Capital Beat: Sununu’s paid leave proposal faces political, contractual hurdles

  • Vermont Gov. Phil Scott, center, and his New Hampshire counterpart Gov. Chris Sununu tour a brewery in Littleton, N.H., on Wednesday Jan. 16, 2019. The governors were discussing a proposal for a voluntary paid family leave program that would be available in both states. The proposal must be approved by the legislatures in both states. (AP Photo/Wilson Ring) Wilson Ring

  • Vermont Gov. Phil Scott (left) and New Hampshire Gov. Chris Sununu talk on Wednesday in Littleton about a proposal for a voluntary paid family leave program that would be available in both states. The proposal must be approved by the legislatures in both states. AP

Monitor staff
Published: 1/20/2019 1:24:40 PM

It takes little more than a glance at Gov. Chris Sununu’s proposed bi-state family leave plan to grasp the nuts and bolts.

The proposal, a joint partnership with Gov. Phil Scott of Vermont presented Wednesday, would offer participating members six weeks of paid leave at 60 percent of their weekly wage, covering events including births, adoptions, and serious health conditions.

State employees would be covered under the state’s benefits package; private employees could either enroll through their employers or do so individually and pay the premium themselves.

But getting there will take more than a little effort. In pursuing a first-of-its-kind joint-state arrangement, the two governors are facing down a number of hurdles, from political to contractual.

They’ll need to convince the unions to jump on board. They’ll need to win over one or more health insurers. And they’ll need to gain the support of their respective legislatures, without which the framework for the program won’t come together.

Let’s start with the most unpredictable sell.

The unions

Fresh off a nine-month standoff with the state employee unions over wage increases, Sununu and his administration are now hoping the workers will come through on paid family leave.

That’s because the unions form the backbone of the proposed insurance market, which presently doesn’t exist. To attract insurers, Sununu and Scott need a base pool of employees to enroll and stabilize the market. A guaranteed pool of 18,500 state employees across the two states would allow insurers to feel comfortable devising plans and setting rates without the specter of insolvency, Sununu said.

Without the unions though, insurers have little to hang a hat on.

To win them over, Sununu and Scott are banking on a truism: no one would turn down something for free. A blueprint released Thursday confirmed New Hampshire and Vermont would pay the premiums for employees. And a Sununu official said that the program could be paid for out of $11 million in savings from unused benefits the year before, meaning it wouldn’t have to compete with the unions’ existing benefits package.

Still, whatever is promised publicly, the real decisions will be made behind closed doors during the bargaining process.

And for the Sununu administration, recent history is rocky. After opposing the State Employees Association’s requested 3 percent raise in 2017, Sununu dug in, while negotiations lapsed and both parties hurtled into fact-finding and arbitration. The unions, historically aligned with Democrats to begin with, wasted no time mobilizing and swarmed State House events with posters decrying the governor.

Eventually, both sides met at the middle, approving a 1.5 percent raise. But the tensions made their mark, and they contributed to the SEA’s endorsement of Democrat Molly Kelly during Sununu’s re-election bid.

Now, Sununu administration officials are tacking a paid family leave insurance program onto the usual package of benefits to be negotiated through collective bargaining, tying its success to the fate of benefits and salaries. A renewed impasse over salaries would imperil New Hampshire’s part in the joint plan.

The unions, for their part, appear wary. They weren’t fully informed of the plan – or their part in it – until the day before Scott and Sununu rolled it out, officials said Wednesday, and they have little more information on it than the public do.

“We really don’t know any details because we weren’t included in the discussions,” said Rich Gulla, the SEA president. “We’d hoped the governor might call us to include us in this process.”

Gulla said the union would approach the proposal earnestly, and that it would be up to members to accept or reject it. But he said the focus for the organization will be on pay raises, not paid family leave.

“We are behind the eight ball on that,” he said of New Hampshire salaries. “I think that’s our number one priority for active employees.”

Add to that one more wrinkle: The unions are, to some extent, flying blind.

