Legislative
Update
Representative
Anne Donahue
April
13, 2019
The
family leave bill was voted out of the House last week, and we expect the
minimum wage bill to be coming our way soon. How soon, and why the foot
dragging on the House side?
The
old expression is that in the final weeks of the session (and we are down to
roughly four), every bill becomes either a hostage or a Christmas tree. A
Christmas tree is a bill that is full of “ornaments.” It is held back to add
last minute issues, even if they are only marginally related to the original
bill, because the deadline has long passed for new bills. Sometimes the
ornament is an entire bill that the House passed, for example, but the Senate
has not taken up. So the House tacks the entire bill onto a Senate bill that is
still in play on the House side, to force the Senate hand.
A
hostage is the reverse situation. If my committee has a bill from the Senate
that we know the Senate really wants (and we don’t consider essential), but the
Senate isn’t acting on something we passed and really want, we can hold onto
its bill until the Senate acts on ours.
Yes,
this is pure politics. Politics, but not necessarily partisan politics. House
and Senate are both controlled by the same party, but still sometimes have different
priorities.In an ironic example, House Democrats fought to pass the heating
fuel tax increase to support the home weatherization fund over the strong
objection of House Republicans, who felt that it hurt low income families
because a sales tax is not proportionate to income. Senate Democrats are now
saying they do not want to pass the bill, because it hurts low income families.
The
Senate passed its high-priority minimum wage bill early in the session. The
House has now handed it its family leave, high-priority bill to the Senate.
There is almost undoubtedly a discussion going on at leadership levels about
who will move first on which bill.
***
Paid Family Leave
At
first blush, paid family leave sounds like absolutely the right thing to do.
Several other states have this type of state-sponsored insurance program that
covers a percentage of salary if someone needs time for family illnesses or a
new baby. Virtually all European countries have done this for years.
The
crunch always comes to the cost, and who pays. In Europe, for example, it is
usually tax-funded, and income taxes can be 50 percent or higher for the broad
social safety net in some countries. The Vermont plan is more generous than the
other states that currently offer it (a higher percentage of wage
reimbursement, more time off, etc). That will mean it will cost more, and also
that the long -term cost is more unpredictable, since we can’t build
assumptions based on the experiences elsewhere. It isn’t a pure math equation.
Whether more people will use the program because of the higher wage
reimbursement, for example, is an unknown.
Then
comes the question of who bears the cost. The House bill makes it a mandate for
all employees to participate. The nearly $80 million cost (at current guesstimates)
will be paid through a payroll deduction. It’s insurance that every individual
wage earner is mandated to purchase. There is a core inequity, though, for
small business employees. Their employers are not required to hire them back
after a leave. (Large businesses do not have to hold a job open, but must give
the next available position to a returning employee.) That makes it a big
gamble, and less attractive, for those who work for a small business. Sure, you
get 90 percent of your salary for the six weeks of leave, but then you’re out
of a job. However, you have to pay the same payroll tax as those who face much
less of a gamble if they access the benefit. In addition, you will pay this
even if you have a summer job as a student, for example, with no eligibility to
access it at all.
For
those who voted “no” (mostly Republicans, but some Democrats), the biggest
issue was about state priority needs. Even though it is insurance rather than a
tax, it is still $80 million coming out of the pockets of Vermonters. Is
creation of a family leave program the highest priority, if we think Vermonters
can pay out $80 million more? One legislator who sits on the House
Appropriations Committee, and lives and breathes the budget challenges in
meeting the needs of Vermonters, explained her vote by saying, “The $80 million
price tag for this bill is way out of proportion to our other critical needs in
higher education, environmental protection, and human services. For this reason,
I voted no.”
As
someone who sits on the Health Care Committee, I would add an even higher
priority to that list: access to health care, which is one of the greatest
areas of inequity in our state. Some people pay exorbitant costs for health
insurance that still leaves them with high co-pays and deductibles. Others have
employer-sponsored plans that cover virtually everything. And while we cover
the needs of the very poorest Vermonters through Medicaid, we underpay the
services we buy for them, so those costs get distributed inequitably among insurance
purchasers instead of among taxpayers. With only a portion of that $80 million,
we could fill in some of the deepest ravines of those inequities.
There
is another more discrete systemic problem with the family leave program we
passed. Employees must buy the coverage, but employers can pitch in if they
wish – at any level, from five percent to one hundred percent. That can make it
a job recruitment and retention tool, some argued on the House floor, by
competing for employers based on how much the employer contributes to the
premium.
