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Are Big Changes Coming to Employer-Sponsored Insurance?

Arguably the biggest outstanding question about the Affordable Care Act is what effect it will have on employer-sponsored insurance (ESI) coverage. According to the Bureau of Labor Statistics, 156 million Americans receive coverage through their employer or their spouse’s employer.

Many employers had to change the benefit structure of their plans to comply with the mandates contained in the ACA, but the larger question looming is whether employers continue to provide coverage at all in the coming years? The frightening thing about this question is no one really knows and there is a wide variance in the estimates out there:

  • One analysis done by the Urban Institute comes to the conclusion that the employer mandate is pretty meaningless and there would be little impact on the decision of employers to provide coverage or not. They estimate that roughly 200,000 fewer employers will provide coverage.
  • Another analysis done by S&P Capital IQ estimates that 90 percent of employers will decide to stop providing employees health coverage in the next six years. That translates to over 100 million Americans moving to the health insurance exchanges because their ESI has gone away.
  • Yet another estimate from Dr. Ezekiel Emanuel, one of the principal architects of the ACA, predicts that 80 percent of employers will suspend offering ESI in the next ten years. If he is right, it’s likely the smaller employers in the fully-insured market that would represent the 80 percent of employers deciding to stop offering coverage.

The two higher estimates are astounding numbers that signal an enormous disruption to millions of Americans in the coming years. As a country we have to determine whether such a dramatic transformation of how we all get health insurance coverage is acceptable – intended or not. Even if the estimates are off by half, we have a fog of uncertainty looming that employers and millions of their employees are going to navigate through in the coming years.

Ninety-seven percent of NAM members provide health coverage to their employees and most, if not all, I speak to want to continue providing that benefit. According to the BLS, manufacturers generally are more likely to offer coverage and their employees are more likely to accept health benefits compared to other sectors of our economy.

The ACA substantially changed the dynamics by increasing regulatory burdens and costs. If 90 percent of employers decide to stop offering coverage, it’s very reasonable to expect some of those employers will be manufacturers. It should be abundantly clear to everyone what forced them to make that decision.

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Manufacturers Lead Charge to Close the Skills Gap

President Obama signs the Workforce Innovation and Opportunity Act into law

President Obama signs the Workforce Innovation and Opportunity Act into law

President Obama put his signature to important legislation to address the skills gap – an issue that has plagued manufacturers in recent years, with 80 percent of them reporting a serious difficulty in finding skilled workers. Recently, a jobs expert took a close look at the skills gap and what manufacturers are facing.

The NAM and Manufacturing Institute have led the business community’s effort to ensure that employers have access to the 21st century workforce that they need to drive innovation, production and growth. Enacting the Workforce Innovation and Opportunity Act into law provides much needed streamlining of skills certification programs and the direction of necessary funding to ensure manufacturers have the workforce they need to succeed in a globally competitive environment.

The United States has long been the home of the most productive and successful workforce in the world. By coming together in a bipartisan manner (a sight too rarely seen in Washington these days), Congress and the President have taken an important step toward ensuring that the American workers’ reputation as the world’s best will continue.

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Setback for the ACA Started Years Ago

To my mind there is no rejoicing in the decision reached by a federal appeals court this morning. The decision determined that subsidies given to those enrolled in federally-facilitated exchanges (FFE) are unlawful because the Affordable Care Act (ACA) law clearly states the subsidies are for those in state-based exchanges. This decision is a severe blow to the Administration and supporters of the ACA as a majority of the exchanges up and running around the country are now ineligible for subsidies to offset the cost of coverage.

The reason there is little to rejoice about this decision is the origins of the decision began about five years ago, before the ACA was the law of the land. What it demonstrates to me is that the legislative process matters and is ignored at the executive’s peril. It also shows us that bad things are more likely to happen when one party decides to effectively cut the other out of the process. Remember, the House was forced to take up the poorly written Senate version of healthcare reform, because Senator Ted Kennedy was replaced by a Republican during a special election held due to his death in 2009, which reduced the Senate Democratic Majority to 59.

Further exacerbating the situation, the White House insisted today that the subsidies will continue to be distributed – in clear contradiction to a federal court decision. The Jacksonian reaction to effectively ignore the decision is only going to create more trouble and puts the millions of Americans who are caught in the middle of this fight in a position of accepting something the federal judiciary has deemed unlawful.

It’s long past time for the President and his administration to accept that the legislative process is integral to the functioning of our government and is not something to be ignored or tolerated. It’s also time for Congress to be legislators.

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21st Century Workforce Training

When the Workforce Investment Act was passed in 1998, Bill Clinton was the president, Newt Gingrich was the Speaker of the House and we were in the middle of the dot-com boom. Since then we’ve been through the dot-com bust, one mild recession after the events of 2001 and one severe recession, of which we are still seeing the effects. Our economy has grown from $11.5 trillion in 1998 to $15.8 trillion in 2013. A company named Google has gone from a startup few people heard of in 1998 to widespread use as a verb in everyday lexicon. All this is to say our economy and the jobs in it have changed dramatically since the original law was passed. The Workforce Investment Act has been badly in need of modernizing for over a decade and the House is poised to give its approval to legislation that will do just that this week.

