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Massachusetts Program Augments Federal COBRA Subsidies

Massachusetts officials are integrating a two-decades-old state program that heavily subsidizes COBRA health insurance premiums with the new federal COBRA premium subsidy to further cut the costs of coverage for employees who lose their jobs.


Launched in 1988, the Massachusetts program—known as the Medical Security Program and administered by the Division of Unemployment Assistance—reimburses 80 percent of COBRA premiums for unemployed workers with adjusted gross incomes of up to 400 percent of the federal poverty level.


The Massachusetts program is the only one of its kind in the country.


Under economic stimulus legislation signed into law last month by President Barack Obama, the federal government will pay 65 percent of COBRA premiums for employees who lose their jobs between September 1, 2008, and December 31, 2009. The subsidy is available for up to nine months, until an employee is eligible for coverage from a new employer or becomes eligible for Medicare.


Massachusetts will apply its 80 percent subsidy to COBRA beneficiaries’ 35 percent share. That will result in beneficiaries paying 7 percent of the premium and the Massachusetts Security Program paying 28 percent.


That type of integration between the Massachusetts program and the federal COBRA premium subsidy is explicitly allowed under the stimulus law.


As of January, more than 3,500 Massachusetts unemployed workers were receiving the state-provided COBRA premium subsidy, state officials say.


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


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Study Sees Link Between Unemployment, Mortality Rates

Unemployment and reduced spending on health care have a direct effect on the country’s mortality rate, according to a new study from the University of North Texas Health Science Center’s School of Public Health in Fort Worth.


As workers lose their jobs, they often lose their health insurance, suffer from stress and adopt unhealthy behaviors.


They also might delay preventive care because of cost or coverage issues. In a news release, the school of public health said that research since World War II has found that economic development is good for health in developing countries; however, the new study’s findings suggest that unemployment is a much more important factor in health and well-being than economic development.


“Interestingly, this economic downturn is showing how quickly the effects of unemployment, and, thus, reduction of health care expenditures is resulting in mortality,” said Harvey Brenner, a professor of public health at the school, in a news release about the study.


“In the past, we saw people die within 10 years after their job loss,” Brenner said. “Now, we are seeing them die as early as the same year.”


The University of North Texas Health Science Center is composed of the Texas College of Osteopathic Medicine, the Graduate School of Biomedical Sciences, the School of Public Health and the School of Health Professions.


Filed by Jessica Zigmond of Modern Health Care, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


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Measure Likely to Include Tax on Employees’ Health Benefits

Employer groups are expecting the first drafts of federal health care reform legislation to include proposals to tax employees’ health benefits.


The cost of health benefits is exempt from taxes for employers and employees. The White House Office of Management and Budget estimates that the tax exemption, which helped create the employer-based health care system during World War II, will cost the federal government $174 billion in lost tax receipts in 2009, making it a policy target for health care reform.


“This whole idea of limiting the tax exclusion will be one of the most highly contested elements of health care reform,” says James Klein, president of the American Benefits Council. “But we may see different variations on this proposal than we have in the past.”
Employers’ contributions would not be taxed. Instead, the cost of an employee’s health care would be added to total compensation and subject to federal, state and Social Security taxes.


No matter the details, employers are likely to oppose the policy, Klein says.


President Barack Obama is pushing the reform, but the first draft of bills will likely be written in the Senate, where Sen. Max Baucus, D-Montana and chairman of the Senate Finance Committee, has proposed taxing benefits in his legislation. Baucus has argued that revenue to pay for health care reform should come from within the health care system.


Republicans have also proposed eliminating the tax exclusion but have suggested providing a tax credit to individuals who buy insurance.


The proposal, however, is fraught with political obstacles. One version is likely to focus on health benefits that cost a certain dollar amount. The idea is to encourage people to elect less costly benefit plans, which would undoubtedly raise the ire of union members, whose heavily subsidized health benefits represent a large portion of their total compensation.


Another option is to tax benefits of people at a certain income level. But employers fear that Congress could lower that level anytime it wanted to raise revenue.


“It’s a blunt policy instrument,” Klein says.


In a policy brief in January, the Employee Benefit Research Institute wrote, “The change would be especially difficult for self-insured employers that do not pay insurance premiums, since they would have to set the ‘premium equivalent’ for each worker. This would not only be costly for employers, depending upon the requirements set out by law, but could also create fairness and tax issues for many affected workers.”


