The Candidates on… Healthcare

The presidential election is upon us.  And you’ve probably notice that, aside from healthcare, workplace issues have not played a very substantial role in the national debate.  With the economic crash, there’s a little more talk of job creation and all, but what do the candidates really believe, and what will they do after they take office, in a year slated to be one of the biggest on record for changes in employment legislation?

This is the first in a series of reports I will post on where the candidates stand on employment law issues, starting with the one you probably know a little about already – healthcare.  Specifically, the employer’s role in providing health insurance.

Going into the campaign season, it was pretty clear that employer-based healthcare coverage wouldn’t leave the next administration untouched, regardless of which party wins.  It was a common theme in the primary debates on both sides, with theories ranging from replacing Medicaid with mandatory pro bono care (Paul) to a full-on government-run single payer system for everybody (Kucinich).    

Neither front runner endorses either of these extremes (with a democratic asterisk, noted below), so what do they think?

Senator McCain

McCain, true to his nature, is not easily pigeonholed as most of his right-wing compatriots.  He has stood against his party’s platform on some key healthcare issues, supporting plans to import drugs from Canada and mandate uniform online recordkeeping. 

That said, he has been clear (especially this year) that healthcare reform means individualizing health insurance.  McCain’s platform includes providing families a $5,000 tax credit (individuals get $2,500) with which to purchase individual insurance (as opposed to employer-based insurance).  He also supports eliminating the interstate restrictions (i.e., state-by-state regulations of insurance plans), so people could “shop around” for the best coverage.  This interstate competition would, in his view, bring down cost.  Because of the emphasis on individual plans, as opposed to employer-based health insurance, McCain would (for the first time ever, as his opponent likes to point out) tax money used to pay insurance premiums as income. 

McCain’s plan has been criticized as being a subversive way of ending employer-based health insurance, and he has not done much to refute those allegations.  Many republicans believe that the future of healthcare lies in giving the populace incentives to govern their own care, and McCain would fall pretty squarely into this camp.  He has said that “socializing” healthcare would ruin it.

We’ll end with a quote from one of the primary debates, summarizing his plan: 

Q: What would you do to curb the high cost of medical health care & to help those who don’t have health insurance?

A: The real question is: How are we going to keep health care costs down, because we have the highest quality of health care in the world in America today? And unlike the Democrats, I’m going to preserve that quality of health care, and at the same time stop the inflation & the skyrocketing costs of health care. And there’s a couple of principles:

- To make the recipient of the health insurance much more responsible in health-care costs.

- To address wellness & fitness.

- To give every American family a $5,000 refundable tax credit so they can go anyplace in America to acquire the health insurance policy that best suits their needs.

- And, if they’ve got money left over, then invest it in a health savings account.

Ronald Reagan said nobody ever washed a rental car. And that’s true in health insurance. If they’re responsible for it, then they will take more care of it.

Senator Obama

Obama’s plan has been one of the cornerstones of his campaign, and also one of the footholds for the “socialist” moniker bestowed upon him of late.  As I said, Obama does not come down on the totally public, not-for-profit, government-payer healthcare plan championed by far-left candidate Dennis Kucinich.  But there’s an important caveat to his policy there.  His reasons for establishing middle ground on healthcare reform are not based on his ideals so much as what he can effectively accomplish.  Here’s a quote from Obama’s website:

“Here’s the bottom line. If I were designing a system from scratch I would probably set up a single-payer system…But we’re not designing a system from scratch…And when we had a healthcare forum before I set up my healthcare plan here in Iowa there was a lot of resistance to a single-payer system. So what I believe is we should set up a series of choices….Over time it may be that we end up transitioning to such a system. For now, I just want to make sure every American is covered…I don’t want to wait for that perfect system…”

So, the issue for Obama is what will work today, but single-payer (universal, government-run) healthcare is still his ideal.  That said, he’s made it clear that his proposal is not single-payer, and gives people the right to choose. 

Obama would give Americans the right to keep the coverage they have, or buy into a government plan that is comparable to the coverage he has as a Senator.  He would help pay for it by making employers who didn’t provide coverage for their employees pay an extra tax (small businesses would be exempt). 

Obama would also eliminate the insurance companies’ ability to deny coverage because of preexisting conditions, something that causes a lot of people to go uninsured now, but would probably raise premiums for small business providing their employees coverage.  Because of this dichotomy (among others) Obama’s system is criticized as the opposite of McCains – a veiled method of instituting “socialized medicine,” or the single-payer plan he endorses but claims is unworkable. 

Like McCain, he has said he would emphasize online organization of medical records, but would go even farther, providing federal funds to encourage more automation and organization in the system altogether, to reduce costs.

We won’t make predictions as to who’s going to win next week, nor will we try to make one guy sound smarter than the other.  That’s up to you.  Next time we’ll talk HR policy, so look for that post soon.

[Unless otheriwse noted, facts and quotes from OnTheIssues.org]

Handbooks as Contracts: A Cautionary Tale

This recent 7th circuit opinion is a good reminder why employment lawyers should be involved in every step of a company’s HR program – this case involves FMLA rules, state breach-of-contract claims, employee notice and designation procedures, and more. And it’s all because of a handbook (are you listening, Sam Zell?):

In Peters v. Gilead Sciences, Inc. (July 14, 2008), an employee sued after the company denied him reinstatement after what he thought was FMLA leave.  This is from an Ogletree Deakins Client Update:

The day after beginning his leave, Peters received a letter from Gilead, stating the terms of his “FMLA” leave, and informing him of his right to reinstatement after leave.  The letter tracked language that was set forth in the company’s employee handbook regarding employees’ entitlement to family and medical leaves.  Although the letter and the handbook both included the 1250 hour/12 month language, neither included the 50-employees-within-a-75-mile-radius (“50/75”) language and, in fact, Gilead did not have 50 employees within a 75 mile radius. 

***

In April of 2003, Gilead decided to replace Peters with another employee.  On April 25, Gilead sent a letter to Peters, designating him as a “key” employee.  Under the FMLA, that designation – which includes the highest paid 10% of all salaried employees – allows a company to replace such a key employee rather than hold his position open.  The letter advised Peters that his position had been filled, but offered an alternative position to him, which he declined.

When the employee sued, the district court granted summary judgment because the company did not meet the 50/75 requirement.  But the 7th Circuit Court of Appeals remanded the case, because it thought Mr. Peters could have a state law contract claim, since the FMLA language was folded into the handbook.  The theory is this:  a handbook can be a contract under certain circumstances, and if that handbook is a contract, and it contains the same promises that are offered under the FMLA, it doesn’t matter whether you would be subject to the law or not, you’ve contractually obligated yourself to provide for leave the way the handbook says.  

The moral of the story, of course, is be careful with your handbooks.  Don’t just take a boilerplate policy set and hand it out.  What you think is just an explanation of a possibly-applicable law could become a binding contract and obligate you to all kinds of scary things like reinstatement and back pay.  

[ed. note: We normally don’t cite to firm publications, but I have to HT Ogletree Deakins for this one – we missed it here, and I haven’t seen it anywhere else, either.