The Workforce Innovation and Opportunity Act (WIOA), as passed by the Senate, builds on the work done by the House of Representatives last year to reform the program and bring it online with the 21st Century. It eliminates 15 existing programs, applies a consistent outcome metric for federal workforce programs, streamlines the bureaucracy of the programs and empowers local boards to tailor services to the needs of their local economy. Manufacturers fully support WIOA and key voted in favor of it when it was considered by the Senate. We were pleased to see it pass the Senate by an overwhelming vote of 95-3.

For the last four years, the NAM has been working to ensure that federal workforce training programs emphasize programs that result in a credential or certification that demonstrates they have acquired the skills identified by employers as necessary for success in their field. Those credentials and certifications should be industry-driven to maximize their value to both the employee and the employer. The NAM believes the WIOA achieves this goal by recognizing the importance of certifications and credentials throughout the legislation.

Workforce training in the 21st Century is a constantly evolving and iterative process. WIOA gives federal programs the ability to adapt to the needs and demands of employers and employees in the future. It’s long overdue, but the House and Senate are to be thanked and congratulated for their bipartisan work in reaching this agreement.

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Manufacturers Will Not Give Up on Comprehensive Immigration Reform

The House won’t vote on comprehensive immigration reform this year—that’s the recent word from Speaker Boehner. Manufacturers are disappointed. With each day that passes, Congress misses an opportunity to take an important step forward for our economy and country.

Immigration reform is a priority for manufacturers. With some 80 percent of employers reporting a shortage of skilled workers, reform can provide a bridge so employers can begin to close the skills gap as we simultaneously undertake efforts to improve education and training efforts. And, in addition to the practical considerations, immigration reform is simply the right thing to do.

Of course, while manufacturers are frustrated by the inaction on reform, we’re not giving up. It’s not a matter of if immigration reform will happen; it’s a matter of when. Our country is better than our current, broken immigration system. That’s why manufacturers are committed to advancing immigration reform done right—a comprehensive solution that includes a pathway to citizenship and ensure that those who seek it aren’t denied the American Dream.

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The Worth of American Ingenuity

Manufacturers in the United States are among the most prolific inventors and innovators in the world and the NAM supports policies at the federal level that encourage and stimulate innovation in all sectors of our economy. While Americans and federal policy makers generally understand there are risks associated with research and development, the enormity of the risk is often difficult to convey, but it is absorbed into every product.

The cost of innovation varies from sector to sector, but the drive for solving problems and improving what we have is priceless. It’s what built our nation into an economic workhorse and we ought to have the proper perspective on the value it brings to our lives every day. Manufacturers of all sizes and types strive to improve, build upon or replace the products we use to make our lives easier – in some cases they even make our lives possible. In the words of Thomas Edison, “There is always a better way.”

Manufacturers of automobiles are constantly looking for ways to make our cars more convenient, more enjoyable, more luxurious, more efficient – generally more of everything, including safer. All of those innovations come with a cost that runs into the millions and billions of dollars and sometimes they never make it to the market. Over time, the price of those innovations that do make it to the market declines and becomes part of the base cost of a vehicle. Thirty years ago, fuel-injection wasn’t viewed as necessary or practical for general use. Try finding a new car that isn’t fuel-injected now – you can’t, unless it’s an electric one.

Manufacturers of paints and other coatings are engaged in a constant and epic battle with chemistry, mineralogy, physics, biology and meteorology. Millions of dollars are spent by coatings companies to perfect the color, application and durability characteristics of all their products and we get to choose which of those features we want with each gallon of paint or stain we buy. Whether we realize it or not, that’s part of the reason we see a price differential between a gallon of flat white paint and a gallon of solid stain.

Manufacturers of medical devices, biologics, pharmaceuticals, agriculture, petroleum, and many other products also spend billions each year to improve upon or invent products and treatments that have never existed before – products that enrich our lives or make it possible to continue living at all. That’s why the NAM has a clear and unambiguous policy when it comes to innovation – we are for it. American ingenuity has always, always been worth the investment and it is firmly embedded in the American ethos.

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Immigration Reform Maintains Support of the American People

House Majority Leader Eric Cantor lost his primary election in what was a stunning upset last week and immigration has been mentioned as a contributor to the defeat. Cantor has been a supporter of key components of immigration reform and his primary opponent highlighted the issue during the campaign. Although press reports initially indicated that his views on immigration may have caused the loss, polls show that more than 70% of voters in his district favor reform – though support for reform was likely much lower among primary voters who voted last week.

No matter who leads Congress, immigration reform is necessary to the American economy and manufacturers. Now more than ever, we need Congress to push forward with reforming a system that most admit is entirely broken. Whether it is the issues we are experiencing on the southern border, access to international talent, the need for a more robust verification, or addressing the millions of undocumented people currently living in the shadows, we need to take a hard look at what is wrong and how to fix it. Inaction on fixing what is clearly broken will not make the situation better and it may well make it worse. Plain and simple, this issue needs to be addressed by Congress. Manufacturers need the system to work for America again and will stand with all Members of Congress who are ready to  get it done.


