Last week, Maine’s Labor and Housing Committee voted to advance a bill which would establish a near-universal Paid Family and Medical Leave (PFML) program for Maine workers. This bill was the result of years of work by a bipartisan commission that included business and worker stakeholders, and which drew on the experience of other states with existing PFML programs as well as the needs of Maine workers and employers. Nonetheless, some lawmakers are suggesting Maine instead adopt a completely different approach, modelled on an untested, unpopular, and potentially unsustainable program in neighboring New Hampshire.
By not universally enrolling nearly every employee in the state and instead relying on voluntary buy-in from companies and workers, New Hampshire’s PFML program creates a whole host of problems.
1. Workers could get left behind
While the New Hampshire program does allow people working at a business that does not participate to enroll themselves in the statewide program and pay a weekly premium, this creates an unnecessary hurdle that will likely limit uptake. Maine should focus on making it easier, not harder, for workers and employers to participate by adhering to the universal model adopted by other states with PFML programs.
2. Workers receive fewer benefits
Aside from state employees, who are automatically enrolled, Granite State residents have two ways to enroll in the state program. Employers can opt to enroll their workforce and receive a tax credit from the state to help cover the premiums (they can also pass those premium costs onto workers). If an employee does not have access to a PFML program through their employer (either the state plan or an equivalent one) they can enroll themselves for a weekly premium that cannot exceed $5 per week.
Despite the state paying $2 million to an agency to advertise the new program, just 149 businesses have opted into the plan, covering a little over 6,000 employees or about 1 percent of the private-sector workforce in the state. That’s a long way from the number of people in New Hampshire who need access to paid family and medical leave.
3. The opt-in approach creates unpredictable risk
The biggest problem with New Hampshire’s voluntary approach is that it creates unpredictability in the program. Because individuals most likely to need leave— prospective new parents and people with underlying medical conditions or chronically sick relatives — are the ones mostly likely to opt in, the amount of money being collected each week in premiums would not be enough to cover the amount of money being paid out each week in benefits.
New Hampshire has attempted to provide a stable risk pool by enrolling 9,000 state employees in the plan and by depositing $6 million into a trust fund to account for extra costs. However, it’s unclear whether that’s enough to mitigate the risk, especially if enrollment grows in future years.
Private insurance companies recognize this fundamental flaw in the program, and representatives from two insurers explained to the bipartisan commission and legislative committee that they declined to bid to be the New Hampshire state carrier because the program carried too much risk. Without multiple companies willing to bid as the state’s preferred carrier, the cost to the state of subsidizing that program will increase and ultimately Granite Staters will be on the hook for higher rates.
4. Benefits are inadequate for workers with low wages
One reason behind the low enrollment rate in New Hampshire’s program may be that the benefit offered is lower than many other states. Enrollees are only eligible for six weeks of benefits (12 if the employer chooses extra coverage) at 60 percent of their usual wage (compared to 12 weeks of benefits at up to 90% of wages in the proposed Maine program). That means an individual earning $15 per hour would receive the equivalent of just $9 per hour in benefits. For most workers at that income level, this is not enough to live on. In other states with wage replacement rates this low, people with low incomes, who are most in need of paid family and medical leave, are least able to take it. For this reason, states have moved towards higher benefit levels in recent years. New Jersey increased its maximum benefit to 85% of regular earnings in 2019 and California’s benefits are set to increase to a maximum of 90% of regular earnings by 2025.
New Hampshire lawmakers may have kept the program’s benefits limited to reduce the risk of fund insolvency, but the result is a program that just doesn’t work for the people who need it most —those with low incomes and few, if any, savings.
5. Realities of work are overlooked
One of the choices made by the commission that designed Maine’s program was to make the benefits portable for Mainers who change jobs or those who work multiple jobs. By contrast, New Hampshire’s program is tied to an employee’s job. If an employee is working more than one job, they need to buy into the plan multiple times. If they change jobs, they can move their credits between jobs, but only in a limited time window. And they may not be able to do this depending on whether their new employer has its own PFML program. Under the Maine proposal, someone who works multiple seasonal jobs with spells of unemployment in between could be eligible for the program; someone in New Hampshire in the same situation would have to restart their enrollment in the program every time they got a new job.
Maine lawmakers should stick to the tried-and-true model proposed by the commission
With so many flaws and potential risks, there’s no reason for Maine lawmakers to look at New Hampshire’s PFML program as one to emulate. Rather, they should follow the recommendations of the legislative commission and pass LD 1964 to implement a program that’s designed to meet the needs of Mainers in the most comprehensive and reliable way possible.