During the SOTU, many topics were addressed which have a direct impact on employers and how to support employees. President Biden’s approach in focusing on specifically and intentionally on middle class economics and job-related issues, employers should continue to monitor the legislative and political landscape over the remainder of his term. Following are key takeaways.
Drug Prices and Medicare
President Biden reminded Americans that the United States spends more on prescription drugs than any other nation in the world. He has pressed for expanding Medicare’s ability to negotiate the price of drugs, citing the insulin price cap as the first step. Having Medicare negotiate with drug manufacturers is a game changer, but this proposal is highly controversial and opposed by pharmacy benefit managers (PBMs) and manufacturers with powerful lobbies. In addition, the president rankled the Republican caucus in the House and the Senate with his claim that Republicans want to sunset entitlements, such as Medicare and Social Security. While it is true that there are certain Republican proposals and a minority of conservative lawmakers that want changes to Medicare and Social Security, including a possible sunset, this idea is highly unpopular with the majority of Americans, and it was denounced by Republicans during the speech and after. It would be highly unlikely for these proposals to gain any significant traction but look for this rhetoric to continue by the president and Democrats.
President Biden also spoke about on the importance of mental health, especially for young children and in the veteran population. Already, the Biden administration has reinvigorated compliance with the federal mental health parity laws, ramping up audits and enforcement. According to the 2022 Vendor Strategy Survey from WTW, mental health and wellbeing solutions remain a key focus for employers, with 30% of respondents ranking it the number one issue with respect to benefit vendor strategies. 82% of respondents reported they plan to add or enhance their vendor solutions in this space. With the competitive labor market and ever-increasing emphasis on mental health challenges post-pandemic, savvy employers would be wise to review, promote and enhance mental health benefits and programs, as well as foster a workplace culture that removes stigma from accessing these important benefits. In addition, due to the increase scrutiny from the DOL and other federal agencies under this administration, employers should review plan benefits and clinical policies to ensure compliance with mental health parity laws.
President Biden touted an initiative called the Cancer Moonshot, which has an ambitious goal of cutting the cancer death rates by at least 50 percent in the next 25 years, delivered through grants, research, improved care and prevention and resources for families. The program reinforces employer-based benefits that emphasize wellness and cancer prevention as priorities in their benefits programs. One of the pillars of the Cancer Moonshot program is centered around reducing health care disparities, which has also become a hot topic for employers competing for top talent. Employers can improve care and outcomes, as well as save on health care costs, when they promote routine preventive care that helps early cancer detection.
Ban on Non-Compete Agreements
Millions of workers must sign non-compete agreements when they accept a new job offer. The Federal Trade Commission (FTC) recently published a proposed rule that would ban these non-compete clauses in employment agreement. The FTC estimated that a noncompete ban could increase employee earnings in the range of $250 – $300 billion. While this rule may pass to some degree, there could be litigation from business advocacy groups that could stall or eliminate it. Employers should continue to monitor updates and be prepared to remove or alter non-compete clauses if they are used in employment agreements. Note that this rule would not affect any non-disclosure agreements.
Paid Family Leave and Family Benefits
President Biden advocated for expanded paid leave benefits for workers, stating “Let’s also make sure working parents can afford to raise a family with sick days, paid family and medical leave, and affordable childcare that will enable millions more people to go to work.” His paid leave plan includes sick days, paid family and medical leave, and affordable childcare. It also includes restoring the expanded Child Tax Credit. While there is little chance paid family leave will pass in this Congress, employers should look for continued legislative activity and movement on paid leave from the state and local level. Also, caregiving benefits in the workplace have gained considerable traction for HR and workers alike in the current post-pandemic workforce.
President Biden called on Congress to pass the Protecting the Right to Organize (PRO) Act. This act would include additional protections for workers to form a union and limit employers’ ability to take adverse action or discourage organizing. It may also weaken some right-to-work laws. But the PRO Act has a low chance of passing the divided Congress. The president will likely look to the National Labor Relations Board (NLRB) and other executive action to push through increased labor protections at the regulatory level. Employers should be aware of increased enforcement on workplace civility rules, barring mandatory employer meetings during union drives, and providing unions more access to an employer’s email system. In addition, his DOL plans to tighten independent contractor rules, changing the definition of an “employee” versus an independent contractor.