Candidate wary of possible CompSource sale
A state labor commissioner is cautioning legislators about privatizing the state’s workers’ compensation insurer, saying the transaction could result in higher insurance rates.
Jason Reese, a Republican, said the Republican-controlled House of Representatives proposal to privatize CompSource Oklahoma in order to recoup as much as $200 million in the state budget shortfall could have unintended consequences. A legislative task force that is studying privatization of CompSource was urged last week to sell the state agency to the highest bidder.
“Let’s not break our small businesses’ budgets in an attempt to balance our state government budget,” Reese said.
Workers’ compensation insurance is required by state law. Privatizing an “insurer of last resort” – often the only option for businesses in high-risk industries – may cause overall premiums to increase, said Reese, a former House staffer who served as an advisor to the chairman of a task force that looked at the workers’ compensation system.
“We must prevent privatizing profits while socializing losses,” he said. “We need to ask if privatizing CompSource is a gimmick to distract the Legislature from having to make the hard decisions about budget cuts. . . . This may be a temporary budget solution, but it fails to address long-term systemic issues and may serve only to help large out-of-state insurance companies.”
The bill that created the task force determined to privatize CompSource at a set date before it was decided whether privatization was a good idea and whether the state government would be entitled to the proceeds rather than the policy holders, Reese said.
The Labor Department oversees and enforces certain workers’ compensation regulations in Oklahoma. Reese is an Oklahoma City labor attorney who represents small- and medium-sized businesses in Oklahoma.
Officials with the National American Insurance Co. last week told a legislative panel looking at privatizing CompSource that agency’s sale would likely raise between $150 million and $200 million for the state. A competitive bidding process would require bidders to buy both the assets and liabilities of CompSource with all proceeds going to the state, officials said.
The task force is considering selling the agency or mutualizing it, meaning it would be owned by its members.
- Michael McNutt, Capitol Bureau
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