Problem: Workers' compensation programs are a significant part of the health care problem. Premiums have increased sharply, and delivery of benefits is often inefficient. State programs frequently require supplemental funding from the legislature. Proposed Solution: One problem with increasing the efficiency of workers' compensation is that conflicts between business and labor over the level of benefits and the program costs prevent the two from using combined leverage to reduce inefficiencies elsewhere in the system. At least in part because workers in Washington State pay a percentage of the premiums themselves, the administration of the Washington program has been able to get workers and employers to agree to a combination of some benefit cuts and a commitment to maintain the public status of the program. This support gives the program more leverage to keep costs down. Evaluation: The annual cost increases in the workers' compensation program in Washington State have been only slightly above the inflation rate since the implementation of the reforms. Unlike most state-run workers' comp programs, Washington's has maintained a significant surplus. Cost controls ahve been effective, and reimbursement of injured workers is efficient. Contact: Theresa Whitmarsh, Assistant Director, Washington Department of Labor and Industries, PO Box 44050, Olympia, WA 98504. Phone: 206-956-5418. Citation: "Innovations 1992." Governing Magazine, Volume 6, October 1992, pp. 38-39. Keywords: workers' compensation, health care