costs for both cash and medical benefits, improving significantly in lowering premium costs, and has positioned itself to continue this trend. Maine appears to have struck a balance between reasonable costs and reasonable benefits, making Maine “competitive,” and all within the governor’s policy of no tax increases.

Paul R. Dionne is currently the executive director and chair of the Workers’ Compensation Board. He serves as vice president of the International Association of Industrial Accidents Boards and Commissions and was recently selected by Law Publishers as Maine’s Workers’ Compensation “Person of the Year.” He serves as a member of Governor John Baldacci’s Cabinet.

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