Colorado Capitol Report

In this Capitol Report:

• Health-Reinsurance Bill Would Cost Employers and Workers $270 Million over the Next Two Years
• House Passes Bill to Bar Employers from Discussing Prior Compensation Histories with Job Applicants
• CACI-Opposed “Pay Equity” Bill Leaps First House Hurdle
• Congratulations to CACI Board Member Barbara Walz!
• ICYMI: CACI’s Top Federal Issues for Manufacturers - Tax Reform
• ICYMI: CACI’s Top Federal Issues for Manufacturers - Protecting Manufacturing
• ICYMI: CACI’s Top Federal Issues for Manufacturers - Infrastructure Investment
• ICYMI: CACI’s Top Federal Issues for Manufacturers - NAFTA
• Fed Council Alert
• Legislative Agenda

Health-Reinsurance Bill Would Cost Employers and Workers $270 Million over the Next Two Years

With a $1.3 billion revenue windfall as the backdrop, the legislature is considering a bill that, in its introduced version, would cost two million workers $270 million in the State’s coming two fiscal years to subsidize health costs for about 140,000 low-income individuals, including those in rural areas, who face high premiums and costs in the individual health-insurance marketplace.

The bill has both Democrat and Republican support.

In short, here’s the big question for employers that provide health insurance and their two million workers: Is it fair?  Is it fair to workers and employers to pay for the program while the legislature–busy this session figuring out how to spend a $1.3 billion tax revenue windfall–would not put up any money for HB-1392?

The House Finance Committee Monday amended and then approved on a partisan vote of 7-to-5 the bill, HB-1392, “State Innovation Waiver Reinsurance Program.”  The House Appropriations Committee approved the bill this morning on a 10-3 vote, which sends it to the House Floor for Second Reading debate.

The program would provide reinsurance to health insurers who taken on low-income individuals with serious illnesses and high costs because of the Federal Affordable Care Act (ACA) mandate that no one with pre-existing conditions can be denied coverage.  Connect for Colorado is the state’s health-insurance exchange under the Federal ACA

Under the program, high-dollar claims from $25,000 up to $1 million would be handed off to the State by the insurers, who then would be able to lower premium costs for low-income individuals in the individual market.  Rural Coloradans who purchase individual health-insurance plans have been especially hard it by rising premiums and costs.

Higher-income people in the individual market and employers and workers who purchase insurance in the small-group and large-group markets would be subject to the two percent fee on premiums.  A provision to levy an 8 percent fee on the “stop-loss” plans of self-insured companies was stricken from the bill in committee.

A report by the Colorado Health Institute projects that, under HB-1392, two million working Coloradans would each pay $100 more per year for health insurance while 124,000 would each pay $1,300 less for their health insurance.

The bill is opposed by the CACI Governmental Affairs Council and the CACI HealthCare Council.

In the House, the bill’s co-sponsors are Representative Chris Kennedy (D-Lakewood) and Representative Bob Rankin (R-Carbondale).

CACI’s Loren Furman testified Monday against HB-1392 before the House Finance Committee.  Here’s an edited version of her prepared testimony:

We understand the goal of the sponsor.  We know something needs to be done to address insurance premiums which continue to increase;

Our employers purchase group insurance or self-fund health-care costs for workers – and they continue to tell us that their biggest cost driver is health insurance.

However, those costs are not limited to the individual market, and we see this bill only benefiting those in the individual market;

This is not a new issue for us;

We supported the bill last year that required that a study be conducted on ways to fund a reinsurance program because we heard loud and clear from legislators and the Colorado Division of Insurance that this was an urgent problem;

We always expected the State would, however, kick in money to partially fund the program and “share the pain.”

Yet, when State agency budgets were submitted to the Joint Budget Committee, there was no appropriation for this idea.

When the State received a $1.3 billion tax revenue windfall due to the Federal Tax Reform bill and the strong Colorado economy, there was no supplemental request to appropriate dollars toward such a program.

Putting the costs solely on the backs of employers and workers who do not even participate in the individual market is not the right solution.

Our employers and workers would subsidizing individuals who may not even be their own employees.

Consequently, we strongly oppose this legislation, but we do appreciate the problem that individuals are facing with higher health-care costs.  This bill simply exacerbates the problem that employers and workers are currently experiencing, and it doesn’t identify a sustainable solution.

On March 19^th, the House Health, Insurance and Environment Committee amended the introduced bill and then approved it on a 9-3 bipartisan vote, thus advancing the bill to the House Finance Committee.  Republican Representatives Lois Landgraf (Colorado Springs) and James Wilson (Salida) joined the majority Democrats to move the bill forward.