No concrete details are expected until the spring, when the legislation is set to go before the Senate committees on health care and finance.


“There’s absolutely no question that it’s on the table,” says Susan Relland, an attorney with Miller & Chevalier in Washington. “But we have no details yet.”



—Jeremy Smerd


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Tough Times Bring Clients to Disneys Training Business

Like many other prominent companies that have traditionally been seen as models of effective management, Walt Disney Co. has been hit hard by the economic downturn. With nervous consumers cutting back on their discretionary spending, the entertainment empire has been beset by declining DVD sales for its classic animated films, and attendance at its world-renowned theme parks has dipped.


But one segment of Disney’s business actually is booming as a result of economic worries. The Disney Institute, which offers other companies business leadership and customer service training based upon time-honored Disney precepts, is seeing a surge in demand for its services.


While Disney isn’t releasing specific figures, Disney Institute spokesman Terry Brinkoetter says corporate clients—which include hospitals, accounting firms and aircraft manufacturers—are signing up in greater numbers than ever for the institute’s various offerings. The curriculum includes three-day courses at Disney resorts where students get to observe Disney’s customer service techniques firsthand, and on-site training sessions in which Disney trainers work to customize Disney business approaches to fit other businesses’ specific needs and problems. The institute also offers a popular traveling series of $400-a-session Keys to Excellence conferences, which it has recently expanded to other countries.


“I think we’re probably going to be the brightest spot in the company this year,” Brinkoetter boasts. “We’re actually setting higher targets for business than in the past, and we’re still seeing enormous jumps.”


Though companies are under increasing pressure to cut expenses, training experts say that forced austerity may be driving organizations to spend what few dollars they can spare for training on one of the world’s most illustrious brand names. Disney, which has been in the training business since 1986, can draw upon its own fabled history for material. Institute instructors, for example, share the tale of how company founder Walt Disney bought dinner for his animators to boost their morale during the 1937 creation of Snow White and the Seven Dwarfs, at a time when the company was so short on resources that Disney and director David Hand worked with only a single light bulb lit to save electricity.


“Disney is an outstanding company,” explains Doug Lynch, vice dean of the University of Pennsylvania’s graduate school of education, who studies corporate leadership training. “These days, there are so few companies that big who have been around as long as they have. But what’s interesting about them is that they have that whole Imagineer, creative side of things, and they’re also perceived as very good at customer service and operational excellence. And they seem to be able to attract really good people and get them to be loyal, without having to pay through the nose. So it’s natural for me to say, ‘I want to be able to do that, too. Can they teach me how to do it?’”


Bruce Jones, the institute’s programming director, says corporate clients turn to Disney for help because they see customer service and efficient execution as ways to differentiate themselves from the pack in a brutally competitive economy.


Health care providers are major part of the institute’s clientele. “The point we make to them is that behaviorally, people don’t always understand the medical procedures and the technology, but they understand how family members are made to feel,” Jones says. “That’s something we know how to do. We try to make everyone feel like a VIP, and we can show them how to do it.”


For example: In the wake of a scandal involving shoddy conditions and patient neglect in 2007, Walter Reed Army Hospital paid Disney $800,000 to retrain 2,000 of its employees on-site in Maryland, according to a Washington Post report. Another institution, the University of Arkansas for Medical Services, spent $178,000 to bring Disney trainers to Little Rock for 17 training sessions last year, and the University of Iowa’s medical center paid two Disney trainers $3,000 for a one-day crash course in customer service, according to coverage in local papers.


Cheri Greenfield, director of strategic consultancy at Humana, the health insurance provider based in Louisville, Kentucky, says working with the institute’s detail-oriented trainers enabled Humana to develop a special program to deal with consumers who are referred to out-of-network specialists by their primary physicians. “Sometimes, the person goes to the appointment, and that’s the first time they realize that Dr. Joe is a nonparticipating provider,” Greenfield explains. “What we learned from Disney, though, is though it may not be our fault, it’s our problem. Now, as soon as we’re notified of the referral, within 24 hours we reach out to the consumer, educate them on the situation, and offer to guide them, if they desire, to a participating provider.” Greenfield says surveys show that 84 percent of its customers want to switch to a participating provider if given the opportunity.


Based upon Disney’s guidance, another client, Arkansas Children’s Hospital, adopted a “central casting” approach to hiring, with an HR staffer embedded in each department to learn its particular needs and then do the initial screening of résumés and interviewing. “That way, the manager doesn’t have to spend time doing all that stuff, which takes away from his or her regular job,” explains Scott Gordon, the hospital’s vice president and COO. “It has worked very well.”


