Innovation may be the answer

West Virginia has the fourth-lowest rate for workers’ compensation insurance in the nation, according to a study by the state of Oregon. But within the memory of many in the Mountain State, our program was close to insolvency and collapse.

What changed?

Privatization is the obvious — but incomplete — answer. In 2005, the state-run workers’ compensation program had about $3 billion in unfunded liabilities. According to one estimate, it was bleeding cash at the rate of about $1 million a day.

Turning the system over to the private sector changed all that. Now, premiums employers pay for workers’ compensation coverage are the 48th lowest in the nation (including the District of Columbia). Only Arkansas, Indiana and North Dakota are lower (Ohio had the 40th-lowest rates).

West Virginia’s workers’ compensation rates are only about one-third what the program costs in New York, the most expensive state.

Relatively low rates are an incentive for businesses to create jobs in our state. That boosts the entire state economy.

Obviously, privatization worked. But it is what led up to that move that is important now.

For years, state officials had been wedded to a government-run workers’ compensation system that was inefficient and, frankly, rife with abuse.

Finally, as the program was on the brink of collapse, legislators led by then-Gov. Joe Manchin decided it was time to break with the old, failed policy. That took some courage.

It was that — state leaders willing to buck what then was the establishment — and do something differently, that got us to where we are today.

There is a lesson there, for those willing to accept it: Innovation, even when powerful interests oppose it, can improve things.

It is a lesson West Virginians may find of value in facing problems other than workers’ compensation. Gov. Jim Justice has said it may be an avenue to address fiscal woes in the Public Employees Insurance Agency. No doubt there are other state government operations that could benefit from a dose of privatization, too.

The question is whether Mountain State residents are willing to try innovation again.

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