employee benefitsFamily and Medical Leave ActFMLAhealth insurancePresident Obamataxes

Obama Policy Agenda Proposals Part II

Yesterday, I started a series of post regarding President Obama’s Policy Proposals – this is Part II of that post. If you missed Part I, you can find it here.

Family and Medical Leave Act Expansion. Obama’s proposal wants to expand FMLA to require businesses with as few as 25 employees to abide by its requirements. Currently, the requirement is only for companies with 50 or more employees. President Obama’s proposal also hopes to expand the list of reasons employees can give in order to take the leave, including the following: up to 24 hours per year for participation in children’s academic activities, leave for workers who care for individuals who live in their home for 6 months or more, and leave for employees to address elder care, domestic violence, and sexual assault. When FMLA originally passed in 1993, it placed a lot of requirements on many small businesses that simply could not be easily met in such a small enterprise. Now they are trying to force it on small businesses with as little as 25 employees. This will result in higher cost and lower productivity for many small businesses.

Extend Paid Sick Time Benefits. President Obama has proposed a requirement that employers provide seven paid sick days per year. In the material that I have read, there is no distinction that states that some employers will be required to do this and other will not. Nevertheless, if small businesses are required to abide by this requirement, it will certainly result in higher labor cost for most. When I worked in a big corporate job, we didn’t even get seven sick days (we got 5). This should be a benefit that is decided by the employer. It is part of the employee-employer agreement when the employee starts and if the employee does not like the employer’s policy – they should go find a job elsewhere. In my opinion, government has no reason to be interfering here.

Encourage State to Adopt Paid Leave. I did a little research trying to figure out what this was, and the best I can figure it is another social program. If you have to take off from your job for certain reasons, presumably sickness or another FMLA allowable excuse, you can still get paid. President Obama’s proposal hopes to get all 50 states on board and President Obama has said that he will sit aside $1.5 billion to help States with startup cost, etc. Do I need to say a lot here? Have we ever implemented any social program where the cost did not astronomically exceed the planned cost? Have we ever implemented any social program where it was not throughly abused?

Small Business Health Tax Credit. President Obama is proposing a new tax credit to help small businesses provide affordable health insurance to their employees. Sounds good, but who is really paying for this? Someone is paying for it.

National Health Insurance Exchange. I don’t quite understand this one. This proposal is to establish an “exchange with a range of private insurance options as well as new public plan based on benefits available to Congress that will allow individuals and small businesses to buy affordable health coverage.” One thing I know is that insurance ultimately cost what the underlying medical cost are plus a small profit for the insurance company. This small profit looks big when added up on all the policies, but eliminating the profit on an individual premium is not going to have a drastic effect on the bottomline price. The underlying expected medical cost will ultimately determine the cost of the insurance. I am not a fan of insurance companies, but lets be fair – just like any other company they are in business to make a profit. They are not going to take a loss because they like Obama and because he asks nicely. In order to lower the cost of insurance, someone has to pay for it. Also, I doubt that insurance similar to what “Congress” has will ever be affordable.

Coverage of Catastrophic Health Costs. President Obama’s proposal here states that it would “cover a portion of the catastrophic health costs businesses pay in return for lower premiums for employees.” I am not quite sure what this means, but I understand this as the government will kick in towards the cost of catatrophic insurance as long as the savings is passed on to employees. Sounds good on the surface, but once again who is paying for this? The government just doesn’t have a lot of excess money sitting around. They will have to get the money for this from somewhere which basically means higher taxes.

Large Employer Health Care Mandate. This would require large employers that do not offer coverage or make a meaningful contribution to the cost of health coverage for their employees to contribute a percentage of payroll toward the cost of their employees’ health care. Most large employers already offer some sort of coverage to full-time employees. Many that do not are in industries that are already struggling to get by from a cost standpoint. In other words, large employers that do not provide health coverage do so for a reason – it is not affordable to do so within their business model. Too many people have this view of business and especially large companies that they are greedy and are keeping more than their fair share. Many of these companies are barely making a profit and are barely getting by. Increased cost and regulations are not what they need to make it through this difficult economic time. Hopefully, this will not result in more of our jobs disappearing to overseas manufacturers who do not have these strangleholds on their livelyhoods.

I will post Part III of this multiple item post tomorrow. As always, if you have any questions, feel free to ask.