Author: Site Staff

The chairman of the Senate Finance Committee is appealing to the business community to help him draft a workable play-or-pay system as part of comprehensive legislation to move the U.S. close to universal health care coverage.

Speaking Wednesday, March 11, in Washington before the annual meeting of the National Business Group on Health, Sen. Max Baucus, D-Montana, said he rejects a single-payer system and instead wants to build on the current employment-based system.

“My vision for reform is one of shared responsibility,” Baucus said, noting that in an earlier position paper he endorsed requiring employers to either provide coverage or pay into a pool to provide health insurance premium subsidies for the uninsured, an approach Massachusetts took nearly three years ago that moved the state to near-universal coverage.

Baucus acknowledged there are many details yet to be resolved in structuring a play-or-pay system. One key concern, he said, is the minimum level of benefits employers would be required to offer to avoid paying into a pool.

“How would that standard relate to what employers already are providing?” he asked.

But the Finance Committee chairman already has come to other conclusions about an employer mandate. The smallest firms, he said, should be exempt, while federal tax credits should be available to other small companies that provide coverage to partially offset premium costs.

Baucus asked the business community, which in the past has largely opposed an employer mandate, to keep an open mind until the legislation he is putting together is complete.

“I urge all of us here to suspend judgment until you can see the whole picture. Wait until we can see all parts of the puzzle,” he said.

And he appealed for employer input. “Help us to develop a play-or-pay structure that works,” he said.

Baucus said he wants his committee to start considering and voting on a reform package in June, with a bill sent to President Barack Obama before the end of the year.

That fast-track schedule is deliberate, he said, noting that history has shown that the greatest chance of passing significant legislation is during the first year of a new presidential administration.

To further delay, he said, could result in disastrous consequences with costs continuing to escalate, resulting in, among other things, employers having less money to grow their businesses and more companies dropping coverage.

Drafting and passing comprehensive health care reform is a huge challenge, Baucus said. The last attempt—in 1993—resulted in the Clinton administration’s biggest domestic failure.

But that risk must be taken. If reform legislation is enacted and is successful in expanding coverage, improving quality and controlling costs, “It may turn out to be one of the most important things that we ever do,” he said.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Employers are losing confidence that they will be able to continue providing health benefits to their workers 10 years from now, according to a survey released Thursday, March 12, by Watson Wyatt Worldwide and the National Business Group on Health at the NBGH’s 2009 Business Health Agenda in Washington.

Just 62 percent of employers reported being “very sure” that they will continue to offer health care benefits 10 years from now, down from 73 percent last year, according to the 14th annual NBGH/Watson Wyatt Employer Survey on Purchasing Value in Health Care.

Moreover, even though increases in health care costs are expected to hold steady at 6 percent in 2009 because of recent events in the U.S. economy, 60 percent of employers either already have or are planning to revamp their health care strategy, the survey found.

“This is the first time that trends are stable, yet there’s been a significant drop in confidence, and I have to believe that is directly related to the uncertainty of the economy and concerns about potential health reform,” said Ted Nussbaum, North America director of group and health care consulting at Watson Wyatt. “They’re saying now with the economy and its effect on their businesses, they’re uncertain they can afford to continue to offer benefits.”

The survey of 489 large U.S. employers, conducted in January, also identified a group of 53 employers that have maintained a consistent track record of lower increases in health care costs than those of their peers over the past four years.

“If you take their trend and run it out for some period of years, the difference between what they pay and what the others pay [for health care benefits] is tens of millions of dollars,” Nussbaum said.

This group, whose median two-year trend was 2.4 percent compared with 6 percent for all employers participating in the survey, have outperformed other employers in five key areas: They offer employees financial incentives to participate in health promotion activities; they have more effective benefits communications; they are more likely to offer centers of excellence and high performance provider networks; they are likely to have a data warehouse and measure outcomes in addition to processes; and their focus is on overall improvements in employee health and productivity.

“They are much more likely to be providing employees with tools and resources to help them know how to best impact their own health status,” Nussbaum said.