Here’s the legislature’s summary of the bill:

The bill authorizes the commissioner of insurance to apply to the secretary of the United States department of health and human services for a state innovation waiver, for federal funding, or both to allow the state to implement and operate a reinsurance program to assist health insurers in paying high-cost insurance claims. The state cannot implement the program absent waiver or funding approval from the secretary. The program is established as an enterprise for purposes of section 20 of article X of the state constitution.

The bill’s Fiscal Note states that the objective of the introduced bill is to generate $90 million from an assessment of up to two percent on health insurance premiums that would generate another $90 million from the Federal Government in fiscal year 2018-2019.  The $180 million would then be paid to health insurers to reduce the “claims cost” of the highest health-insurance premiums paid by Colorado residents.  In fiscal year  2019-2020, the numbers would be $180 million from the Colorado premium tax to draw in another $180 million from the Federal Government for a total of $360 million.

Here’s the Fiscal Note’s detailed summary of the bill:

his bill requires the Commissioner of Insurance to seek a State Innovation Waiver under the federal Affordable Care Act to create a state reinsurance program in Colorado. If federal approval is received, the reinsurance program will apply to 2019 health plans sold on the individual health insurance market. To fund the reinsurance program, the Commissioner is authorized to assess a fee on state-regulated health insurance carriers of up to 2 percent of premiums. In addition, the reinsurance program will be supported by federal funds that would have otherwise been provided to consumers as federal advanced premium tax credits. The bill directs the Commissioner to set the parameters of the reinsurance program so that claims costs in areas of the state with the highest health insurance premiums are reduced by 30 percent, and that all other geographic areas of the state have a 20 percent reduction in claims costs. Fees collected from health insurers and available federal funds under the State Innovation Waiver are to be deposited into the newly created Reinsurance Program Cash Fund. The reinsurance program is created as an enterprise under TABOR and revenue is exempt from the TABOR revenue limits.

Background

Reinsurance. Reinsurance is a type of insurance available to insurance carriers to transfer a portion of the risk to one or more other carriers, thereby reducing the risk of having to pay high-cost claims. By covering a portion of costs for high-cost claims, reinsurance can allow insurance carriers to charge lower premiums to consumers.

State Innovation Waivers. Section 1332 of the federal Affordable Care Act (ACA) allows states to apply for a waiver of various requirements of the federal law to pursue innovative strategies for providing residents with access to high-quality, affordable health care. To apply for a waiver, the state must enact a law authorizing a state agency to seek a waiver. To receive a waiver, a state must show that the waiver provides access to quality health care that will be least as comprehensive and affordable as it would be provided absent the waiver; that coverage is provided to a comparable number of residents as would be provided coverage absent a waiver; and that the changes under the waiver do not increase the federal deficit.

Federal health insurance subsidies. In 2017, Coloradans received about $375 million in federal advanced premium tax credits to purchase health insurance through Connect for Health Colorado, the state’s health insurance exchange. These subsidies are based on household income, premium amount paid, and the cost of a benchmark health plan. Subsidies are available to persons with income between 133 and 400 percent of the federal poverty level.

State Revenue

Conditional upon federal approval of a State Innovation Waiver, this bill increases state cash fund revenue by $90 million in FY 2018-19 and $180 million in FY 2019-20. This revenue is from fees assessed on health insurance carriers and is based on the amount necessary to fund the reinsurance program. The first-year impact is prorated to reflect a half year of implementation. The exact fee amount will be determined by the Commissioner of Insurance, but may not exceed 2 percent of premiums collected by health insurers. This revenue is exempt from TABOR revenue limits.

For information on HB-1392, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

For news media coverage of HB-1392, read:

“Legislature considers raising fees on employer health plans to stabilize individual market,” by Ed Sealover, The Denver Business Journal, April 20^th.

House Passes Bill to Bar Employers from Discussing Prior Compensation Histories with Job Applicants

On Wednesday, the House gave final, Third Reading approval of a bill, HB-1377, that would bar employers from discussing prior compensation histories with job applicants on a party-line vote of 35-to-27 with one member excused.

CACI’s Labor and Employment Council opposes the measure.

In the Republican-controlled Senate, HB-1377 has been assigned to the Senate State, Veterans and Military Affairs Committee, otherwise known as the leadership’s “kill committee” where partisan Democrat bills from the House are sent to die.  The measure has not yet been assigned a date for a hearing.