Possibly inspired by Disney’s success, other corporate brand names, such as Motorola and Raytheon, also have ventured into training and consulting. “More companies are offering education externally; they’re not just doing it for money,” says New York-based training consultant Jeanne Meister, writer of the New Learning Playbook blog. “They’re also doing it to add to their brand.”


Perhaps Disney’s closest competitor is Washington-area-based Ritz-Carlton and its Leadership Center, which utilizes the company’s own hotels as classrooms for courses with titles such as “Legendary Service,” in addition to doing on-site consultations.


Like Disney, these days Ritz-Carlton is finding plenty of eager corporate students. “What’s happening is that companies are in dire straits,” says Diana Oreck, Ritz-Carlton’s vice-president of global learning. “They’re realizing that they need that service touch as a differentiator, and that they better get on it. We have everyone from automotive companies to health care to financial firms coming to us.”


Disney is hoping to stay ahead of the curve by offering “Leading Through Turbulent Times.” The new program draws upon Disney’s history—including Walt Disney’s experiences leading his studio through the Great Depression of the 1930s, and Disney’s struggle to operate its Florida resort complex after major hurricanes—to give clients insights on how to survive the current downturn. Disney was planning to roll out the product with a late-March webinar, which is intended to appeal to companies who are feeling too financially strapped to send staffers to Orlando, Florida.

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The Three Biggest Blunders Dealing With Unions

With card-check legislation on the horizon, employers need to open up communication with their workers now more than ever, says Bill Adams, CEO of labor management consultancy Adams Nash Haskell & Sheridan in Fort Wright, Kentucky.


    Letting problems and grievances fester, he says, is a good way to drive workers to unionize.


    “The bottom line is, if the issues are common and fixable and they’re not addressed, they’ll soon be sitting down with a union. It’s that simple,” Adams says.


    Some employers assume they’ll never have to deal with a union. Others panic at the first sign that workers are organizing. Both reactions can lead to painful and costly mistakes, Adams says.


Ignoring the possibility
   Many business owners adopt an “ostrich” mentality and assume their workers will not seek union representation, says Stephen Cabot, chairman of the Cabot Institute for Labor Relations Inc. in Pennsylvania.


    “They think, ‘It won’t happen. I’m a good employer. Everybody loves me.’ But waiting is a death knell,” Cabot says. “If you don’t step back and find out how your employees feel and get addressing those concerns now, you’re dead in the water.”


    Employees are particularly tuned in to issues of fairness, especially regarding pay, and discrepancies over time do not go unnoticed, he warns. Wise employers seek feedback and try to resolve problems.


Tolerating lax, inept or corrupt behavior from supervisors or managers
   Employers that overlook bad seeds among management ranks leave themselves vulnerable. Accepting or ignoring malevolent behavior from supervisors kills morale and breeds resentment, Adams says.


    “If you have allowed a supervisor to behave in that way, you must fire him or get him out of there,” he says.


    Look for clues in body language.


    “Pay attention to your employees. Do they look you in the eye, or are their eyes downcast? You can tell when something’s wrong,” he advises. “Get to the root of the issue.”


Assuming executives can freely discuss union matters with employees
   There are rules about what employers can and cannot say to employees, especially to those who are attempting to organize or are in the process of reaching their first collectively bargained contract. In particular, asking questions about a worker’s interest in union representation is off limits.


    Become familiar with acceptable discourse.


    “A useful general rule is that an employer can be a dispenser of information, but not a collector,” according to the nonprofit National Federation of Independent Business, which has published a guide for small-business owners facing organizing efforts on its Web site: www.nfib.com.

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San Francisco Health Care Mandate Inches Toward Supreme Court

The 9th U.S. Circuit Court of Appeals’ decision this month not to review a 2008 appeals panel ruling upholding a San Francisco health care spending law brings one step closer a potential U.S. Supreme Court review and perhaps a final resolution on the legality of employer spending mandates.

In a case followed by employers nationwide due to its potential impact on the design, cost and administration of corporate health plans, a majority of appeals court members rejected a request for the full appeals court to review a unanimous ruling by a three-judge panel of the court that the law could stand.