Other findings of the survey include:

• More employers are conducting eligibility audits to cut benefit costs. While 47 percent did so in 2007, that number increased to 54 percent in 2008 and 61 percent this year.

• Employers are more likely to offer health savings accounts than health reimbursement arrangements. Thirty-four percent of employers offer HSAs, but that number is expected to increase to 43 percent by 2010. By comparison, while HRAs are offered by 21 percent of employers today, only 3 percent plan to add one next year.

Retiree medical coverage for pre-Medicare-eligible retirees continues to erode, with just 23 percent of employers offering it in 2009, down from 24 percent in 2008. Supplemental coverage for Medicare-eligible retirees also is declining, with just 20 percent of employers providing it in 2009, down from 23 percent in 2008. Only 12 percent of employers provide traditional retiree medical coverage to new hires, down from 15 percent in 2008.

Sixty-seven percent of employers say the biggest challenge to managing health care costs is employees’ poor health habits. In addition, 42 percent said they also struggle with employees’ underuse of preventive services, while 36 percent are wrestling with the high costs of catastrophic cases and end-of-life care.

To view the 14th annual NBGH/Watson Wyatt survey report, visit www.watsonwyatt.com.

Filed by Joanne Wojcik of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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The federal budget signed by President Barack Obama on Wednesday, March 11, reauthorized the E-Verify immigration database through September 30.

An amendment to extend it five years didn’t make it into the final budget bill. E-Verify is a Web-based service for employers that checks information from I-9 forms against Homeland Security and Social Security Administration databases to verify whether a worker is legally eligible to work in the U.S.

Federal contractors will have to use E-Verify beginning May 21, under an executive order signed by then-President George W. Bush in June, according to the Department of Homeland Security.

The Society for Human Resource Management and other organizations have filed a lawsuit to stop the rule, arguing that such a mandate must come from Congress and that it could expose employers to more lawsuits from workers who feel they were discriminated against on the basis of race or national origin.

Opponents of E-Verify have also argued that the databases it uses contain errors and could cause workers with a legal right to work in the U.S. to be denied jobs.

E-Verify is a voluntary program, although some states require employers to use it.

—Staffing Industry Analysts

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President Barack Obama has signed a $410 billion appropriations bill, a sizable chunk of which goes to a number of health care initiatives. The measure cleared the Senate on Tuesday, March 10.

The package, which funds a total of nine federal agencies, allots $30.3 billion to the National Institutes of Health for disease research, $6.6 billion for public health programs under the Centers for Disease Control and Prevention and $125 million more for community health centers.

The legislation, which came under attack for the number of earmarks it contained, also sets out spending for a variety of workforce training programs, rural health outposts and programs to help seniors.

The bill adds $15 million more than was available last year for nurse education and training, for a total of $171 million, and adds another $28 million to train doctors and other health care professionals, for a total of $222 million.

Rural health providers will also see a financial bump.

The measure provides a total of $289 million to help aid the more than 1,200 small, rural hospitals serving more than 775,000 patients each year. The House passed the bill in February.

Filed by Matthew DoBias of Modern Healthcare, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Employment discrimination claims soared 15 percent to a record high in the fiscal year that ended September 30 and will probably surge again this year, propelled by the recession, said a spokesman for Equal Employment Opportunity Commission.

“Historically, whenever there’s been a severe economic downturn, charges have usually spiked the next year,” spokesman David Grinberg said in an interview.

The most dramatic surges in employee claims occurred for those alleging age discrimination and retaliation for complaints of bias. Age discrimination claims rose 29 percent to 24,582, and retaliation claims increased 23 percent to 32,690, according to EEOC data released Wednesday, March 11.

Overall employee claims with the EEOC jumped to 95,402, the most since the agency opened its doors in 1965. Retaliation claims were second in number only to those alleging race discrimination.

“Someone who has lost his job is in a very tough situation and may be looking at a number of avenues where he can replace revenue,” said Gerald Hathaway, an employment lawyer with Littler Mendelson in New York. “But true victims of discrimination are rare. Most commonly, someone files a claim thinking he’s a victim of discrimination, but is not.”