I
absolutely cringe when I hear this. After World War II, when a wage freeze was
in effect, employers began competing instead by offering to provide varying
levels of health insurance. That was the
birth of our system of employer-sponsored health insurance, recognized by most
health analysts today as the accident of history that created our gross
inequities in health care access. So we now want to create a new benefit –
being defined as essential, since it is mandatory – which will create gross
inequities in who pays how much, depending upon what an employer contributes? How
soon we forget!
I
don’t question the value of this benefit. I saw it within my own family when my
brother, who is from New Jersey where paid family leave exists, was able to
take a long series of 3- to 4-day weekends to commute to Northfield to be with
my mother in her final months. But whether, and how, we can pay for it, and
whether it is our highest priority, is the issue. And for those wondering, I do
not support the governor’s alternative, either. Making it voluntary, with
voluntary employer participation as well, worsens the fundamental inequities. I
suggested that alternative in last year’s debate, but have reconsidered the
core policy issues.
***
Minimum Wage
That
leads rather directly into a fundamental problem I see with the entire
discussion of increasing the minimum wage. I think there are valid arguments
both pro and con for this initiative. While the “pros” are fairly obvious, the
“cons” are important: will we sacrifice jobs for some, in the effort to improve
wages for others? Will the increase in prices offset increased wage – since the
money has to come from somewhere, which means it will come in the costs of
goods and services? Will those who
benefit actually lose, as they fall off “cliffs” for eligibility for benefits
such as child care subsidies, thus lowering their household income? All those
risks are very real and have been deeply analyzed, with no truly dispositive
answer in either direction. It’s a gamble.
But
that’s not the fundamental problem from my perspective. It is about the
critical interplay with employer-sponsored health insurance, which is being
completely ignored in the minimum wage discussion. Bluntly put: the difference
between an employer who pays 100 percent of top-level health insurance coverage
and one who does not offer it at all is roughly $4.50 an hour. Someone making
$14 an hour but getting a reasonably good health package may be getting a
compensation package worth $17 an hour and doing far better than someone making
$15 an hour with no health coverage. If I were that first employer and I was
mandated to increase a wage to $15, I might just keep my bottom line even by
cutting health benefits by the value of a $1 an hour level contribution. The
employee gains nothing. Keep in mind that when an employer does offer good
health benefits, employees are “paid” in a highly regressive way. The person
making $12 an hour may be paying a quarter of their income (in terms of what is
deferred away from wages), while the person making $36 an hour with the same
health benefit is only paying 10 percent of their income. Talk about a
regressive tax! This is one part of the fundamental inequity of paying for
health care this way.
We
urgently need to be addressing health access disparities. Although many still
debate this, it has become extremely clear that we cannot address it as a small
state by creating a taxpayer sponsored universal (single payer) health care
system. But we can, and must, work harder at levelling this playing field – and
without that, in my mind, increasing the minimum wage is a dubious way of
advancing the public good. I would be far more ready to consider a “minimum
compensation package” level that included both wages and health coverage than a
wage bill alone. That would mean employers who did not offer health care would
be the ones who would need to increase wages – better enabling their employees
to pay for coverage themselves. I introduced a bill this year that said that
minimum wage levels needed to incorporate health coverage in that way, but it
has not been endorsed.
***
Guns
The
Senate bill imposing a 24-hour waiting period for hand gun purchases has been
sitting in the House Judiciary Committee without action after a flurry or early
testimony and a public hearing. Is it a House “hostage” bill? Is House
leadership worried about support on the House floor? (It is considered a
political no-no for a majority party to bring a bill to the floor without the
votes to have it pass. That’s why floor debates are usually lopsided and
partisan: any debate within a party happens long before that phase.) I don’t
know – and thus can’t predict what will happen to it this year.
One
thing is clear. At its core, this gun bill is a health care bill. The rationale
for the waiting period is completely about suicide. Suicide decisions are often
impetuous, and the thought is that just allowing a brief delay could save a
life if someone is buying a gun for that purpose but has the time to
reconsider. The complex issues about what causes a person to believe that
suicide is their only option, and how society can or should intervene, are
issues that we have addressed (and will need to continue to grapple with) in
our Health Care Committee. There is a much bigger picture here, and it needs to
be assessed in its full context. That is why we have committees of
jurisdiction, assigned to become the subject experts (to the extent a lay
legislature is able to develop expertise.) I have been and will continue to be
strongly arguing that my committee needs to be involved in assessing the merits
of this specific proposed health care intervention.
***
It is truly an
honor to represent you. Please contact me with your concerns and thoughts; I’m
best reached via email at adonahue@leg.state.vt.us. My past legislative updates
are available at representativeannedonahue.blogspot.com.
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