HB-1377 is but one of the package of anti-business bills introduced late in the session by House Democrats that are partisan “messaging” proposals aimed at their party’s liberal base this election year that, in one way or another, seek to close the so-called “income gap”  by targeting employers.  HB-1377 and the other bills, however, stand scant chance of survival in the Republican-controlled Senate.

The bill’s Senate co-sponsors are Senator Kerry Donovan (D-Wolcott) and Senator Dominick Moreno  (D-Commerce City).

The House Finance Committee on Monday endorsed the measure on a party-line 7-to-6 vote.  The proposal’s House co-sponsors were Representative James Coleman (D-Denver) and Representative Brittany Pettersen (D-Lakewood).

Here’s the legislature’s summary of the proposal:

The bill makes it an unfair employment practice for an employer to seek wage or salary history information, including compensation and benefits, about an applicant for employment, unless the employer notifies the applicant of the wage or salary range for the current employment opening or the applicant agrees to discuss his or her wage or salary history.

The bill’s Fiscal Note also contains a brief summary of the bill and the impact on state government.

CACI’s Loren Furman testified Monday against HB-1377 before the Committee.  Here’s an edited version of her prepared testimony:

We respect the intent of the sponsors and truly appreciate their efforts to reach out to us and try to find a solution to the issue of “equal pay for equal work” with this bill.  We have, however, several major areas of concern.

First, if this bill were to become law and an employer mistakenly asked for an applicant’s salary history, the employer would be subject to incredible litigation risk.  By creating a new discrimination claim under the Colorado Anti-Discrimination Act, which was expanded in 2013, employers would be subject to punitive damages, compensatory damages, attorney’s fees and costs and potentially front pay if a job applicant wanted to sue an employer for simply asking for salary history.  Consequently, this bill is a “sledgehammer approach” on employers that we believe is unreasonable.

Second, employers and their human-resource staff need to determine whether an applicant is within the salary range that they are considering for an opening.  This could be a special problem for companies that hire workers in other states.

Third, this bill doesn’t take into consideration that a prospective employer might call a prior employer, which an applicant has listed, for a referral.  An employer might ask the prior employer what the applicant had been earning in his or her job.

In summary, CACI has worked very hard over the last several years to strike a balance between employers and employees to resolve bills targeted at wage claims, benefits and discrimination claims.

We believe that there could be ways to address this specific issue without subjecting employers to extreme litigation costs that could put them out of business.

Again, I truly respect the sponsors’ interests in finding ways to pay someone equitably, but we don’t believe this bill is the best approach.

For information on HB-1377, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

CACI-Opposed “Pay Equity” Bill Leaps First House Hurdle

On Monday, the House Finance Committee approved on a partisan vote of 7-to-6 a bill, HB-1378, that seeks to promote pay equity based on gender for equal work.

The measure would, however, open employers up to lawsuits in district court while neutering the existing regulatory process for addressing pay-equity claims.  The bill also would hamper the hiring process for employers by forcing them to publicize all openings and the pay ranges.

CACI’s Labor and Employment Council opposes the measure.

HB-1378 now goes to the House Appropriation Committee.

The bill is co-sponsored in the House by Representative Jessie Danielson (D-Wheat Ridge) and Representative Janet Buckner (D-Aurora).

The bill is but one of a package of anti-business bills introduced late in the session by House Democrats that are partisan “messaging” proposals aimed at their party’s liberal base this election year.  The bills stand scant chance of survival, however, in the Republican-controlled Senate.

Here’s the legislature’s summary of the proposal:

The bill authorizes the director of the division of labor standards and statistics in the department of labor and employment (director) to administer and enforce the law that prohibits an employer from discriminating against an employee on the basis of sex and to issue awards to employees and impose penalties on employers for violations. The bill removes the director’s enforcement authority and instead permits an aggrieved person to bring a civil action in district court to pursue remedies specified in the bill. The bill allows exceptions to the prohibition if the employer demonstrates that a wage differential is based upon one or more factors including a seniority system, a merit system, or a system that measures earnings by quantity or quality of production or a bona fide factor other than sex.

 

The bill prohibits an employer from discharging or retaliating against an employee for actions by an employee asserting the rights established by the bill against an employer.

 

An employer is required to announce to all employees employment advancement opportunities and the pay range for the opportunities. The director is authorized to enforce actions against an employer concerning transparency in pay and employment opportunities, including fines of between $500 and $10,000 per violation.