Under the law, San Francisco employers must spend as much as $3,600 per employee annually on health care in order to avoid stiff fines. The Golden Gate Restaurant Association, a San Francisco-area employer group that brought the case, argued that the law runs afoul of a provision in the Employee Retirement Income Security Act that pre-empts state and local ordinances that relate to employee benefit plans.

Under the ordinance, which went into effect in January 2008, employers with at least 100 employees have to make health care expenditures of at least $1.85 per hour for each employee working at least eight hours per week. Employers have a variety of options to satisfy the spending mandate, including payment of health insurance premiums, contributions to health reimbursement arrangements and health savings accounts, and payments to a city fund.

Judge William Fletcher, who also wrote last year’s appeals court ruling, says ERISA pre-emption did not come into play. “Nothing in the ordinance requires the employer to establish an ERISA plan, and nothing in the ordinance interferes in any way with the uniformity of ERISA regulation,” he wrote.

In a dissent, Judge Milan D. Smith Jr. wrote that the city ordinance strikes at the heart of what ERISA pre-emption was designed to prevent: the proliferation of varying state and local benefit laws and requirements.

As it stands, the decision will “undoubtedly serve as a road map in jurisdictions across the country on how to design and enact a labyrinth of laws requiring employer compliance on health care expenditures, thereby creating the very kind of health care expenditure balkanization ERISA was designed to avoid,” he wrote.

Kevin Westlye, executive director of the Golden Gate Restaurant Association, says the group intends to seek a Supreme Court review of the case.

Legal experts say it is likely the Supreme Court will take up the case because the ruling has created a split at the appeals court level—in 2006, the 4th U.S. Circuit Court of Appeals ruled that a Maryland health care spending law was pre-empted by ERISA.

In addition, experts say, a Supreme Court review is likely given the huge impact the San Francisco ruling would have on corporate benefit plans.

“Given that there is a conflict in the courts and that this clearly is a case of national importance, one would think that the Supreme Court will take it up,” says Kathryn Wilber, senior counsel-health policy with the American Benefits Council in Washington.

It is the potential proliferation of similar laws that most concerns national employers. It would be incredibly difficult for employers to track, let alone administer, what could become a maze of spending laws, experts say.

“If ERISA pre-emption means anything, it should be that employers shouldn’t have to analyze and comply with benefit laws that could pop up in every nook and cranny of the country,” says Andy Anderson, an attorney in the Chicago office of Morgan, Lewis & Bockius.

For employers that meet the $1.85-per-hour spending mandate, the only direct impact is the ordinance’s reporting requirements.

But many employers don’t meet the spending requirement. Few employers provide health care coverage to employees working as little as eight hours a week—the trigger for the mandate.

In addition, the law generally requires a spending contribution even for those employees who have rejected coverage from their employers in favor of being covered under a spouse’s group health care plan.

Employers not meeting the spending requirements have taken a variety of approaches. Some have found that the easiest action is just to pay the required contribution to San Francisco, says Rich Stover, a principal with Buck Consultants in Secaucus, New Jersey.

Other employers have established health reimbursement arrangements for affected employees. With that approach, employers have assurance that their contributions are being used to pay for their own employees’ health care expenses rather than going to a city fund, Anderson says.

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Taming Twitter Did They Really Just Say That

Perhaps by now you’ve heard of the PR guy whose snarky comments about Memphis, Tennessee, to his Twitter followers landed him in hot water with the Memphis-based client he was about to visit, a little company named FedEx.


    Or the congressman whose Twitter posts during a secret trip to Iraq had military officials worried he had compromised the mission’s security.


    And then there’s the very public and very profane exchange between a Canadian journalist and a product-marketing executive.


    As those instances show, organizations are using Twitter for almost anything and everything, often with unintended or even disastrous consequences. The social networking service, which lets people post messages 140 characters at a time to a circle of online friends, has grown so big so fast that it has outpaced companies’ efforts to create user guidelines—or in some cases understand what it is and how it works.


    If this sounds familiar, it should.


    Companies have covered this ground before, first with e-mail, then the Web and more recently with social networks such as Facebook and LinkedIn. In each case, advances in electronic communications forced organizations to decide what employees could or couldn’t do and revise corporate conduct guidelines or acceptable use policies accordingly.


    Although it’s still small compared with social networks like MySpace, Facebook or LinkedIn, Twitter is catching on fast. The 2-year-old service grew 900 percent in 2008 to approximately 6 million users, according to company officials and Internet industry analysts.