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Ambush is Coming

Today the National Labor Relations Board convened a two-day public hearing on its proposed “ambush election” rule, noticed earlier this year to demonstrate its supposed commitment to transparency and fair review.  This is the recycled rule—previously rejected by a Federal Appeals’ Court—which would shorten the timeframe, to as few as 10-14 days, in which a union election can take place after a petition is filed.  The rule would also prohibit certain challenges employers can currently make prior to the election and would also allow the union to receive employees’ private information, such as personal email addresses and home addresses and telephone numbers. It’s patently obvious that this rule is an attempt to stack the deck in favor of the radical agenda we’ve seen out of the NLRB for several years now. While this may be just a “show hearing” for the Board, manufacturers are taking this opportunity to again raise our voice in dissent – because ambush elections are as damaging as they sound.

The NAM will present on two topics tomorrow and stress that by “compressing the timeframe for a representation election, the proposed rules would eviscerate the right of employees to make an informed exercise of their rights, as well as impair the employers’ rights to communicate their position to employees.” The rule would also “chill the free, uninhibited, robust debate regarding the issue of unionization contemplated by Congress enacting the NLRA.”  The NAM will also point that requiring employers provide certain confidential information, such as personal email addresses, telephone numbers, home addresses, and work shift information will “provide a wealth of information rendering employees vulnerable to harassment or worse. Providing such information without safeguards exposes both the employee and employer to risk.”

While the idea of having this public hearing on its face would fit the definition of an open and transparent government rulemaking process, the hearing itself is more reminiscent of other public “hearings,” which have been held lately. Hearings where only one side is permitted to ask questions and presenters are limited to a mere five minutes to present one particular aspect of the proposed rule, rather than the rule as a whole.  In the end, it is hard to believe this hearing is anything more than checking the transparency box for the Board.  The reality is, employers should be preparing for an ambush election – and the Board should prepare for a fight.

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Ambush Election Comment Period Closes

Today, the comment period closes for the National Labor Relations Board (NLRB) proposed regulation on representation elections – or as we’ve come to call it, the Ambush Election Reg. The NAM has filed extensive comments opposing the regulation, which you can find here.

The NLRB’s proposed regulation fundamentally alters the way union elections are conducted by shortening the time between when a petition for election is filed and the actual election takes place. This time is critical to the process, because an employer is often unaware an organizing campaign was underway until the petition is filed. Under the proposed regulation, employers would have as few as 10-14 days from the day the petition is filed to the election taking place. In that short amount of time the employer must turn over employee contact information, draft a legal position about the election process and proposed collective bargaining unit or forever lose the right to bring it up, and determine how to communicate with its employees in a manner compliant with the National Labor Relations Act. All this would have to happen after retaining proper legal counsel in the event the employer doesn’t have in-house counsel.

The NAM’s comments take issue with virtually all aspects of the proposed regulation, but the central question the Board needs to answer – and so far has refused to answer – is why the change is needed at all. Why is it necessary to strip employers of their rights under the NLRA? Why is it necessary to require employers to disclose private employee information, including what days and times they work? Why is it necessary to fast-forward elections when the Board has met or exceeded its goals for over a decade? These are important questions the NLRB should answer before finalizing regulations that represent the most significant change to the election procedure in 50 years.

The NLRB will be holding a hearing on the proposed changes later this week – a scant three days from the comment deadline. It appears the Board majority really wants to hear and consider what the public has to say about the changes they’re asking for – three days to contemplate thousands of comments is reasonable, right? After all, that’s nearly a third of the time an employer would have before an election. I guess we shouldn’t be surprised, they are trying to institutionalize the ambush right?

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The Promise of Using a Pen and a Phone is Alive and Well

During the State of the Union, President Obama promised to use his pen to enact policy changes, but despite that promise, today’s action to change overtime pay came as a surprise. It was never on a list of regulations or rules that might come out, an agenda – this almost seems to have been done on a political whim. Regardless, bad policy is bad policy no matter how carefully it may have been considered – and today’s announcement is bad news for manufacturers looking to grow, invest and create jobs. In a Presidential Memorandum, the Secretary of Labor is directed to alter the current rules in which an employee is to receive overtime pay as set forth under the Fair Labor Standards Act (FLSA).  The current rules for overtime pay lay out a test based on a threshold weekly salary (currently set at $455/week), as well as whether an employee may perform duties in a certain job category (management, supervisory), which then would exempt the employee from overtime pay.  While we have yet to see the details of the proposal, it is inevitable that these new rules will create more costs for employers, rather than help create more jobs.

This move by the Administration should not be surprising, however, since the President has said he would do what he can on his own to raise wages. He has already raised the minimum wage for federal contractors, but if Congress remains relatively the same, it is unlikely a minimum wage bill will pass in its current form. What the Administration fails to realize, however, is that changing the rules for overtime pay, will not achieve the end game of creating more jobs.  In fact these new rules will have the opposite effect since employers will have to pull resources away from new jobs.  Although we lack any specificity on this latest set of bad ideas, we know from the outset that the new rules will only create more hurdles for growth and job creation.

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