The bill’s Fiscal Note also contains a brief summary of the bill.

CACI’s Loren Furman testified against the bill before the Committee.  Here’s an edited version of her prepared testimony:

It’s in an employer’s best interest to have strong working relationships with its employees and to treat them equally and pay them equally.  We absolutely agree with the principles outlined in the bill’s declaration.

There are provisions of this bill, however, that are problematic for our members.  Since this is a late bill, there has been little time to work out these concerns with the bill’s sponsors.

1. Our primary concern of this bill is that it allows a worker to circumvent the current requirement in law that these claims go through the Colorado Department of Labor and Employment (CDLE) first.  Instead, it creates a new private right of action to sue an employer instead of going through a regulatory process that has been in place for years.  It would be helpful to understand what the CDLE has been doing incorrectly to trigger this proposal.
2. Our second concern is the requirement for employers to post all employment promotion opportunities.  The reaction from our members has been very strong that this language just doesn’t work.  There are plenty of situations where employers will use succession planning or other talent programs to advance their employees, but these positions may not be open to everyone.  Quite simply, our companies don’t believe the State should be determining how someone should or shouldn’t be promoted.
3. Our third issue with this bill is the provision making employers liable for “liquidated damages.”  These types of damages are normally awarded when there is a contract between two parties that is outlined in advance.  This bill essentially creates a new definition for the use of liquidated damages and creates a double penalty on employers.  That ultimately would cripple a business and put everyone else out of a job.
4. Finally, there is a provision in the bill that states that, if an employer is found by a district court to have operated in good faith, the Court still has discretion to award liquidated damages.  This is extremely punitive.  If an employer has operated in good faith, then the district court should not have the discretion to award liquidated damages.

I’ll close by saying that the State Chamber has worked on many labor-and-employment bills over the years with the sponsors.  More often than not, we have found consensus when there has been prior outreach by bill sponsors and plenty of time to work on language.

Unfortunately, that opportunity wasn’t presented here, which is why we are opposed to HB-1378.

For information on HB-1378, contact Loren Furman, CACI Senior Vice President, State and Federal Relations, at 303.866.9642.

Congratulations to CACI Board Member Barbara Walz!

 CACI Board Member Barbara Walz was recognized as one of the Top Women in Energy by the Denver Business Journal.

Barbara is the Senior Vice President of Policy and Compliance/Chief Compliance Officer for Tri-State Generation and Transmission Association, Inc.  She has been with Tri-State for 19 years.  She leads a professional staff responsible for government relations, external affairs, environmental compliance, environmental policy, reliability compliance, safety, security and other external matters.  She is responsible for developing and supporting corporate policies and initiatives that relate to energy and environmental issues while interfacing with state and federal elected officials, representatives from Tri-State’s member co-ops, and other key policymakers from organizations and businesses in the association’s service territory.

ICYMI: CACI’s Top Federal Issues for Manufacturers - Tax Reform

Tax Reform:  Passed in December 2017 and currently being implemented, Congress’ tax plan makes it easier for businesses to invest in themselves, as well as compete with an international market.

• Lowered corporate tax rate to 21% as of January 1, 2018 – Down from 35%, which was the highest in the industrialized world & the largest reduction in the U.S. corporate tax rate in our nation’s history.
• Offers a first-ever 20% tax deduction that applies to the first $315,000 of joint income earned by all businesses organized as S corporations, partnerships, LLCs, and sole proprietorships. Reduces effective marginal tax rate to no more than 29.6%.
• Allows businesses to immediately write off the full cost of new (or new-to-you) equipment to improve operations.
• Protects the ability of small businesses to write off interest on loans, helping manufacturers start new lines, expand a business, hire workers, etc.

To read more about tax reform & individual tax changes, click here.  For tax examples, click here.

ICYMI: CACI’s Top Federal Issues for Manufacturers - Protecting Manufacturing

Protecting Manufacturing: CACI Teams Up with the NAM for New MAP Program

The National Association of Manufacturers (NAM) has launched an effort to help manufacturers fight frivolous lawsuits – with the most glaring case right now coming from Boulder, where the city council is suing the oil and gas industry for creating climate change.

What you need to know:  Similar lawsuits were brought against the oil and gas industry in New York City and a more expansive version in Los Angeles, where virtually every company which extracts, manufactures, produces or represents the oil and gas industry was named in the suit, also alleging responsibility for climate change.