Employers announced 1.22 million job cuts in calendar year 2008, the most since 2003, according to consulting firm Challenger, Gray & Christmas. The numbers skyrocketed in November and December to a total of 348,019, accounting for 28 percent of the year’s cuts.

The reductions continued to soar in January and February, rising to 428,099, according to the firm. If cuts were to continue at that pace throughout the year, the 2009 figure would be by far the highest annual total in the last 20 years.

Employees who want to file a claim have six months since the last action of alleged discrimination to do so, Grinberg said.

A charging party does not have to wait and see how the EEOC resolves his/her case before filing a private suit, according to Grinberg.

A charging party can ask for a Right to Sue Notice at any point in the process, and EEOC is required to provide one no later than 180 days after the request is made. according to Grinberg. An individual may file a private lawsuit even if the EEOC has not resolved their case.

Many employees who may be genuine victims of discrimination may not file claims out of fear of losing their jobs, especially during a recession, Grinberg said.

“It is clear that employment discrimination remains a persistent problem,” EEOC acting Chairman Stuart Ishimaru said in a statement.

Hathaway disagreed, saying that the claims surge is a reflection of both the recession and poor management communication.

“Managers tend to manage around troubled employees rather than confronting the problem directly,” said Hathaway, who advises large and midsize companies on layoffs. “These employees start to feel isolated and wonder if they’re being discriminated against.”

If employees then file claims, managers sometimes “go ballistic,” which explains the soaring number of retaliation complaints, he said.

“The record is full of cases where employees lose on their discrimination allegation but win on complaints of retaliation,” Hathaway said.

The striking increase in age discrimination claims reflects both the aging of the baby boomer workforce and the frequent correlation between employees’ age and pay, said Steven Weatherhead, an employment lawyer with Bello Black & Welsh in Boston.

“Older employees tend to earn more,” Weatherhead said. “And higher salaries are one of a number of factors that managers consider when trying to make the right business decisions.”
 
To view the EEOC announcement, go to http://www.eeoc.gov/press/3-11-09.html

—Neil Roland

All employers would be required to contribute to a retirement plan for their workers under a series of reform principles presented Tuesday, March 10, by a group of worker advocacy and policy associations.

At a conference in Washington, the group, which includes the Pension Rights Center and the Service Employees International Union, rolled out its new “Retirement USA” initiative, which is intended to pave the way for the creation of a new retirement system that would provide workers without an employer-sponsored retirement plan enough income on top of their Social Security payments to “maintain a reasonable standard of living in retirement,” according to a statement the group released.

The federal government would subsidize the contributions of lower-income workers under the plan, with all contributions pooled and professionally managed to minimize costs and financial risks. A government regulator would oversee the plan.

Payouts would generally be limited to retirement, and employees would be able to make additional contributions to the accounts, “with reasonable limits for tax-favored contributions,” according to a statement by the group.

At the conference, representatives of the Pension Rights Center (PRC), SEIU, Economic Policy Institute and National Committee to Preserve Social Security and Medicare said the existing system leaves many Americans without adequate retirement savings and half of full-time private-sector workers lacking a retirement plan.

In his 2010 budget blueprint, President Barack Obama proposed enhancing retirement savings by requiring automatic enrollment for existing sponsors of 401(k) plans and to mandate that employers who aren’t providing a retirement program to automatically enroll their workers in a direct-deposit IRA account. The principles endorsed by Retirement USA reach far beyond that, in part by requiring employer contributions.

“They [President Obama’s proposals] recognize the problem,” said Karen Ferguson, PRC director, at the conference. “They certainly don’t solve it. We’re hopeful that the president will come out with something bolder.”

“We will be asking members of Congress to take the principles into account as they consider any retirement income legislation,” said Nancy Hwa, a PRC spokeswoman.

Filed by Doug Halonen of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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An employee who was fired after he said he had complained about an unsafe working environment must meet an objective standard of alleged danger, a federal district court said.

