Gov. Mary Fallin supports downsizing government to reduce both taxpayer burden and undue influence in private markets. To stay true to those goals, Fallin should veto House Bill 2201, which mutualizes CompSource, the state-run workers' compensation company.
We support privatizing CompSource; this bill does not truly do that. Here's a refresher on its flaws: Under HB 2201, political appointees would comprise a majority of CompSource board members and the company “shall not be permitted to dissolve.” CompSource would remain politically run and politically protected; there's a tacit promise of taxpayer bailouts should its business practices prove unsound.
HB 2201 maintains CompSource's status as an “insurer of last resort,” which grants it an exclusive federal tax break on its entire book of business, providing significant financial advantages over truly private competitors. CompSource would remain exempt from state rate-setting regulations for three more years, another financial advantage. It's hard to believe lawmakers who couldn't repeal that special privilege this year will actually let it lapse in three.
This bill is privatization in name only. Any reduction in state employees will simply be on paper. The taxpayers' burden will merely move off-book.
Fallin should veto this bill. Lawmakers should start over again next year.
Reportedly, 38 other states have an assigned risk pool for workers' comp residual coverage (policies for those who can't otherwise obtain coverage). In that system, all carriers essentially take turns writing residual coverage to equitably share risk. There's no reason CompSource can't be truly privatized and placed under the same rules as all competitors.
Should HB 2201 be signed into law, CompSource's special advantages will continue to impede the free market. Yet legislators are unlikely to revisit the issue without a catastrophe, such as a CompSource failure threatening countless policyholders.
Instead of risking disaster, here's an alternative: Start over. True CompSource privatization is needed. HB 2201 is not.