Flex Workforce

Coverage

For the Flex Workforce

By Lucien Wulsin  

May 1, 2000

Index

Introduction…                                                                                              1

How Big is the Flex Workforce?…                                                                2

Demographics…                                                                                             6

Wage Earnings…                                                                                            6

Why Use Flex Workers?…                                                                            8

Are Flex Workers a Growing Trend?…                                                          10

Health Coverage…                                                                                          12

Recommendations…                                                                                       14

Flex Workforce Models from Across the Country…                                16

Microsoft/Washtech…                                                                                    16

AFSCME…                                                                                                    18

Academia Initiatives…                                                                         22

Organization Initiatives…                                                                                23

State Initiatives…                                                                                            25

California Models…                                                                                                28

Broad Based Coverage of the Flex Workforce…                                            29

Child Care Workers…                                                                                    30

Construction Workers…                                                                                 32

Entertainment Industry…                                                                                34

Home Care Workers…                                                                                   35

Nursing Registries…                                                                                      38

Public Workers…                                                                                           38

Taft Hartley Trusts…                                                                                      40

Temporary Workers…                                                                                    40

California Model Charts…                                                                              43                                                                   

California Recommendations…                                                                 44

California Recommendations Chart…                                                 49

Options for Covering the Flex Workforce…                                             50

Tables and Charts…                                                                                                58

INTRODUCTION

In California, the lack of insurance for the flex workforce accounts for a very large share of the uninsured. 13% of the uninsured are part time workers, 13% are seasonal employees and 9% are self-employed; less than half the uninsured are full time, full year workers.[1] All aspects of the flex workforce have high rates of uninsurance and low rates of coverage through their own job.

·      39% of the self-employed are uninsured, 29% are employed through their spouse’s job and 25% purchase individual coverage.

·      36% of part timers are uninsured, 7% of part timers purchase individual coverage, and 37% are covered through their own or their spouse’s employment.

·      28% of seasonal workers are uninsured, 48% have coverage through their own or a spouse’s job and 3% of seasonal workers purchase private coverage.

While spousal coverage plays a major role in covering flex workers, public coverage such as MediCal or Healthy Families is surprisingly low, given the low wages of many flex workers: 4% of the self employed, 17% of part timers and 20% of the seasonal workers.[2] If we are to reduce the high rates of uninsurance of the flex workforce, we can follow four options:

·      expand public programs to cover them,

·      make private individual coverage more affordable and accessible,

·      encourage employers to extend group health coverage to the flex workforce or

·      create a new form of private coverage that is affordable, accessible, portable and appropriate for the new forms of employment taking shape in an evolving employment relationship.

The basic foundation on which 20th Century Americans built their lives has been, until now, the permanent job. Access to group health insurance and pension funds, the collection of taxes, peace of mind, eligibility for unemployment insurance and safeguards against discrimination all hinge, to some degree, on a range of legally defined obligations attached to full time, permanent employment.[3]

As the American workforce grows, however, a significant number of people are in flexible work arrangements - situations that differ from traditional full-time, permanent jobs. They come from all walks of life: among them are single parents, students, women re-entering the workforce, people who seek new skills, and retirees who want to supplement their income.[4] We chose the term "flex workforce" as best suited to describe these millions of people who, for a variety of reasons, do not fit the standard model of full time, full year employment around which the traditional benefit structure is built. Others refer to the contingent workforce, a term we think is unnecessarily pejorative. Some have a sense of impermanence about their jobs or do not perceive themselves as having an explicit or implicit contract for ongoing employment; others have chosen this style of work and relish the freedom and flexibility entailed.[5]

Their numbers are growing, and the use of flex workers, also known as "outsourcing" is one of the hot trends in business. Companies are hiring outsiders to take care of central business functions like tax, payroll, and pension management. Managers are using temporary workers as a competitive tool, rather than a simple means of cost control. Across government, managers are making more creative use of flexible employees, and are structuring parts of their organizations to be permanently staffed by temporary workers. Some of this is a response to a benefits rich job structure, the strictures of civil service and a cause of labor management strife; some is a response to the rigidities of traditional employment that is desirable for both the flex worker and the employer.

Estimating the size of the nation’s flex workforce is not an easy task. "There is no agreement among scientists about what constitutes a contingent worker or how many there are," says Heidi Hartmann, director of the nonprofit Institute for Women's Policy Research.[6]

HOW BIG IS THE FLEX WORKFORCE?

In August 1995, the first special survey to produce estimates of the number of workers in flexible jobs, that is, jobs, which are structured to last only a limited period of time, was completed by the Bureau of Labor Statistics (BLS). The survey also produced estimates of the number of workers in several alternative employment arrangements, including those working as independent contractors and on-call workers, as well as those working through temporary help agencies or contract companies.[7]

Depending on the definition and data used, the flex workforce estimates range from less than 2% of the working population (126.7 million people total) to more than 30%[8]  – a difference of between 2 million and 36 million workers.[9]

The Federal Reserve Bank of Chicago publishes the lowest estimate, at 1.9 million.[10] The BLS survey, conducted in February 1995, estimated that between 2.7 and 6.0 million workers -- a range of 2.2% to 4% of total employment -- were in flexible jobs.

