In Victoria, Australia, a broken workplace injury compensation system is letting workers down. WorkSafe is the state’s institution that regulates industry safety standards and governs workplace injury insurance. However, its workers’ compensation arm, WorkCover, outsources the handling of workers’ compensation claims to private insurance companies that place profit ahead of the health of our communities’ most vulnerable members.
Deprived of a political voice that can stand for them, injured workers report being stalked by private investigators in order to force them back into work before they have recovered. This frequently exacerbates their injuries and triggers new and often debilitating psychological harm. This harassment is most often targeted at workers with long-term injuries or those who are homebound as a result of their injuries.
Recently, however, injured workers from across Victoria have started coming together to campaign for change. Most importantly, they are demanding an end to outsourcing essential social services to private insurance agents who have an interest in cutting workers off from compensation payments as soon as possible. For these efforts to bear fruit, however, it’s crucial to understand the origins of the existing system that prioritizes insurance companies’ profits over injured and sick workers’ health.
Given Social Security’s dire financial condition, there is growing interest in attempting to harness the power of private capital markets to bail out the faltering system. However, despite its surface attractiveness, allowing the government to invest funds from the Social Security trust fund in private capital markets would be a terrible mistake that would have severe consequences for the U.S. economy.
Allowing the government to invest the trust fund in private capital markets would amount to the “socialization” of a large portion of the U.S. economy. The federal government would become the nation’s largest shareholder, with a controlling interest in nearly every American company. Government ownership brings with it serious problems of government control and is a threat to the efficiency and competitiveness of the U.S. economy.
Moreover, experience in other countries has shown that government investments seldom achieve the rates of return seen in private investment. Attempts by the government to manipulate the markets could further undermine returns and threaten general market stability.
However, there is no significant budgetary reform in the offing, and California’s cities and counties feel no compunction to address the issue. In fact, these days several municipalities are taking steps that will ultimately serve to exacerbate the shortfall by bringing in all of their emergency services “in house,” rather than contracting out emergency services to a private entity.
The rationale typically given for such steps is that doing ambulance and fire services completely in house helps coordinate emergency responses and creates efficiencies, improving services and saving them money.
However, such efforts rarely manage to help towns—or the state, for that matter—to save money. Contracting out ambulance services is typically done by smaller communities that don’t have the demand to support a full-time ambulance crew, which can be expensive—a tricked-out ambulance alone costs over $150,000. Combining with another nearby community generates economies of scale.