Bills to repeal don’t faze voluntary system’s backers

Not too long ago, a government-backed paid family and medical leave system appeared to be inevitable in New Hampshire, either at the state or federal level. But since then, robust universal mandate programs have failed in Concord and Washington, temporary Covid fixes have expired and a more limited voluntary program that has never been tried before is under threat of repeal even before it is implemented.

Still, the Granite State Paid Family Leave Plan — with lukewarm legislative support and even some hostility — is being developed with the support of Gov. Chris Sununu and is likely to survive. A $1.9 million consulting contract was approved by the Executive Council in November, with the goal of putting out a request for proposals at the end of March. And, assuming the state will get at least one acceptable bid, the plan would be in place at the end of this year.

The consultants and officials from at least four state agencies are developing the RFP, assures Deputy Insurance Commissioner D.J. Bettencourt, who has helped to develop the program.

“This is the first of its kind and incredibly unique,” he enthused to NH Business Review. “We are getting calls from insurers every week. There is a lot of heavy interest among insurers.”

The governor’s plan came in reaction to a bill — sponsored by Democrats but supported by some Republicans — which passed the House three times and then the Senate when Democrats had control of the Legislature, but Sununu vetoed it calling the 0.5 percent payroll deduction that would fund it an “income tax.” The program would have provided up to 12 weeks of leave at 60 percent of salary.

That was a heady time for paid family leave, since it had some bipartisan support. Even the Trump administration had advocated for paid maternity leave and more comprehensive programs were increasingly enacted in different states.

Then along came Covid, which made the need for leave more apparent and urgent. Congress enacted Covid-related leave provisions, both signed into law by Trump.

One required that large employers provide pandemic-related leave for a worker’s own illness or that of a family member as well as to care for a child forced to stay home because of school and child care shutdowns. The federal government also paid out unemployment compensation for workers who had to leave work for the same reasons.

Meanwhile, eight states enacted leave programs or expanding existing ones. There will be at least 10, with Colorado and Oregon slated to launch theirs in 2023 and 2024, respectively.

Some of the states offer more generous wage replacement than others, particularly for lower-income workers. In Massachusetts, for instance, 80 percent of pay is provided, and in Connecticut it’s 95 percent.

All of the states offer universal leave paid funded through a payroll deduction or employers, or some combination of the two, with a few subsidized by the general fund.

Limited benefits

New Hampshire, at Sununu’s insistence, went its own way by coming up with a voluntary program with more limited benefits.

The program didn’t pass easily. Some House Republicans opposed it, as did nearly all Democrats, and the state employees’ union was reluctant, hoping for a more robust plan.

Democrats in the Legislature sent the bill to interim study at the start of the pandemic, when they still held a majority. Then, like many other controversial proposals, it was tucked into the 2021 budget trailer bill.

The governor’s plan revolves around a six-week benefit at 60 percent of salary that will be offered to all state employees at taxpayers’ expense. The hope is that the 10,000-person risk pool would attract insurers willing to take on additional employers who want to sign up.

Under the Sununu plan, employers would decide how a company pays a yet-to-be-determined premium, and whatever that number is, the state would reimburse them for half of the cost via a business enterprise tax credit. Companies with over 50 employees would administer the program and deal directly with the insurer. Employees from firms that don’t participate can sign up on their own, with a payroll deduction premium capped at no more than $5 per weekly paycheck through a program administered by the Department of Employment Security.

That cap, by the way, is roughly what the average mandatory payroll deduction under the plan Sununu vetoed, but that plan’s premium varied by income, whereas under the governor’s plan all individual premiums would be the same, whether a worker was making $20,000 or $200,000, even though the higher-paid worker’s benefit would amount to a lot more money.

But Some 38,000 New Hampshire employers — 96 percent — have fewer than 50 workers, and they employ more than 42 percent of the 316,000 individuals in the private workforces, according to figures from Employment Security.

It’s also unclear whether smaller firms can sign up and get the tax break.

The law seems to say they can’t, but Bettencourt said it is the state’s interpretation that they can. That’s what is in the consultant’s contract.

Either way, employees of smaller firms can sign up on their own, but they won’t have the federal job protections under the Federal Family and Medical Leave Act (which only apply to larger firms). The state protection included in the new law — and enforced by the state Department of Labor — also is limited to larger firms.

In other words, workers who want to keep their job after leave at a small firm must ask their employer’s permission for that benefit, even if they are paying $5 a week for it, and the employer isn’t chipping in a dime.

“There is no job protection,” said Administrative Services Commissioner Charles Arlinghaus, talking about workers in small firms. “And it’s our job to make sure the consumer knows what’s up.”

The eventual vendor will help subsize the individual premium via a 2 percent insurance tax. “It’s not a new tax by any means,” said Bettencourt. The revenue from the new vendor’s tax would be earmarked for the Paid Family and Medical Leave Premium Stabilization Reserve fund.

It’s not clear whether it will be more than enough, or not enough, with a $5 payroll tax cap.

Adverse selection

This is where Spring Consulting Group LLC comes in. It’s the Boston-based subsidiary of the Illinois-based Alera Group, a consulting firm that works with employee benefits affiliates nationwide, including three in New Hampshire:

New England Employee Benefits Co. Inc. in Concord, Granite Group Benefits in Manchester and Landmark Benefits in Windham.

In addition to helping develop the RFP by March 31, Spring is supposed to help do the actuarial work with the Insurance Department to figure out how large unsubsidized premiums are going to be.

What, for instance, would happen if the premiums paid by employers are substantially higher than the $5 per individuals paid to help subsidize it? Bettencourt noted the department would have to approve the premium “so they couldn’t put forward anything extravagant,” and the contract would be written so that the insurer, not the state, takes the risk.

