After passing a record tax increase that attracted national headlines, Illinois Democratic leaders are looking for a way to redeem themselves with the business community and taxpayers.

The best way to build some goodwill is to enact workers' compensation reforms to improve the state's business climate.

For most businesses, workers' compensation costs are probably higher than corporate income taxes. Workers' compensation is a primary reason for the high cost of doing business in Illinois, and by enacting reform we can significantly reduce that cost without spending tax revenue.

Governments are among our largest employers. When they are burdened with high workers' compensation expenses, taxpayers foot the bill.

The state of Illinois has annual workers' compensation expenses in excess of $135 million. Other public employers such as universities, municipalities and park districts also would see substantial budget savings if the state's compensation laws are rationalized.

Illinois' workers' compensation costs are third-highest in the country. Businesses have left the state, in part, because of these high costs. Other employers have bypassed Illinois for states, such as Indiana and Missouri, where workers' compensation costs are under control.

A broken system

Put yourself in the shoes of a small business owner, who emphasizes safety to employees through training, signs and daily reminders.

A couple of your employees have reported strains, sprains and soreness for several years and filed multiple workers' compensation claims. These common ailments may not be primarily caused by the person's job, but it doesn't matter. You still have to pay because, in Illinois, there is a very low threshold for an employee to prove an injury was aggravated by work.

For some employees, seeking workers' compensation benefits is more attractive than using the company's health care plan. Once an employee has a doctor's approval, the business covers medical, non-taxed disability pay and often a cash payout. If you're the small business owner, you might want to fight questionable claims, but insurance companies often settle because they know the chances of winning are slim.

The multitude of these types of claims has shot workers' compensation insurance costs through the roof, and employers are forced to pay higher rates.

Perhaps the best barometer is that even self-insured, multi-state companies have expressed concern about the higher costs in Illinois compared to other states.

Government and taxpayers suffer

One egregious example of "gaming the system" was recently spotlighted in Illinois' prison system.

The House voted unanimously to audit the Illinois Workers' Compensation program "as it applies to state employees" because of abuses uncovered by a Belleville News-Democrat investigation. The newspaper found that 389 employees at Menard Correctional Center in Chester were given almost $10 million in workers' compensation awards, including more than 200 guards who said they suffered from repetitive trauma from locking and unlocking cell doors.

Not only that, but some of the state's 32 workers' compensation arbitrators also used the system: 25 percent of them filed for and/or received workers' compensation awards.

The current system's low threshold for entry offers generous benefits and is susceptible to fraud, abuse, delays and a "cash reward" system for far too many workers. Employers -- and taxpayers -- deserve a system that reflects better management, follows a better process and offers better outcomes for employees.

Illinois changed workers' compensation laws in 2005 to increase benefits, but failed to reduce employer costs. In fact, in the last six years, Illinois' workers' compensation rates have increased nearly 17 percent while average rates across the country declined 19 percent. This trend must be reversed.

Meaningful workers' compensation reform will not only bring welcome relief to businesses and taxpayers, but also serve as a fundamental means of restoring economic and employment growth in Illinois.

Our exceedingly costly and questionable workers' compensation system is a barrier that must come down if we want to reverse the migration of jobs from Illinois and improve the economic outlook for our state.

Whitley is president and CEO of the Illinois Chamber of Commerce


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