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Paid Family Leave – Its Time Has Come

Too many Americans experience a number of different hardships when taking parental leave for a newborn – or an aging parent. A 2017 Pew Research study found that Americans who received only some pay or no pay when they took family or medical leave:

  • Cut back on spending (78 percent)
  • Used savings set aside for something else (50 percent)
  • Used savings set aside for this situation (45 percent)
  • Cut short their leave time (41 percent)
  • Took on debt (37 percent)
  • Put off paying their bills (33 percent)
  • Borrowed money from family or friends (24 percent)
  • Received money from family or friends that they weren’t expected to pay back (23 percent)
  • Went on public assistance (17 percent)

As of 2016, the U.S. is the only developed country without government-mandated paid maternity leave. Additionally, according to research from the Organization for Economic Cooperation and Development (OECD), the U.S. is one of nine OECD countries that have no leave policies for new fathers. In total, there are 36 OECD countries.

Need for Parental Leave

According to research from the National Institute of Health, children have fewer mental health, developmental and other problems if they have full-time caregivers in the first few weeks and months of infancy. Other research also supports the need for promoting a healthy family environment within our country.

After World War II, with many women in the workforce, employers and lawmakers needed to address the issue of pregnancy on the job. In 1972, the Equal Employment Opportunity Commission drafted guidelines that basically labeled pregnancy as a disability. Six years later, the Pregnancy Discrimination Act of 1978 amended the Civil Rights Act that prohibited discrimination on the basis of pregnancy, childbirth or related medical conditions. However, this legislation did not provide time off – paid or unpaid – to care for a child.

Family and Medical Leave Act (FMLA)

The Family and Medical Leave Act of 1993 provides unpaid leave. But only about 60 percent of private-sector workers are eligible, as it provides 12 weeks of unpaid, job-protected leave with continued health insurance coverage to attend to a newborn or adopted child, a family member, or an employee’s own serious health condition. There are strict eligibility requirements for FMLA, such as needing to have worked at least 1,250 hours for an employer with 50 or more employees during the 12 months before the start of the leave.

Employer Role

Employers, for their part, have been adding parental-paid leave at their workplaces. According to a Society of Human Resource and Management (SHRM) survey in 2018, 27 percent of U.S. employers offered paid leave in 2018, a very slight increase from the prior year. A 2015 survey by Mercer reported about 25 percent of U.S. employers offered paid-parental leave for employees to bond with a new child, while in 2018, Mercer found this dramatically increased to 40 percent. Mercer also reported that the median number of weeks employers offer to birth parents in their paid leave policies was six weeks, a number similar to their 2015 findings. Most employers who do provide some type of paid maternity leave tend to be larger organizations and is dependent on their given industry.

As an example, according to the National Compensation Survey (BLS) in 2016, 37 percent of the finance and insurance sector employers offered paid-family leave, while 10 percent of manufacturing and six percent of leisure and hospitality offer such programs.

As mentioned in an earlier blog, we are in the midst of randomly surveying Iowa organizations to learn about the prevalence of various ‘work-life’ benefits in the workplace – which includes paid leave, unpaid leave, and a host of other ‘convenience’ benefits that help assist employees and their family members.

Being able to pay for this benefit is a big hinderance for many employers, and yet, according to SHRM, not having these plans in place can cause skilled workers to leave for employers who do offer such plans. Additionally, SHRM estimates that every time an employer loses an employee, it will cost the equivalent of six-to-nine month’s salary to replace and retrain a replacement – and considerably higher for highly-skilled employees.

The moral of this story is that employers may be wise to pursue the costs up front by offering paid leave programs.

Federal Traction on Paid Family Leave

Despite the gridlock in Congress to pass meaningful legislation on basically anything of substance to Americans, there does appear to be some hope that there is bipartisan support for some type of paid-family leave. Iowa’s Senator Joni Ernst, along with Utah Senator Mile Lee (both Republicans), announced last month a bill that would allow new parents to take paid time off for their children. Known as the “Cradle Act,” the bill would allow Americans to draw from their Social Security funds to take time off from work.

Two other bills involving paid leave are currently being kicked around. The Working Parents Flexibility Act proposes to create tax-exempt savings accounts which can be used to pay for childcare. This appears to have bipartisan support in the House and is moving to the Senate. The problem with having accounts, similar to Health Savings Accounts (HSAs), is that not everyone can afford to set money aside to pay for this benefit. The other bill, FAMILY Act, proposes offering 12 weeks of partially-paid parental leave to all employees who fall under the protection of the FMLA. Funding would be provided through employer and employee payroll taxes. Five states already have a similar mandate in place: California, New Jersey, Rhode Island, New York and Washington. Again, employers with fewer than 50 employees are not impacted by the FMLA.

As employers continue to search for opportunities to obtain and retain a highly-valued workforce in the future, paid-family leave programs will be a large trend in the years to come.

Balancing competing demands of work and family are important reminders to having healthy and thriving families within our workplaces and communities.

To stay abreast of employee benefits and healthcare issues, we invite you to subscribe to our blog.

20th Iowa Employer Benefits Survey Now Underway!

At Haystack Rock in Cannon Beach, Oregon (2002).

This year marks the 20th year that we have been performing the Iowa Employer Benefits Study©. When this study began in 1999, I had two toddler daughters, one of which is now two years post-college and working in the Twin Cities, while the other is about to graduate from St. Olaf College. Between my daughters and this survey, it’s easy to measure just how fast the years have flown by!

With the 2019 survey, as in the past, we plan to randomly survey at least 1,000 Iowa employers from a variety of sizes and industries. We have found this number of respondents to be extremely beneficial when comparing various industries and size categories to one another.

