Plan to Sell Part of State Fund Faces Opposition

Gov. Arnold Schwarzenegger's plan to raise $1 billion by selling part of the state's scandal-plagued workers' compensation insurance company is running into strong flak from small-business advocates, the insurance industry and the state's elected insurance commissioner.

The governor wants to help reduce a $24-billion budget deficit by giving private insurers a chance to buy about half of customers' policies at the government-controlled State Compensation Insurance Fund.

Opponents got a powerful new voice Wednesday when Insurance Commissioner Steve Poizner warned that "a hasty or ill-considered sale could wreak havoc on the already volatile workers' compensation market." Private insurers are worried that forcing such a dramatic change at the country's largest workers' compensation insurer could create market turmoil at a time when medical costs are rising and profits are dropping.