Phil Barnhart
State Representative
Central Lane and Linn counties
Hang on to your wallet! If you own, work in, or do business with any small business in Oregon, and many larger ones, you are about to be fleeced. Liberty Northwest of Boston Massachusetts is trying to abolish the State Accident Insurance Fund (SAIF) through an initiative for the fall ballot and a very clever but misleading media blitz. Northwest has already spent over $850,000 in its two-pronged attack. Why would an insurance company spend big money to try to abolish its chief competitor in Oregon? Read on.
SAIF, a semi-independent state agency, insures workers against on the job injury for 44,000 mostly small businesses in Oregon. Some are in high-risk businesses that for-profit companies do not want to insure such as farmers, homebuilders and nursing homes. The Oregon Department of Consumer and Business Services believes the end of SAIF would increase premiums for small businesses by a fifth or over $100 Million a year. Not only would this lead to higher prices and fewer jobs for Oregonians but most of those excess payments would flow out of our state to the east coast shareholders of Liberty Mutual, the parent company of Liberty Northwest. While Oregon Workers’ Comp basic rates have held steady for over a decade because of the moderating influence of SAIF, rates in our neighbors, California and Washington, have skyrocketed in the last year.
SAIF is not perfect. It needs a thorough housecleaning like the one the Oregon Lottery Commission got last year, but abolishing it would be throwing the baby out with the dirty bath water. For example, SAIF did overspend on lobbyists in the recent past and has generally taken a “hunker down” attitude in the face of its competitor’s attacks. It may also be necessary for the legislature to reduce its independence somewhat, but abolishing it is serious overkill. Many workers who suffer permanent injuries are paid too little in compensation for lost wages, but that is a systemic problem the legislature will have to deal with, affecting all insurers, not just SAIF.
One of Northwest’s arguments is that SAIF has a much too large reserve that could be used to offset some of Oregon’s huge budget shortfall by establishing a reserve account. The independent actuaries that SAIF hired to advise it think the reserve is about right to pay future claims. But even if they are wrong, the excess reserve should be repaid as an dividend to the businesses that paid the premiums in the first place.
Another Northwest argument is that SAIF gets an unfair advantage because it is tax-free and Northwest is not. The reality in Oregon is that Northwest does not pay State Income taxes because of the complex accounting rules that apply to insurance companies and it is exempt from paying local payroll taxes (thanks to the 1995 legislature) while SAIF must pay those local taxes.
SAIF is more than an insurance company owned by the state. Its job is to protect workers from injury as well as compensate them if they are injured. SAIF insures higher risk jobs than private insurers but has a better safety record. Its mission is not to make money for shareholders, but to protect Oregon workers and keep Oregon business costs down. SAIF concentrates on improving safety for workers.
If a worker is injured on the job, SAIF makes claims decisions in about half the time, on average, it takes private insurers and makes the first payments to the injured workers faster.
When I ran a small professional office, I bought workers comp insurance from SAIF. Even though I have been busy in the legislature and no longer run my private office, I continued to receive dividend checks for several years from SAIF because costs were lower than expected. Surveys show that most small business leaders object to abolishing SAIF and with good reason.
Over the next several months you will probably hear a lot about SAIF, some true, some not. Be an informed voter, keep a firm grip on your wallet and decide for yourself what will really be best for you and Oregon. If you suspect, as I do, that Northwest is not spending big money to destroy SAIF out of the goodness of its heart, but because it hopes to profit mightily from the effort, deciding how to vote will be easy.
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Phil Barnhart is State Representative from Central Lane and Linn Counties and Assistant Democratic Caucus Leader. He can be reached at 541-484-5119 or [email protected]