What would be the impact of adverse selection? Would employees sign up for the benefit right before the due date, and drop shortly after they took advantage of the benefit? There are already some safeguards, noted Bettencourt — there will be a two-month open enrollment period each year with a seven-month wait before eligibility — and the consultant might recommend others.

While Spring has a lot of actuarial experience, its website doesn’t indicate that it has worked with any paid family medical leave programs. It did publish a white paper in 2015, “What Employers Need to Know About New Paid Sick Leave Laws,” that was updated to 2018 and mainly focused on disability programs.

Lead consultant on the New Hampshire project, Karen Trumbull English is on the Executive Advisory Board of the Disability Management Employer Coalition and “is committed to researching how disability, absence and health management programs can be integrated, and uses that research to develop employee-focused solutions that provide a cost savings for the employer,” according to her online biography.

English did not respond to inquiries asking about Alera’s work on the project or their expertise, but Arlinghaus said she was told not to.

“They don’t talk to the press. We should speak with one voice when it comes to the public,” he said.

NH Business Review asked to review Alera’s bid, which would presumably highlight their credentials. Arlinghaus said it was public, but it wasn’t supplied by NH Business Review’s deadline.

‘A guided discussion’

In any case, Alera won out over two other bidders, and has been hard at work since, said both Bettencourt and Arlinghaus.

“There are meetings once a week, sometimes two or three times,” Arlinghaus said.

He estimated that Spring has five to eight people so far working on the project and the state has about two dozen across four agencies. So far, there hasn’t been anything in writing.

“We are not asking them to produce a white paper for us so to speak. It’s more of a guided discussion,” Arlinghaus said.

The only written product the public will see is the RFP itself, he said, and that won’t be released before March 31.

However, the contract does call for quite a bit of written work aside from the RFP.

According to that contract, “the Contractor shall provide written recommendations on the structure, design, development, implementation, funding mechanisms, marketing and outreach and required reporting ... improvements or changes to all aspects of the law ... for the design and implementation of ... funding mechanisms, risk pool, and rates, based upon and including an actuarial analysis … to the best methods for recordkeeping and administration… for the utilization of a consolidated webbased platform, mobile application, and other alternatives.”

The contract indicated that $302,225 of the $641,000 paid out over the first year would be for such written work. The rest would be for attending various meetings. Arlinghaus said that the consultants submitted one invoice, but he did not produce it — nor disclose its amount — by deadline.

Citing this, NH Business Review again asked whether there was anything written down and what it would be. Arlinghaus did not get back by deadline and Bettencourt replied, “I will let you know if any of that comes my way.”

‘Vulnerable to collapse’

While the Sununu administration works to implement the new law, two bills sponsored by members of his own party seek to repeal it.

“I don’t feel it’s the proper government role,” said Rep. Norm Silber, R-Gilford, who signed on to both bills.

“We shouldn’t be in the business of providing another state entitlement,” said Rep. Peter Torosian, R-Atkinson, prime sponsor of House Bill 1582, which has five co-sponsors. Even though the program would be voluntary, “once we open the door, good luck getting rid of it. Once the employees get a taste of it, they won’t let go,” said Torosian.

Torosian also criticized the process that resulted in the program. “Eighty percent of our caucus was against that bill,” but it “never got a fair hearing.” Instead, the Senate put it in the budget and “people fell on the swords to pass the budget. This wouldn’t stand as a separate bill.”

Torosian’s bill, which would come before the House Commerce Committee, doesn’t have a hearing date yet, whereas HB 1165, sponsored by Rep. Andrew Prout, R-Hudson, and seven others, is scheduled to be heard Feb. 3 by the House Labor Committee.

Bettencourt doesn’t see much hope for either bill passing, noting that it would take more than two-thirds in each chamber to override an expected gubernatorial veto.

“This program is a big priority for the governor,” he said. “It would be a very uphill climb.”

On the other hand, there doesn’t seem to be much support, at least at this stage, for the program in either party.

“The legislature approved the paid family leave plan as part of the budget passed in 2021. We are interested in what level of success the state has in the implementation process,” read the statement released about the repeal effort by Jennifer Tramp, spokesperson for the House speaker’s office.

And it’s unclear whether Democrats — who have not put forth their own family leave bill — would vote to keep the governor’s plan alive. They claim that its non-universality would create adverse selection and only people who think they need the benefit would pay for it, meaning that premiums would not cover the costs. That’s why, they maintain, all other state paid leave programs cover everybody.

“Governor Sununu’s paid family leave plan remains unworkable and inequitable for Granite State families. The funding structure is entirely impractical and leaves the program vulnerable to collapse. House Democrats support a paid family leave plan that works for all families in New Hampshire,” said Mary Jane Wallner, D-Concord, a prime sponsor of the bill Sununu vetoed. But Wallner did not say how she or her caucus would vote on repeal.

Even national supporters of family and medical leave are indifferent to the Sununu program’s fate.

“The New Hampshire program that exists now ... puts the onus on individuals who have not won the boss lottery to opt in and potentially face implicit or explicit workplace pressure not to use the benefit or even to participate,” said Vicki Shabo, senior fellow of paid leave policy and strategy at New America, a liberal Washington think tank. “I think the way the program is designed will disappoint people. I defer to people in the state about whether to keep or toss it.”

Even if one of the repeal bills clears the House with a veto-proof majority, it would have a much harder time in the same Senate that voted to include it in the budget.

Some Democrats might back repeal “to give a black eye to the governor,” said Torosian, hastening to add, “my intent is not to feud” with the governor.

Despite the opposition, Bettencourt is optimistic about the program’s future program. There is, he said, the “potential for enthusiasm.”

Bob Sanders can be reached at bsanders@nhbr.com.