    Given the avalanche of things HR departments are dealing with right now—a recession-induced talent upheaval and a new U.S. president intent on revising workplace rules and regulations—they’re not investing lots of energy worrying about Twitter, says Jason Averbook, CEO at Knowledge Infusion, the Minneapolis HR management consulting firm.


    “They’re slammed to the gills just trying to survive, and writing a guide to social media isn’t on top of their to-do list,” he says.


    Maybe it should be.


    Because of how it works, Twitter can spread information exponentially faster than e-mail or blog posts.


    Think of Twitter as a giant chat room, but instead of person-to-person conversations, with a mouse click one person can instantly beam a message to however many Twitter users have signed up to “follow” them, whether that’s 20, 200, 2,000 or more. Any of those people can rebroadcast, or “retweet” the original message to their own network and so on and so on.


    Its viral nature makes Twitter powerful but also dangerous, says Michael Krigsman, CEO at Asuret Inc., a Boston IT consultant, and author of the IT Project Failures blog.


    “If a company does well, the positive effect can happen more rapidly than e-mail,” Krigsman says. “If a company doesn’t do something or isn’t responding to customers, the possibility of negative spiral is far greater too.”


    Some companies have responded by blocking employees’ access to Twitter with the same software they use to block gambling, pornography or other sites they’ve determined could hamper productivity or be perceived as harassment.


    But social networking experts agree that blocking Twitter will backfire.


    “It’s a hopeless battle,” says Steve Boese, an adjunct professor at New York’s Rochester Institute of Technology who teaches an HR IT course in the school’s HR master’s degree program. “You can issue blocks but you’ll be blocking more and more. It’s a game, and eventually you’ll give up.”


    Besides, social media and HR experts say, there’s nothing stopping an employee from using Twitter to talk about work from their home computer or personal iPhone.


    Some companies have taken the offensive and tapped designated employees to act as their official eyes and ears on the network.


    Comcast, for example, has at least a half-dozen customer service and public relations representatives on Twitter fielding customers’ questions and complaints about the company’s telephone, cable TV and Internet service. UPS, Bank of America, Wachovia, Southwest Airlines, Starbucks and Zappos, the online retailer, all have official corporate accounts on the network for customer service, marketing or both.


    At Yahoo, 25 to 30 employees act as the Silicon Valley tech giant’s official Twitter representatives. Many are product or community managers who get paid to spread information about new Yahoo products and services.


    In early February, Nicki Dugan, a Yahoo corporate communications senior director, became the official corporate voice of Yahoo on Twitter.


    But even tech-savvy companies like Yahoo haven’t sorted everything out.


    Although Yahoo employees have used Twitter in an official capacity for at least a year, the company has yet to revise 4-year-old employee electronic communications guidelines to include the new service.


    The only update has been a wiki Yahoo engineers created in 2008 to share advice on handling complaints customers post on Twitter.


    It’s definitely time for more, Dugan says.


    Although Yahoo hasn’t encountered problems, company officials are discussing creating a separate wiki to spell out Twitter best practices, and are also talking about ways to use Twitter for customer service, she says, adding: “We need to formalize it.”


    Having an electronic communications policy or employee-conduct guidelines that cover Twitter won’t mean much if employees don’t know they exist, according to HR and social media experts.


    Guidelines should be spelled out during new employee orientation. They should also be available in handbooks and online in multiple locations, such as on an internal company blog or on its HR employee portal.


    Most important, make sure employees realize Twitter is a public forum, says Krigsman, the IT failures expert.


    Employees may think they’re posting about minor company events, but you had better believe that competitors are out there, hanging on their every word. Says Krigsman: “Twitter is a competitive-intelligence dream tool.”

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Solis Vows at Swearing-In to Bolster Job Training, Enforcement

It took her awhile to get confirmed, but new Secretary of Labor Hilda Solis won’t waste time making her presence felt by companies that her agency determines are subjecting employees to dangerous working conditions or are shorting their pay.


“Let me be clear, there is a new sheriff in town,” Solis told a crowd of a couple hundred Department of Labor staff, government officials and political supporters at her swearing-in ceremony Friday, March 13.


“We’ll accomplish this through tough enforcement, transparency, cooperation and balance,” she said.


Her remarks reflected President Barack Obama’s budget outline for the agency. He proposes to raise discretionary funding by $1.5 billion by 2010. A big chunk of the increase will go toward the Occupational Safety and Health Administration and the Wage and Hour Division.


