During my tenure in the House of Representatives, I sat on the Labor Committee which also oversaw bills such as Family Medical Leave Insurance. What follows is:
1) A speech (unedited) I gave when I was a State Representative to the House Assembly during the floor debate on an FMLI bill; and,
2) An op-ed penned in 2019 when yet another attempt was made to get an FMLI bill passed.
Both are lengthy, but provide a fairly detailed explanation as to why the plans put forth were financially UNSUSTAINABLE. They also provide additional info as to the plans flaws.
4 MAIN Points on House Bill 628
One: Family Leave insurance plans currently exist in the private marketplace and are readily available to employers and employees desiring them.
Two: As originally introduced, this bill would have created a new .5% tax on income disguised as a “premium”; and as amended, it creates another financially unsustainable social program that will likely require a taxpayer bailout in short order.
Three: At its peak, the program requires the addition of 45 new State Employees at an annual cost of 4.1 million dollars, or the equivalent of almost $100,000 per added employee; and it will take nearly 16,000 private-sector employees opting into the scheme just to cover the administration costs.
And four: The bill is unneeded, it adds further bureaucracy, it is ill-thought out, and contains multiple, glaring deficiencies.
When this bill was first introduced, it mandated a ½% tax on wages of EVERY SINGLE private sector employee in our State, again exempting public employees. However, having realized that a blatant income tax would be a VERY difficult sell to you all, an amendment was added to make the tax “optional” in an attempt to make the scheme appear a little less extreme. Unfortunately, in doing so, the amendment creates more problems than even the original bill contains.
– You will hear, or may have already heard, of the great successes of the 4 States that currently have FML insurance schemes (more on those particular states later). However, what you have yet to hear is that in each of those states, AND THIS IS VERY IMPORTANT FOR YOU TO UNDERSTAND, the plans were implemented as a mandate and NOT, repeat, NOT as an “Opt-out, Opt-in” system as the amended bill before you propose.
– After receiving a large monetary grant to fund research into an FML insurance plan as requested by NH’s Dept. of Employment Security, individuals were contracted to explore the potential for this new scheme. Two of those individuals provided lengthy oral and written testimony to our Labor Committee. Listen very carefully to a couple of key quotes from these same two individuals utilized to explore and assess the original FML insurance scheme:
– Kristen Smith of UNH’s Carsey Institute stated in her written testimony to the Labor Committee: {QUOTE} “Opt-ins makes programs unsustainable”, and, “opt-in opt-out is unchartered territory” {END QUOTE}. Recall that not one of the 4 states who currently have individual state FML insurance plans have opt-in, opt-outs. Why? Because they are UNSUSTAINABLE.
– Testimony was also advanced regarding plans without 100% mandatory participation by Jeffery Hayes PHD, the individual who did some of the actuarial research. Mr. Hayes points out: {QUOTE} “As costs climb for smaller participant pools with higher benefits, more workers may withdraw or cease to participate in ways we have not yet been able to measure or estimate, which would result in an unsustainable program.” {END QUOTE} And there is that word again, UNSUSTAINABLE.
– Now, realize that all the actuarial simulations and number-crunching the sponsors of this bill are relying on, required MANDATORY contributions from every State and Local Government employee, every private-sector employee and every self-employed person in the state. What about the bill before you? Opt-out, opt-in… and only the private-sector employees.
– Before you, is an amended bill where the sponsors have failed to heed the written testimony of those intimately involved with studying the scheme. Or maybe they simply failed to analyze or understand the fact that an “opt-in, opt-out” system is certain to be an abject financial failure…..UNSUSTAINABLE.
– I’d like to remind you all at this point: Family Leave insurance plans are already available to employers and employees in the PRIVATE INSURANCE MARKET
Let’s look at just a few (emphasis on “a few”) of the many other deficiencies of the bill itself…
– The bill contains language on “retaliation” that guarantees an increase in lawsuits and the costs associated with pursuing or defending those lawsuits. Yet there is no guidance contained in the bill on exactly who will be the arbiter of the “retaliation” claim
– The bill mentions fraud by claimants. That will certainly require additional bureaucratic time, effort and costs to ensure compliance….additional employee head counts above and beyond the numbers already estimated
– And my personal favorite? Government employees are exempted. Why are they exempted? Could it be that several public-sector union employee contracts already get this type of benefit paid for by the taxpayers? Or is it that some are OK with using our private-sector employers and employees as social and financial Lab-rats, but do not want to take the heat from public employees for the same experimentation?
– What happens when, not if, the program becomes underfunded and eventually insolvent? Will NH taxpayers then be forced to pick up the additional costs? Will those in the program be required to pay ever increasing amounts toward the scheme, the same that has happened with Obamacare? The bill FAILS to give any such guidance. Are the sponsors and those who support this bill expecting future legislatures to have to step in and clean up the mess later on?
– The plan also creates a situation allowing for financially strategic manipulation by employees by waiting to opt-in when they anticipate needing or wanting the paid time off. A planned pregnancy or an elective surgery are the easiest cases to illustrate this point. In the case of a pre-planned pregnancy, an employee could opt out of the system initially. With proper timing and planning, the employee could then opt-in and pay a mere $240 into the system, while removing $5000 in benefits. Once again, analogous to what we have seen with Obamacare.