The March 6 decision by the federal district court in Hartford, Connecticut, in Cesar Ferrer v. T.L. Cannon Management Corp. involved a worker who claimed he was discharged for complaining about his employer’s alleged violation of public policy requiring employers to provide a reasonably safe workplace.

Ferrer said he was discharged after telling his manager that a co-worker had thrown a punch at him and missed. He also said the co-worker had assaulted another employee about a year earlier.

The Connecticut Supreme Court ruled in a 1997 decision that employers must “exercise reasonable care” to provide a “reasonably safe place in which to work,” according to the opinion. However, the “plaintiff cannot recover unless he can carry the burden of proving that the danger he faced met the objective standard enunciated” in that decision.

“This stringent standard is not satisfied by plaintiff’s bare allegations that the co-worker who unsuccessfully tried to punch him had assaulted someone else about a year earlier,” said the court.

The plaintiff was given three weeks to amend his complaint to show that the co-worker “had a known propensity for violence and specifically threatened him with serious bodily harm.”

Commenting on the decision, Daniel A. Schwartz, of Pullman & Comley in Hartford, said the court is saying in its decision that simply complaining “you believe a co-worker is going to commit violence, without something a little more tangible” is “not going to be enough.”

T.L. Cannon’s attorney, Glenn Duhl, of Siegel O’Connor O’Donnell & Beck in Hartford, said Ferrer was discharged after witnesses disputed his version of the incident, the company learned he had a record of prior disciplinary warnings and he refused to go back to work at the same shift as his co-worker.

But Ferrer’s attorney, Steve Jacobs of Jacobs, Jacobs & Shannon, said he believes Ferrer was discharged in retaliation for complaining about an unsafe workplace.

The judge seemed to think that to successfully plead his case, the plaintiff had to have suffered “serious bodily injury,” and to have alleged the assailant “had a propensity to commit violent actions in the workplace. I’m not sure that that’s necessarily the law,” he said.
 
Jacobs said no decision has been made as to whether he will plead the case again.

Filed by Judy Greenwald of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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President Barack Obama is promoting two proposals that would deliver two more blows to the voluntary nature of the private retirement system.

In his 2010 budget blueprint unveiled February 26, Obama proposed requiring employers sponsoring 401(k) or similar defined-contribution plans to offer automatic enrollment. A second proposal would require employers without existing retirement plans to enroll their employees in a direct-deposit individual retirement account.

The president’s proposals follow one in the works by senior Democratic congressmen that would provide funding relief to companies with defined-benefit plans that commit, for an undefined period, to keep their plans open.

All three are seen as steps toward changing the nation’s retirement system from a voluntary one to a mandatory one. And the potential for a combined assault on the voluntary nature of retirement plans is giving some pension industry lobbyists the shudders.

Chief among their concerns is the possibility of additional requirements, such as a mandate that employers provide matching contributions to their defined-contribution plans, something that has always been voluntary, said Ed Ferrigno, Washington vice president of the Profit Sharing/401(k) Council of America, based in Chicago.

“Where does this stop?” Ferrigno said. “It’s very ominous.”

Kathryn Ricard, vice president of retirement policy for the ERISA Industry Committee in Washington, agreed.

“It’s that slippery slope of what’s next; that’s what gives us pause.”

“Employers will be concerned that this is the first mandate in what has been a voluntary system,” said Jan Jacobson, senior counsel, retirement policy at the American Benefits Council in Washington.

Despite those concerns, the concept of enrollment mandates has the support of the mutual fund industry’s Investment Company Institute in Washington.

“We should consider requiring all 401(k) plans to use automatic enrollment and automatic savings escalation,” Paul Schott Stevens, ICI president and CEO, said at a February 24 hearing on strengthening retirement security before the House Education and Labor Committee.

Another retirement-related proposal in Obama’s budget would dramatically expand the existing saver’s tax credit program to make it fully refundable, meaning qualified taxpayers would receive a federal payment to their retirement accounts. That proposal has the support of the Profit Sharing/401(k) Council of America.

