Dissolving MT State Fund Dead in the Water… For Now

Helena, MT (WorkersCompensation.com) — The Montana State Fund isn't going anywhere regardless of Senator Eric Moore’s (R-Miles City) proposal last week to dissolve the state's largest workers' compensation insurance carrier.

The threat to dissolve the $1.6 billion-dollar state fund with SB 371 days after the group announced a five-percent decrease in workers' comp costs and negative rate was a shock to some.

According to the senator, there would be more competition and consumer choice if the fund was replaced by privatized insurance. Laurence Hubbard, President and CEO of the fund, disagreed on dissolving the fund, formed in 1915, which now insures approximately 26,000 policyholders and covers about 10,000 injured workers per year.

"It is not likely to resurface this session," Hubbard said Thursday directly after the decision to table the bill came in. He further explained at the end of the legislative session there will be a resolution on what to do in the interim.

The fund president said while "we are constantly trying to find the middle ground or balance," the group does not claim to know "what is the best mechanism to provide workers' compensation insurance."

"Is it monopolistic funds like North Dakota, competitive state funds like here in Montana or private insurance markets you have in other jurisdictions?" Hubbard asked. "There is no one perfect way to do it. I think the important point to remember is every state is different, every state culture is different and we shouldn't get caught up in being too general with national trends. All politics are still local and that matters.”

According to an Insurance Journal report yesterday, Sen. Ed Buttrey (R-Great Falls) said while "privatizing the fund has its merits,” but he and other committee members needed more time to see how privatizing the system would affect Montana businesses.

There was doubt to begin with among some legislators as far as the bill was concerned. Senate Majority Leader Fred Thomas (R-Stevensville) told the Missoulian last week he was doubtful who, if anyone, would support the draft measure and Greg Hertz, Montana House Speaker Pro Tempore and MSF policyholder, also noted it was hard to understand the grounds for the proposal.

Hubbard acknowledged state-funded or private carriers both bring up concerns. "Public entities can be criticized as being bureaucratic, nonresponsive and kind of black-hole kinds of organizations. I get that and that is often a fair assessment of public sector endeavors.

"But on the same token, the private sector has shown its ability to conceal corruption that has led up to the economic recession," he said, adding in the end if no balance is found, then "we all pay a price." 

"Stronger regulations and things that make it more difficult for ordinary Americans to do business after awhile make people get sick and tired and they push against the regulatory environment, which swings the pendulum the other way," Hubbard said. "I see that in workers’ compensation with the existence of state funds. When we do too well we become the target of opportunists. And those opportunists come in many colors."

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