Slightly off of the main subject, but certainly relevant, look at the four states that currently have an FML insurance plans in place: California, New Jersey, New York and Rhode Island.
– Not exactly states one would say are in NH’s league when it comes to financial sanity. In fact, these four States are some of the most financially mismanaged states in our country, fiscal basket-cases if you will. High taxes, extreme debt and severely underfunded pension plans are the norm.
– But their most common trait is they each have some the highest net negative population flows out of their states in the country, two of them rank first and second in net negative migration
– When you increase taxes, and when you increase the burdens and regulations on businesses, high income earners and businesses talk with their feet. They leave for states who are more tax advantageous with fewer burdensome regulations. And businesses do not grow, start-up or relocate to states with high regulatory burdens and high taxes. Much testimony before our committee was about making our state more attractive to employees and businesses, but over the moderate to long term, this scheme would have the exact opposite effect.
– About the polling you have heard mentioned today, the poll that said 80% of those polled support an FML insurance scheme. The devil is always in the details. Realize that less than 500 NH residents out of a population of 1.3 million were polled by UNH. And here is the actual text of the questioned asked:
“Some states currently have paid family and medical leave programs that provide a portion of wages to workers who have to take leave from work for personal or family reasons, like to care for a new child, pregnancy, their own serious illness, or a serious ill family member. Generally, would you support or oppose a paid family and medical leave law in New Hampshire that provides paid leave for the types of situations just mentioned?”
With a polling question worded to obtain a specific response as this one did, as this question was worded, I find it hard to believe that 100% of the people polled did not answer YES!
Now, one final time to drive home the simplest and most common-sense argument against the implementation of this bureaucratic social scheme. In the footnote of this bill, The NH Insurance Department states: {QUOTE}
“Insurance plans currently exist that would provide coverage for the types of benefits included in this legislation. The coverage is sold, on a voluntary basis, to employers who desire to provide these benefits to their employees”. {End QUOTE}
In closing, this bill is not needed or warranted. Recall the infamous words of a California US Senator regarding the vote on Obamacare: “But we have to pass the bill so that you can find out what is in it.” We do not have to do the same here. With a little thought and analysis, we have everything we need right in front of us to know this is another unneeded social scheme and financial disaster in the making.
I ask you to vote against this financially unsustainable bill by pushing the RED button. I request a roll-call vote.
(From 2019)
Here we go again, another Family Medical Leave Insurance (FMLI) bill proposed by liberal NH democrats.
Never comfortable or satisfied with the idea of the private sector providing market-rate policies, Senator Feltes and a slew of democrat legislators want to implement a new 0.5% tax on income disguised as an insurance premium. As with last session’s nearly identical legislation, the current iteration mandates that almost every employee in the State of NH would be forced to participate. Also like before, it conspicuously exempts public employees (that is so they can negotiate the “benefit” into their contracts and possibly having taxpayers pick up their premiums as well). Last session, fearing a backlash to this tax, the bill was amended to make participation optional. This made the original, fiscally unsustainable bill even more so and it eventually failed in the Senate.
During the past session, I sat as a member on the Labor Committee and was privy to the days of testimony and documentation pushing this socialist program. Senator Feltes (a prime sponsor at the time) and others failed to comprehend the majority of the language contained in their own bill, as well as the supporting documentation. More troubling, he and other sponsors were unable to grasp the basic fiscal math that made this unsustainable on its own. That, or they were simply ignoring the obvious while peddling what their “constituents” wanted, regardless of the taxpayer’s exposure. Additionally, the sponsors even failed to listen to the testimony and heed the dire, fiscal warnings of both their own paid consultants and the public agency employees who would be responsible for its administration.
Eventually, and most likely in very short order, what would occur should this bill become law, is much the same as happened with Obamacare. Initial promises and cost/benefit predictions will be impossible to meet requiring either an increase in the tax’s percentage or more likely, all NH taxpayers picking up the tab for underfunding. Back to the basic math point, you simply cannot have an entitlement program that allows one to put a mere couple hundred dollars into the system while then taking out benefits in the thousands. Yet, here we are once again.
The Governors from New Hampshire and Vermont recently announced a bi-state FMLI program administered by the private sector. Without even knowing the details of the Governor’s yet announced plan, Feltes and liberal Vermont legislators have publicly decried the proposal as a “stunt” and “inadequate”. Translating these statements, democrats abhor anything where the private sector is involved. They despise the idea that those who believe they are entitled to paid leave, should have to finance that time off by themselves, through premiums or otherwise. And they especially want you and I, the taxpayers, to completely subsidize their socialized entitlement.
New Hampshire does not need to burden our citizens with any more tax-draining, fiscally irresponsible social programs. The negative financial impacts of Obamacare, Medicaid expansion and the State’s severely under-funded public pension plans are burdens enough.
Since the democrats hold slight majorities in the House and Senate this term, we can expect the FMLI legislation implementing a new tax to reach the Governor’s desk. Governor Sununu, make sure your veto pen does not run out of ink.
Len Turcotte – Former NH House Representative, Barrington