Benefit increases would come with a search for savings
California employers are preparing to negotiate a potential increase in permanent disability benefits alongside changes intended to reduce workers compensation costs. Jason Schmelzer, chief lobbyist for the California Coalition on Workers’ Compensation, said the discussions are expected next year. That timing leaves both sides with a defined issue to address, but not yet a settled package: the benefit proposal and the cost reductions are linked in the negotiations, while their details remain open.
The financial gap is becoming harder to defer. Permanent disability benefits haven’t changed since 2014, while cumulative inflation has reached about 40%, Schmelzer said. An initial estimate put the cost of a 51% benefit increase at $1.8 billion. Employers would seek savings roughly twice the size of any increase, he said, because savings can diminish over time.
That proposed ratio says a lot about the employers’ negotiating position. They’re signaling that a one-time estimate of savings wouldn’t be enough if those savings fade, while a benefit increase would add costs that persist. The estimate is an initial one, though, and the source provides no detail on its assumptions or how the final cost might differ. The gap between a headline estimate and the eventual effect of a negotiated policy can be material.
SB 555, which proposed the 51% increase, could provide a vehicle for broader reform. The bill was withdrawn from an Assembly Insurance Committee hearing in June and is no longer under consideration this year. “This is a pending problem, and it’s something we’re going to have to deal with in the next year,” Schmelzer said at the CCWC conference in Anaheim on Wednesday.
A bill that combines a benefit increase with system changes could give negotiators a way to address several concerns in one package. It could also make agreement harder: parties may support the general need to revisit benefits while disagreeing over which costs to target, how savings should be measured, and who bears the risk if projected savings don’t materialize. The bill’s withdrawal means that discussion remains prospective. It doesn’t establish what terms either side will accept.
Claims and medical costs at the center of negotiations
Employers’ leading concern is cumulative trauma claims, which Schmelzer said can be filed on a worker’s first day. “That doesn’t seem very cumulative,” he said. His remark points to a dispute over how a claim’s timing and the nature of an alleged injury fit together. The source doesn’t describe the claims in detail, so the practical scope of the concern remains unclear.
Claims rules matter because they shape how disputes are presented and evaluated, but changing them can raise questions about workers’ access to benefits as well as employers’ costs. That tension is likely to make cumulative trauma a central negotiating issue. A policy change would need to address the employers’ concern without assuming that every claim filed early has the same circumstances.
Employers also want to address medical-legal costs and quality. Labor’s priorities include access to treatment and medical provider networks. Schmelzer said some network doctors don’t see workers compensation patients, leaving workers waiting for care.
Those priorities meet at a practical point: a network’s stated availability doesn’t necessarily mean a worker can get an appointment. And yet, reducing medical-legal expenses and improving access aren’t automatically the same task. The negotiations will have to contend with both the cost of assessing claims and the ability of injured workers to receive treatment. If you’re working in this space, the distinction matters: a change that lowers one category of expense may leave the access problem untouched.
Here’s the thing: a reform package can promise savings on paper, but the people affected will judge it by how claims are handled and whether care is available. That’s where policy design meets day-to-day operations. (And this is the part most people overlook.)
SIBTF changes await action
Separately, Schmelzer credited Gov. Gavin Newsom with advancing reforms to the Subsequent Injuries Benefits Trust Fund through SB 171, a budget trailer bill awaiting action. The measure would require preexisting conditions to be labor-disabling and supported by medical evidence, require medical-legal evidence to be gathered during the primary claim, mandate use of the combined values chart and set filing deadlines.
Together, those provisions would set requirements for evidence, calculation and timing. They’re aimed at how claims are documented and processed, according to the measure as described in the source. Their effect would depend on implementation and on the claims involved; the article doesn’t provide enough detail to estimate how many claims might be affected or how much liability the changes could reduce.
The scale of SIBTF liabilities remains uncertain. Rand Corp. estimated in 2024 that they ranged from $6.4 billion to $10.5 billion. The Legislative Analyst’s Office estimated benefit costs of $2 billion to $3 billion last year, while warning that a backlog of 25,000 to 30,000 claims could obscure the total. “This wouldn’t have happened without the governor’s push,” Schmelzer said. “I hope he signs it soon.”
The estimates describe different measures of the issue, and the reported backlog complicates any simple reading of the totals. A large pending caseload can make it harder to know how much has accrued, how much may still be resolved, and what the final cost will be. The figures signal material uncertainty; they don’t settle it. Schmelzer’s support for the bill is clear, but the source doesn’t report whether it has been signed.
What the next round will test
California’s next round of discussions will test whether employers and labor can connect benefit levels, claims rules, medical access and long-term costs in a workable agreement. The issues aren’t interchangeable: a benefit adjustment addresses the value of compensation, while claims and medical changes concern how the system handles cases and care. A package would have to make those links explicit.
The numbers here are underwhelming as a guide to the final outcome: they show the size of the concerns, but not the terms of a deal or the results of any reform. Still, the prospect of negotiations matters because the benefit level has been unchanged since 2014, and the SIBTF estimates point to substantial uncertainty over liabilities. That said, agreement will depend on choices the source doesn’t yet specify. Not a resolution, but a clear agenda.
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