However, contrary to the past, this year’s survey is being conducted three months earlier in the year, allowing the study to become available in July. By doing so, many employers will have access to these results while strategizing potential changes to their benefit plans during the fall renewal season. Because of this, we are excited about performing this survey process earlier.

If you happen to be an employer who is randomly-selected to participate in this year’s survey, we would greatly appreciate you taking the time to share your confidential data with us. By doing so, you will receive, via email, the Iowa Employer Benefits Study© report that summarizes key findings. Please know that your information will only be used on an aggregate basis and combined with data from other participating employers. Most importantly, we will protect your anonymity and the confidentiality of your responses to the fullest extent.

Twenty years is a milestone for us. As mentioned, much has changed over these two decades, but during this time, I have always been very grateful to all Iowa employers who have taken the time to share their information with us. We take our work seriously and will always value your trust in our survey.

To stay abreast of employee benefits and healthcare issues, we invite you to subscribe to our blog.

A Potential Game Changer – Making ‘Secretly-Negotiated’ Medical Prices Public

Have you ever had a clogged bathtub drain or toilet? Yep, me too. For the waste to exit efficiently, it takes deliberate effort to remove the obstruction that hinders the plumbing system.

The U.S. healthcare system is somewhat akin to an inefficient plumbing system. As is said, “Every system is perfectly designed for exactly the results it gets.” So, in healthcare, when it comes to having transparent prices (and outcomes), our system was DESIGNED to have clogged ‘plumbing.’ Allow me to explain…

The current healthcare pricing system is broken and indefensible. It is a known fact that the escalating prices we pay for our healthcare services is a black box. Whether it be for hospitals, doctors, pharmacy or other healthcare providers, we have no idea what the negotiated prices actually are between insurers and health providers, at least until sometime AFTER the services have been rendered. But this black box was carefully designed to work as intended. To paraphrase noted economist Uwe Reinhardt, where there’s mysteries (in pricing), there’s (larger than normal) margin to be had. In healthcare, obscene money is made when it is allowed to operate in a dark room of denial and obfuscation.

It’s one thing for hospitals to now publicly disclose their ‘list’ prices – (effective January 2019) – but it’s another to disclose the ‘real’ prices that have been negotiated and paid by the insurers we choose to use.

Negotiated prices are largely bound by confidentiality agreements between healthcare providers and insurance companies, and are so closely guarded that even mega employers are not allowed to penetrate this veil of secrecy. While in Indianapolis this past week, I had lunch with the manager of General Motors’ benefits plans who shared her frustrations about these backdoor deals around the country. If this secrecy happens to General Motors, it happens to all employers.

New Transparency Approach Provides Hope

But there is hope. A Wall Street Journal (WSJ) story broke this past Friday that may possibly open up the drain and allow the plumbing to finally function properly. The Trump Administration, through the U.S. Department of Health and Human Services (HHS), is seeking to require hospitals, doctors and other healthcare providers to publicly disclose these secretly negotiated prices – which are the relevant prices we all want to know.

HHS is requesting public comment on whether patients have the right to view the discounted prices in advance of obtaining care. The invitation for comment was actually outlined in a little-noticed passage of a broader patient-data proposal released in March, tucked away in a 700-page draft regulation. According to the WSJ article, the Administration could issue a final rule mandating the disclosure of negotiated rates after the comment period closes on May 3.

Watch for Opposition to Fight this Move

It is often interesting to observe both insurers and healthcare providers who have historically acknowledged the importance of having ‘transparency’ in healthcare. These same organizations, however, appear to believe that ‘transparency’ can only happen when it suits them.

One prime example is the American Hospital Association (AHA), which opposes the move to make negotiated prices public. As reported in the WSJ article, an AHA executive vice president commented, “Disclosing negotiated rates between insurers and hospitals could undermine the choices available in the private market…While we support transparency, this approach misses the mark.”

Misses what mark? What type of transparency is the AHA looking for? This is a baffling comment made by a trade organization whose sole purpose is to serve hospitals, but at the public’s expense. We don’t need to have the AHA tell us what ‘transparency’ should be…they, along with insurance companies, have had their chance to fix this clogged drain for decades, but they have habitually – and deliberately – failed. Just watch the massive lobbying efforts that will coalesce to fight against this newly-found plunger from being used to fix an enormous problem.

The legal question will most likely center around whether this new transparency initiative violates contract law, or whether it can ‘bust’ antitrust activity that harms the public. The insurance card that we carry represents lost wages and financial bonuses that have, instead, been unnecessarily diverted to pay exorbitant healthcare fees to others.

A Possible New Beginning – More Changes Necessary

By itself, having real prices become publicly available will not solve the inherent problems that persist throughout the healthcare system, but it may serve as the liquid drain cleaner that will eventually loosen stubborn ‘hairy gunk’ that blocks a drain from functioning properly. Price transparency is a good first-step to have, but it is not the sole remedy to a ‘system’ that requires massive fixes.

Despite isolated progress, healthcare ‘consumerism’ has been relatively slow for various reasons. However, by exposing real (negotiated) prices to the public, the aggregation of price data will most likely find new legs due to third-party entrepreneurs and technology companies who will find clever ways to make pricing a relevant decision-making tool for many patients. This has always been the hope for consumerism to take hold. All purchasers want the BEST VALUE in the healthcare being purchased.

Unclogging the healthcare price drain will begin to allow for a natural flow of the real waste to exit the system.

To stay abreast of employee benefits and healthcare issues, we invite you to subscribe to our blog.