Because the insurers can’t bid to create the insurance program until the unions are on board, the unions must sign it into the contract without knowing the exact terms. That could complicate the collective bargaining process.

Sununu officials say the unions can have faith in the blueprint set out Wednesday – six weeks of benefits, sixty percent of pay – because those would be the mandatory terms in the request for proposals sent out after the contract was signed.

But if union membership is less than confident in the ultimate success of that bidding process, winning the argument during the bargaining process could get complicated.

The insurers

Not much is known about which insurers are interested in the governors’ leave program, which would require a private carrier or carriers to set up and administer. At Wednesday’s press conference, Sununu said that the two states have had positive conversations with insurers, but that they’ve been strictly preliminary.

And that’s by design. Due to conflict of interest laws protecting the bidding process, neither administration can release the names of potential carriers, let alone divulge their interest level – until the bids are in and the final vendor selected, according to officials.

And the administration itself can’t enter into overly detailed talks, lest they give one bidder an advantage by spelling out what they’re looking for. Strategically, it could tip the state’s hand as well.

All of that combines to keep the public largely in the dark on specifics. But the insurers, too, will be making assumptions.

In cobbling together their bids, the carriers will operate on the assumption that one if not both governors will convince their unions to create the base pool. But the entire project is new territory: No state has attempted to create an opt-in market for family leave legislation, and there is a little precedent on which to peg an actuarial study to project costs.

Insurers are also at the whim of the unions, and also face transparency challenges: The ground rules of collective bargaining mean that neither the unions nor the governor can give in-depth status updates until an agreement is made.

To review: The carriers can’t make a formal bid until the unions agree to the benefit, and the unions must agree to the benefit without knowing details from the carriers. Keeping the players engaged will be Govs. Chris Sununu and Phil Scott.

Still, caveats aside, Sununu says he’s confident the insurers would come through. Early projections have suggested the program would be relatively affordable – $2 to 3 million for each state, the governors have each said – meaning the state could guarantee the carriers’ payment.

That leaves the final piece of the equation, and potentially the highest hurdle of all.

The Legislature

The core of Sununu’s proposed program doesn’t rely on any one bill; much of it is, after all, will be accomplished through contract negotiation and a request for proposals. But a few components will need enabling legislation.

To start, it is not just New Hampshire or just Vermont that will be asking for bids – it’s both together. Authorizing a two-state request for proposals will require a bill, a Sununu official said.

Then, further legislation will be needed to allow individuals in the private sector to buy onto a future plan – a key piece of expansion. The mechanism for this is complex, but it involves the ongoing fight to authorize association health plans, which were recently made available by the Trump administration but have not yet been established in the Granite State.

That, too, will need a legislative effort.

Finally, substantial pieces of the proposal will come down to what’s agreed to in the budget. The Sununu administration will need the Legislature to approve two new positions in the Department of Administrative Services to oversee the program, not to mention the overall contract with the unions should they agree to the benefit.

None of these efforts are major legislative lifts. But they come at a time of heated disagreement between the governor and the Democratic Legislature over paid family leave.

Mere months after Sununu helped stop short a Democratic-led paid family leave effort last year, Democrats may have little incentive to cooperate, particularly since both the House and Senate have their own family leave plans to present.

On Wednesday, Democratic leaders wasted no time blasting Sununu’s plan, suggesting that bipartisan cooperation could be a pipe dream.

“There’s no policy behind this,” Senate Majority Leader Dan Feltes said in a statement. “There’s no legislative planning behind this, there’s no actuarial studies, there’s no stakeholder support, and there has been no effort at bipartisanship.”

Key parts of the program could go ahead without legislative support. A deal could still be struck with the unions, and the Sununu and Scott administrations could still request bids individually, without a cross-state market.

A Sununu administration official said Wednesday the program could still be viable with only New Hampshire state employees as a base.

But the legislation makes the difference between a piecemeal proposal and a program.

And for a governor hammered throughout his re-election campaign over paid family leave, the risks are justified by the rewards.


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