Solis said another emphasis would be worker training, especially for “green-collar jobs” and for high-growth industries. “In a time of economic crisis, giving Americans the tools they need to find and keep a job must be our priority,” she said.
 
The swearing-in, conducted by Vice President Joe Biden, was a ceremonial event. Solis, a former congresswoman from the Los Angeles area, has been serving as labor secretary since her confirmation, 80-17, by the Senate on February 24.


The Senate took nearly seven weeks to scrutinize Solis’ background and policy positions. Her nomination was held up by Republicans who had concerns about a potential conflict of interest between Solis’ role as treasurer for an advocacy group and her support of legislation that it sought to pass, including a bill that would make it easier for workers to form unions.


In addition, Solis ran into a tax problem involving her husband, who did not pay about $6,400 in tax liens against his auto repair business until the day before the Senate Health, Education, Labor and Pensions Committee was to vote on her.


Her nomination stumbles seemed far behind her during her swearing-in, with the enthusiastic crowd giving her a couple of standing ovations as she vowed to take the department in a new direction.


The program for the event captured the theme of Solis’ and Biden’s speeches. At the top, it said: “U.S. Department of Labor: The Voice for Working Families.”


Her vision for the department is shaped by her background as the daughter of immigrants who were both members of unions, Solis said. Her father, originally from Mexico, was a shop steward at a battery recycling plant. Her mother, who came to the U.S. from Nicaragua, worked in a toy factory.


Solis credited her father’s union for her family’s health care and other benefits. She articulated her affection for organized labor by recognizing union leaders in the audience.
“Thank you brothers and sisters for being here with me,” she said. “You are a very, very important part of what I will be doing in the next few years.”


While in the House, Solis co-sponsored the Employee Free Choice Act, a bill that would allow workers to form a union once a majority sign cards authorizing one. It would prohibit a company from requiring a secret-ballot election supervised by the National Labor Relations Board.


But Solis vexed Senate Republicans by refusing to answer questions about her position on the bill during her confirmation hearing. It was one of several policy areas on which she declined to comment.


Solis didn’t mention the bill in her remarks at the swearing-in ceremony, but she did emphasize that the department would be a forceful advocate for women and minorities.


Her background was a focus of the event. Solis, the first Latina labor secretary, began her remarks by saying, “Buenos dias.” She also paid tribute to her parents in a portion of her speech spoken in Spanish.


Solis was the first person in her family of six to graduate from college. She earned her undergraduate degree from Cal Poly Pomona and a master’s degree from the University of Southern California. She was the first woman to win a seat in the California Senate.


“The fact that I’m standing before you today as a child of an immigrant family, a working family, is proof that in America anything is possible,” Solis said.


—Mark Schoeff Jr.


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Merrill Bonuses to Receive Congressional Grilling

Key members of Congress will begin an investigation to determine whether officials from Merrill Lynch deliberately misled lawmakers about bonuses the brokerage firm intended to pay out to top executives for its 2008 performance.


Rep. Edolphus Towns, chairman of the House Committee on Oversight and Government Reform, told Workforce Management sister publication Investment News on Thursday, March 12, that he intends to launch a probe to explore claims that Merrill Lynch & Co. Inc. of New York secretly moved up its timetable to award $3.6 billion in bonuses to its executives prior to its acquisition by Bank of America Corp. on January 1 and before it was revealed that Merrill would post a nearly $16 billion loss for the fourth quarter.


“We will be looking to find out whether or not they lied to us,” he said.


Towns, D-New York, was referring specifically to a letter that Merrill Lynch officials sent to members of Congress in late November, in which the firm wrote that its “incentive compensation decisions for 2008 have not yet been made” and that bonuses would be determined at year’s end.


On Wednesday, March 11, New York state Attorney General Andrew Cuomo, who has been targeting the payment of these bonuses at Merrill all year, accused the firm of deceiving Congress as part of his own investigation.


“We take these allegations very seriously,” Towns said, noting that Merrill Lynch and Bank of America have received more than $40 billion in federal funds in the last six months. “When you are dealing with taxpayer dollars, you have a right to know how the money is being spent.”


Towns added that his committee intends to interview key executives from both Merrill and BofA on the issue, including John Thain, former Merrill chief executive, and Ken Lewis, BofA’s current CEO.


A spokeswoman for Merrill Lynch referred calls on that matter to BofA spokesman Scott Silvestri, who was not immediately available for comment.


Filed by Mark Bruno of Investment News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.



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Senator Seeks Employer Input for Health System

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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