Rebates on top of premium discounts please employers

How many state agencies routinely give money back to the entities they tax while also reducing tax rates?

That essentially is what has been going on with the Ohio Bureau of Workers’ Compensation — to the tune of $8 billion this decade.

This week the bureau announced plans to give back $1.5 billion — the largest rebates since former Gov. George Voinovich initiated the practice with a $1.3 billion refund in 1997. The rebates mean employers will recoup 85 percent of the premiums they paid in the last policy year.

That’s in addition to a 12-percent rate cut announced in February for July 1. The reduction represents a savings of $163.5 million from current premiums. With it, rates will be 35 percent lower than they were in 2011.

The rebates stem not from overcharging employers, the bureau maintains, but from doing well on investing the $27 billion currently entrusted to it for injured workers’ needs.

A hefty sum to invest and plenty more for rebates is a nice problem to have, but it’s not without challenges. The bureau would be wise to review just how much it needs to meet its obligations without gouging the 244,000 private and public employees whose premiums support the system for injured workers.

All but the state’s largest employers pay into the program and thus are in line for a share of the rebates. BWC is the largest staterun insurance program in the United States and one of only four still operated as a state monopoly. Ohio’s largest employers tend to be self-funded and seek exemptions from the state plan, so most of those paying into and participating in the plan are small and mid-sized employers.

Workers’ compensation hasn’t always been so flush; its fortunes tend to rise and fall with the economy. But now with such healthy assets, it can also be a target for shenanigans from lawmakers or other public officials with lesser resources and big needs. It must guard against being raided for other purposes.

Would employers rather have paid premiums 85 percent smaller and kept the rest of their money working for their businesses? Almost-annual rebates coupled with rate reductions apparently keep many happy.

The Great Recession temporarily halted rebates, but the bureau returned $966 million in 2013, just over $1 billion in 2015, $15 million to counties only in 2016 and more than $1 billion in 2017. The $1.5 billion for 2018 still needs to be approved by the BWC board on May 24.

Members of the Ohio Chamber of Commerce are not complaining as they did 10 years ago, said President and CEO Andrew Doehrel. He said improvements in worker safety and declining injury rates contribute to employers’ general satisfaction with the workers’ compensation system

Roger Geiger said his smaller employers represented by the National Federation of Independent Business Ohio have seen frequent rebates and cuts as a reasonable trade-off to stability and budget predictability for their workers’ comp premiums.

Of larger concern than whether premiums are too high is protecting the fund for its intended purpose of caring for injured workers. Whenever a state-controlled pot of money is preceded by a B, as in billion, it can attract interest from education and infrastructure.

Changing winds of the stock market not withstanding, BWC is to be congratulated for a decent run of performing its core function, keeping its constituents satisfied and putting money back into the hands of those it serves.