 “The goal is to increase savings,” Thomas E. Gavin, a spokesman for the White House’s Office of Management and Budget, wrote in an e-mail response.

“As the budget noted, 75 million working Americans—roughly half the work force—currently lack access to employer-based retirement plans,” Gavin said. “In addition, the existing incentives to save for retirement are weak or non-existent for the majority of middle- and low-income households.”

Meanwhile, House Education and Labor Committee Chairman George Miller, D-California, is considering sweeping reforms to the U.S. retirement system, though he has yet to endorse any specific proposals.

Miller said he had heard several proposals aimed at making retirement coverage universal. “People clearly believe you have to do this.”

During the February 24 hearing—the first of a series planned to consider how to strengthen the U.S. retirement system, Miller said Congress had to address ways to improve 401(k) plans, making them more transparent, fair “and operated on behalf of the account holder, not Wall Street firms.”

“But we must also ask the difficult questions about the state of our nation’s retirement system as a whole and look to see whether we need to create a new leg of retirement security,” Miller said. “For too many Americans, 401(k) plans have become little more than a high-stakes crapshoot.”

Among those hoping to help fill in Miller’s reform agenda are the Pension Rights Center, the Economic Policy Institute and the National Committee to Preserve Social Security and Medicare, all worker advocacy and policy groups in Washington.

The three groups plan to announce on Tuesday, March 10, an effort to establish a “new retirement system that, together with Social Security, will provide universal, secure and adequate income for future retirees,” according to a PRC advisory. No specifics have been revealed.

With the retirement reform train roaring out of the station, House Republican Leader John Boehner of Ohio is asking GOP lawmakers to come up with alternatives to Miller’s efforts to help the public rebuild savings and retirement accounts that have been devastated by the economic downturn, said Kevin Smith, a spokesman for Boehner.

“This is an effort to counter the fight that George Miller has already picked: He wants to wipe out 401(k)s completely and replace them with accounts controlled by bureaucrats instead of the people who own them,” Smith said. “We will vigorously oppose that idea and develop solutions that better help rebuild Americans’ savings.”

Filed by Doug Halonen of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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The House Ways and Means Committee, not the House Education and Labor Committee, should have jurisdiction over 401(k)s and other pension plans, said Rep. Richard Neal, D-Massachusetts.

House Education and Labor Committee Chairman George Miller, D-California, has already launched a series of hearings on 401(k) and other potential pension reforms this year.

In remarks Thursday, March 5, at the Investment Company Institute’s 2009 Retirement Savings Summit in Washington, Neal said the Ways and Means Committee—which he is a member of—should be in the driver’s seat on pension issues. “He [Mr. Miller] has a small slice of it,” Neal said after his remarks. “It’s our responsibility.”

Aaron Albright, a spokesman for Miller, declined to comment.

Neal, who chairs the House Select Revenue Measures Subcommittee, also said he planned to introduce legislation in the next several weeks—which would enact a proposal in President Barack Obama’s 2010 budget blueprint—to require employers who don’t currently offer a retirement program to enroll their employees in a direct-deposit individual retirement account. But Neal also said he would consider ways that would prevent the program from becoming mandatory.

Also at the conference, Tom Reeder, benefits tax counsel for the Department of Treasury, said agency guidance on how defined-benefit plan sponsors should smooth assets in calculating their pension-funding obligations should be forthcoming within the next several days. President George W. Bush signed legislation December 23 that makes clear that pension funds can smooth their assets over the 24-month period. But according to Reeder, the plans can’t actually do the smoothing calculations until the Treasury issues its guidance.

Filed by Doug Halonen of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Seeking help in communicating available federal benefits to your organization’s lower-wage employees? Corporate Voices for Working Families, a nonprofit corporate membership organization, offers its 2008 Employer Guide: Educate Your Employees About the Benefits They’ve Earned. The guide includes information about the Earned Income Tax Credit and Medicaid, corporate best practices on using the guide to help employees access these and other programs, and more. Click here to read more about the tool and to register for downloading the guide.