GUEST COLUMNIST

When South Carolina's business community speaks, it usually tells elected officials to stay out of their way so they can create jobs and a strong economy. They can't do that when government imposes a lot of burdensome regulations and unfair taxes. But this year they have asked us to roll up our sleeves and fix a problem that is costing jobs and lowering wages.

Business leaders from small and large companies need legislators to reform the workers' compensation system. They are right to be concerned. If we do not address the problems that exist right now, South Carolina will have a hard time expanding existing companies and employing current workers, much less attracting new businesses that bring new jobs.

South Carolina's workers' compensation system has gone from being one of the most effective in the nation to one that has raised premiums so high they are beyond affordable for many businesses. No one disagrees that we must have a system that protects workers, and business leaders understand that. In fact, the Workers' Compensation Commission was created to resolve disputes between employees and employers, thus avoiding litigation that was costly for all sides. For our insured employers, the cost of insurance - like all costs to businesses - is ultimately absorbed by consumers and also plays a role in setting wages, it is in everyone's best interest to ensure those costs are minimal. Nearly forty percent of our employers are self-insured, which means they pay the costs out of their bottom lines. Those huge costs limit the hiring of new employees and reduce wages.

Our premiums have gone from being among the lowest in the nation to ranking in the middle and rising. A few court rulings have changed what the legislature intended our workers' compensation system to be and that has resulted in an unstable system that discourages insurance companies from selling policies in our state. Those that are willing to assume the high risk are forced to charge higher and higher premiums to cover the costs. According to the South Carolina Policy Council, as of October 2006, premiums had increased 47.5 percent over three years. As the State Chamber of Commerce points out, insurance costs are the second-highest expenditure after wages for small and mediumsized businesses.

Fortunately, most leaders in the General Assembly understand that an unaffordable cost to business is an unaffordable cost to our economy. It has become clear to many of us that a piecemeal approach to reforming the system will not do the job. South Carolina companies and their workers have every right to expect a substantive overhaul that will genuinely result in positive change.

There are several measures that any true reform proposal should contain. One is the change in the composition of the Commission. Right now there are only seven members. That number should be expanded to ensure a more efficient system with less waiting time. Also, a separate review panel to hear appeals would ensure a more independent process.

In addition, it is time to phase out the costly second injury fund, which was created to protect workers with pre-existing conditions from discrimination by companies who might not be willing to hire disabled workers. The federal Americans with Disabilities Act has since guaranteed those protections, and thus the costly fund is no longer necessary. Sixteen states have already eliminated their second injury funds, and yet South Carolina's fund continues to cost millions of dollars.

We also need to increase and enforce penalties for fraud and we must align the definitions for workers' compensation with guidelines set forth by the American Medical Association. The AMA has set a standard and defined the term for impairment which is an important element in determining disability. But in South Carolina the commissioners determine the standards and some of their awards are as much as 300 percent out of line with the AMA. The lack of uniform standards and clear guidelines create unpredictability that makes insurance companies unable to offer reasonable insurance policies.

There is no excuse for not fixing the broken system. I have been hearing from business leaders from all over the state and they are extremely frustrated and concerned about their future ability to compete. It is time to respond. The Senate is already working on a plan to reform our system. I have no doubt there will be plenty of debate once the plan reaches the Senate floor. There will also be plenty of resistance. But without reform, the losers will be our state's businesses and ultimately their employees. We cannot afford to ignore the companies who are the backbone of our economy. They have asked their legislators for help, and they deserve to get it.