The narrowest estimate by the Bureau of Labor Statistics (2.7 million) includes only wage and salary workers who had been in their jobs for 1 year or less and who expected their jobs to last for an additional year or less. The second estimate (3.4 million) added self-employed and independent contractors who were in a similar situation. In the third and broadest estimate (6 million), the limitation on how long workers had held their jobs and expected to remain in them was dropped for wage and salary workers; thus, this estimate includes almost any worker who believed his or her job was temporary and not expected to continue.[11]

In addition, the BLS estimated that 6.7% of the workforce were employed as independent contractors, 1.6% were on-call workers, 1% were employees of temporary agencies, and 0.55% worked for contract service firms. After controlling for double counting, the data suggest an upper estimate of 13.3% for the flex labor force in 1995.[12]

Some researchers consider the BLS definitions too narrow. Hartmann's 1995 study found that, in 1990, more than 19 million workers, or 16%, held flex jobs. This number was based on the Census Bureau's 1987 and 1990 Surveys of Income and Program Participation.[13]

References to the flex workforce generally involve individuals whose employment status falls in one of these categories:

Independent contractors (8.3 million): individuals whose services are engaged by contract to perform specialized tasks often requiring a high level of skill, discretion and independent judgment, and whose work, as a consequence, is not "directed or controlled" by the service recipient. They are considerably more likely to be men, white, and at least 25 years old, to be out of school and have a bachelor's degree. They were also more likely to work part-time and hold managerial, professional, sales, or precision production jobs.

Leased workers: staff who are hired by a leasing company and then leased by written contract to a service recipient company. Generally, the leasing company administers payroll, provides any employee benefits, maintains personnel records and handles other functions ordinarily performed by a human resources department.

Contract technical workers (652,000): skilled technical workers (often professionals such as engineers and computer specialists) who are supplied for long-term projects under contract between a service recipient company and a technical services firm. They may be either leased employees or independent contractors. They are disproportionately male, and in the service industry, although substantial proportions work in manufacturing and transportation and public utilities.

Temporary or seasonal workers (1.2 million): workers hired by a temporary staffing agency that assigns workers to work at a client's premises for a limited duration. This arrangement is often utilized to supplement the client's work force due to absences, temporary skill shortages, seasonal work fluctuations and special short-term projects. They are usually women, young, and African American and were slightly more likely to be employed part-time.

Part-time employees: employees that worked less than the employer's full-time work force. Part-time employees can be either permanent or temporary employees, and may or may not be eligible for an employer's benefit plans, depending on such factors as the number of hours worked, whether they are hired directly or through an outside agency, and the terms of the employer's benefit plans.

Flexible schedule employees (2 million): workers whose work schedule varies, either at the discretion of the employer or the worker. Examples of such workers include on-call employees, per-diem workers, callback workers and stand-by workers. They are more likely to be in the construction or services industry. They are likely in professional, service, and operator, fabricator, and laborer occupations.

Outsourcing: An arrangement in which an outside firm with particular expertise contracts not just to supply personnel but to assume complete responsibility for specific operations. Traditionally limited to non-core functions such as security, food service and landscaping, outsourcing is expanding and may include large portions of the service recipient's business.[14]

Some of the major findings by the BLS regarding the characteristics of the flexible workforce are:

·      Flex workers were more likely than non-flex workers to be women and African American.

·      Among 16-24 year olds, flex workers were more likely than non-flex workers to be enrolled in school.

·      The services industry alone accounted for more than half the flex workforce, followed by the construction industry.

·      Flex workers were concentrated in the professional, service, administrative support, operator, fabricator and laborer occupations.

·      The proportion of flex workers who had health insurance from any source ranged from 57-65%, depending on the estimate chosen. This was 17-25% lower than the proportion of non-flex workers with health insurance. Moreover, flex workers with insurance were substantially less likely to receive it from their employers.

·      Some components of the flex workforce preferred to have permanent rather than temporary jobs. Most on-call and temp workers would have preferred to be in traditional work arrangements. In stark contrast, more than 4 out of 5 independent contractors preferred their current work arrangements.[15]

DEMOGRAPHICS

The flex workforce is made up of a disproportionately large number of workers from protected classes, and therefore the discrimination laws raise special concerns in connection with them. Women constitute two-thirds of the flex workforce, as compared to 45% of the overall workforce. Further, African-Americans are also disproportionately represented in temporary employment, constituting over 20% of the temp workforce, as compared to 10.4% of the general labor force.[16]

·      52% of flex workers were aged 35 or older, yet they remain much younger than the overall work force.

·      In 1995 between 31-42% of all types of flex workers were aged 16 to 24.

