What is a Competitive State-Run Workers Compensation Fund?
A Competitive State-Run Workers Compensation Fund is run by a given state and used to provide employees and self-employed individuals with Workers Compensation insurance. In states with Competitive State-Run Workers Compensation Funds, the state competes directly with private insurance companies. Employers and self-employed individuals have the option to obtain insurance from either the state fund or a private insurer.
These state funds are created with assistance from a given legislature that allocates the initial financial and logistical resources necessary for establishment. In turn, the fund eventually becomes self-sufficient and can function with more autonomy. Competitive state-run funds are created to limit the extent to which private insurers increase the costs of coverage for employers. Other states either have Monopolistic State Funds or funds set up in conjunction with the National Council on Compensation Insurance (NCCI).
The states that have competitive state-run funds are Arizona, California, Colorado, Hawaii, Idaho, Kentucky, Louisiana, Maine, Maryland, Minnesota, Missouri, Montana, New Mexico, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, Texas, and Utah. State-run funds may not always provide the most comprehensive coverage for employers to invest in and therefore, can be considered a backup option for insurance.