Private sector vs. government

Premiums West Virginia companies pay for workers’ compensation insurance are going down – again. How often can it be said that individuals and businesses find themselves paying less and less for government services?

Virtually never. But there is a reason for that: While workers’ compensation is mandated for most businesses, the program is not managed by state government.

Gov. Earl Ray Tomblin announced last week that during the coming year, state employers collectively will pay $32 million less for workers’ compensation than they do this year. He added the reduction marks the 10th consecutive year of cuts.

Before 2005, workers’ compensation was a state-run program. It had built up an astronomically high unfunded liability of billions of dollars. Premiums kept going up, making West Virginia a less competitive place to do business.

In 2005, at the urging of then-Gov. and now U.S. Sen. Joe Manchin, state legislators decided to “privatize” the program. Instead of being a state government monopoly, it would be opened to private insurance companies.

The rest is enjoyable history. Businesses report better service at lower cost from the private sector. It is estimated that since the program was privatized, companies have saved about $280 million on premiums. There have been estimates that workers’ compensation rates are less than half what they would have been had the government-operated system been retained.

That makes it easier for Mountain State employers to compete. It makes it easier for state officials to sell West Virginia as a location for new and expanded businesses. It means more jobs and a better economy.

Experience with workers’ compensation ought to prompt Tomblin and legislators to look for any other operation of government that can be privatized.

Clearly, the private sector does most things better – and cheaper – than government. What a shame it is that politicians seldom pay attention to that before establishing new government-run mega-initiatives that bleed taxpayers and those forced to participate in the programs dry.

Yes, we’re thinking of Obamacare.