Colorado Governor Jared Polis wants to reduce the state’s spending drastically—and seeks to do so in part with a controversial plan to privatize the workers’ comp “insurer of last resort,” Pinnacol Assurance.

Pinnacol covers Colorado employers that cannot secure workers’ comp coverage through conventional insurers or self-insurance. According to Pinnacol’s website, Pinnacol currently covers over 56,000 Colorado employers.

If Governor Polis has his way, Pinnacol would still theoretically be able to function as the insurer of last resort, but would also be free to cover workers outside of Colorado and offer products other than workers’ comp insurance, thus allowing it to compete with conventional insurers.

Pinnacol would also lose its tax-exempt status, further shoring up state revenue.

Privatizing Pinnacol

Proponents of the Governor’s plan argue that—in addition to the necessity of cutting the state budget generally—Pinnacol in its current form cannot adequately serve Colorado employers, many of which hire remote workers outside the state.

According to a detailed article published by The Sum & Substance, Colorado employers with out-of-state employees must either find separate coverage for those out-of-state employees or pay “significant markups” to have Pinnacol facilitate those employees’ coverage.

As remote work remains standard, the current Pinnacol model may not be suited to the times.

By cutting Pinnacol loose from state management and requiring the insurer to pay the income, property, and other taxes from which it is currently exempt, Colorado stands to save hundreds of millions of public dollars.

Pros & Cons: Will Injured Workers Pay the Price?

Supporters believe privatization will allow Pinnacol to diversify revenue, better serve a modern workforce, and provide enhanced resources for injured workers.

However, labor organizations counter that allowing Pinnacol to privatize would free the insurer from state government oversight, which currently helps ensure it prioritizes workers over profits. Since the governor appoints Pinnacol’s board, some worry that privatization would limit workers’ voices in company policies.

Labor groups like the Colorado AFL-CIO argue that privatizing Pinnacol could increase premiums and decrease protections for workers, especially as the company may focus more on profits than workers’ welfare.

Labor advocates further point out that there would be no guarantee that Pinnacol would continue its role as the insurer of last resort, potentially leaving employers in high-risk industries and lower-income workers without affordable coverage options.

An Uphill Battle

Governor Polis cannot unilaterally convert Pinnacol from a public enterprise to a private one; Colorado legislators will ultimately have to approve the plan. Any conversion would require legislation, and the proposal is expected to generate significant debate when it reaches the state’s Joint Budget Committee.

Pinnacol President and CEO John O’Donnell, while speaking to The Sum & Substance, was cautiously noncommittal and careful not to clearly endorse the conversion pending further details. With opposition from labor, and no guarantee of unified support from Polis’s fellow Democrats, nothing is certain.

For providers treating injured workers covered by Pinnacol, daisyNews will continue to follow this story.

If you have any questions about billing Pinnacol or workers’ comp billing in general, ask our experts using the pink chat icon at the bottom right of this page or email us at info@daisybill.com.

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