• The same D.C. law firm as the New York and California cases, approached Boulder’s city council months ago, offering to take the case pro bono.  Boulder announced their lawsuit on April 17^th, along with Boulder County & San Miguel County (Telluride).

To read more, check out recent news coverage:

• Colorado Energy, Manufacturing Industries Push Back on Boulder Climate Change Lawsuit, Inside Sources
• Leading Colorado Voices Push Back Against Boulder Climate Lawsuit, Energy In Depth
• Climate Lawsuits, Once Limited to the Coasts, Jump Inland, New York Times
• Boulder Spearheads Lawsuit Seeking Damages From ExxonMobil, Suncor Over Climate Change Impacts, Boulder Daily Camera

ICYMI: CACI’s Top Federal Issues for Manufacturers - Infrastructure Investment

Infrastructure Investment – Congress vs. POTUS

Congress:  Negotiations have been underway for months to develop an infrastructure spending plan, however but no public plan has been announced by Congress to-date.  Consensus across Capitol Hill back in January was that ideas might be drawn from the President’s Infrastructure Plan proposal, but would not be adopted as proposed.

President Trump: In late January, President Donald Trump announced an infrastructure plan which proposed leveraging the President’s requested $200 billion in spending from Congress, encouraging states and local jurisdictions to invest $1 trillion in spending into infrastructure — where the White House cites the ability to leverage the federal government’s investment into $1.5 trillion in infrastructure and economic investment across the U.S.

By The Numbers:  $200 billion in federal dollars to be leveraged and bonded

• 50% (of the $200 Billion) would go toward federal incentives
• 25% would go toward rural infrastructure projects
  • (Primarily for governors to divvy out)
• 10% toward “transformative” projects to spur innovation, competition, non-traditional approaches to infrastructure investment
• 10% to federal financing at lower-than-market rates
• 5% revolving fund to refinance or purchase federal real property leases for locations that ‘should be owned.’

Infrastructure Principles: 

1. Stimulate infrastructure investment – see percentages above
2. Invest in rural America – see above
3. Increase state & local authority – Makes state responsible for applying, implementing & in some cases, regulating, funding streams
4. Eliminate Regulatory barriers – Reduces timelines and duplicative processes for regulatory permitting such as NEPA, Clean Water Act, etc.
5. Streamline permitting – Looks to reduce permitting to less than two years
6. Empower American workers – Looks to assess effectiveness of workforce development programs and reform where duplicative.

ICYMI: CACI’s Top Federal Issues for Manufacturers - NAFTA

NAFTA – The Free Trade Agreement That’s More Than Just Trade

Did you know NAFTA also includes national security provisions?  NORAD is one of the best – but least known — examples located right here in Colorado!  The #1 in command of NORAD is always U.S. military, but the #2 in command is always Canadian military – a perfect example of the partnership with our closest ally.

Quick Economic Facts for Colorado & Canada:

• Canada is Colorado’s #1 trade partner, as well as for the whole U.S.;
• Canada represents 23% of Colorado’s exports, Mexico 10%;
• The U.S. has a $12 Billion trade surplus with Canada (i.e. they import more U.S. products than we import of Canadian products);
• 141,200 jobs in Colorado relied on Canada, or Canadian companies last year; and,
• CACI teamed up with the Ontario Chamber of Commerce, recognizing Colorado’s trade with Ontario represents $1.4 billion to the Colorado economy (Check out our press release).

When NAFTA was first implemented in the early 1990’s, the majority of people and businesses did not have a bag phone (let alone a cell phone), the Internet was in its infancy, cybersecurity didn’t exist and neither did many of the Intellectual Property (IP) protections that need to be recognized by today’s NAFTA.

CACI supports a modernized NAFTA which acknowledges our intricate & integrated supply chain across both the U.S.’s northern and southern borders.  This would be done for the benefit of manufacturers and companies across Colorado.  To read more background on NAFTA, click here. 

To see the presentation by Canadian Consul General Stéphane Lessard to CACI’s Federal Policy Council on how the U.S. and Canada’s integrated supply chain make Colorado and the U.S. more efficient than our competitors, click here.

Fed Council Alert

Tuesday, May 1^st Council to be moved!  Look for exciting details coming soon on our new date & topic:  “Work Force Issues: How the opioid crisis has made fentanyl contamination & (illegal) online prescription drug-buying a problem for Colorado”

Legislative Agenda

Below is a list of bills and their status on which The State Chamber Policy Councils have taken positions. For more information on the bills, contact Loren Furman, Senior Vice President, State and Federal Relations, at 303.866.9642.