·      As workers age, they are increasingly likely to spend longer periods working in the flex workforce.[17]

·      People ages 50 to 64 are most likely to work outside the traditional wage and salary structure. Some 20% of workers in this age bracket are employed in flexible work arrangements, and demographic trends among the baby-boom generation indicate that an increasing number of 50-64 year olds may seek similar arrangements in the future.[18]

WAGE EARNINGS

Although the economy has recently begun to produce broad-based wage gains, as real wages have risen 2.6% annually since 1996, the wages of many workers still have not been restored to 1989 levels.

Results from a study on working America found that:

·      Between 1989 and 1994 wages for all temporary workers in the US declined by an average of nearly 14.7% in real terms.[19]

·      The inflation-adjusted earnings of the median worker in 1997 were 3.1% lower than in 1989. Real hourly wages stagnated or fell for the bottom 60% of workers, except for low-wage workers.

·      Median family income was $1000 (2.3%) less in 1996.

·      Job tenure fell in the 1990s as the share of workers in "long-term jobs" (those lasting at least 10 years) fell from 41% in 1979 to 35.4% in 1996.

·      Wages for the bottom 80% of men were lower in 1997 than in 1989.

·      Women's wages rose at most levels of the wage distribution, with 2.7% growth in real wages for low-paid women contrasting a steep decline of 18.2% in the 1980s.

Factors contributing to these wage declines include: a steep drop in the number and bargaining power of unionized workers; erosion in the value of the minimum wage, only partially corrected by recent increases; a decline in manufacturing jobs and the corresponding expansion of lower-paying service-sector employment; globalization; and increased nonstandard work such as temporary and part-time employment.[20]

Flex workers tend to earn less than their permanent counterparts even after adjusting for age, sex, race and education. Pink collar flex workers (clerical jobs) earn 10% less than comparable permanent workers do. Blue collar workers earn 34% less in flex jobs than in permanent ones. However, white collar flex workers earn 2% more than non-flex workers. Highly skilled professionals, executives, and technicians who work as consultants on a project basis can often command fees well in excess of staff salaries.[21]

Much of the difference in average wages between flex and regular workers can be explained by their different characteristics:

1. Temps are younger, less educated, less experienced and have less stable work histories. Temps are more likely to be retirees, students, concentrated in lower paying occupations and working part-time.[22]

1. Part-timers are concentrated in industries and occupations that tend to pay lower than average wages, most notably the wholesale and retail trade industry. Part-timers are also concentrated in the services industries (waiters, child care workers, short-order cooks and hairdressers). Relatively few part-timers are in their prime working years; more than 20% are under age 20. Many are "semi-retired", particularly those aged 65-74. Two thirds of part-time workers are women.[23]

1. Independent Contractors, by contrast, earn more than traditional employees do. In 1997, median weekly earnings for full-time independent contractors were $523 compared to $510 for traditional workers. However, most of this gap can probably be attributed to the differences in age, sex and education between independent contractors and traditional workers.[24]

WHY USE FLEX WORKERS?

The Employer Side

Taking the viewpoint of the employer, flex workers are seen as a logical response to increasingly competitive and turbulent environments. Firms use flex workers to control costs, achieve operational flexibility and manage intellectual capital. Firms can reduce labor costs because they pay no fringe benefits and employment taxes on independent contractors or employees of temporary service firms. There are no costs of recruitment, training and termination.[25]

The use of flexible workers can reduce the cost of employee benefit plans, eliminate the need to withhold income and employment taxes and avoid a plethora of compliance matters. Non-employees, for example, are not covered by wage/hour and overtime pay requirements, unemployment compensation, worker's compensation, the National Labor Relations Act, state and federal laws concerning discrimination, safety and health, and the leave time granted under the Family and Medical Leave Act.[26]

The varying needs of employers present a multitude of reasons for hiring flex workers:

1.     Full-time employees’ vacation schedules

2.     Peak demand for labor

3.     Qualified flex workers

4.     Minimum training

5.     Quick service to customers[27]

6.     Instant staff

7.     Lower overall staffing costs

8.     No severance costs

9.     Access to additional skills

The benefits of using flex workers include flexibility, cost control and expertise that can be focused immediately and for only as long as necessary.

Some disadvantages of using flex workers include:

1. Possible lack of job commitment

2. Possible lack of organization-specific skills

3. High turnover

4. Lower morale

5. Difficult to integrate into core staff

6. Higher salary costs

7. Possible compromise of organization's security

The downside, many managers believe, is that flex workers will be less loyal than permanent employees.[28] However, a 1997 survey found that far from being less committed, less satisfied, and less skillful than core employees, contingent workers frequently scored higher:

• Flex workers scored higher in their ability to be self-motivated by their jobs.

• Flex workers scored significantly higher in task identity and job feedback.

• Flex workers scored higher in need for growth, suggesting that they were likely to respond more favorably to jobs that challenged them.[29]

The Worker Side

There are many reasons why people enter into the flex workforce:

• Flexible work meets employee needs

• Flexible scheduling allows for balance and family needs

• Can provide an entrée into desirable, full-time positions

• Provides greater autonomy

• Increases marketable skills[30]

Many flexible workers strongly prefer their arrangements to regular full-time occupations. For part-time workers, the largest segment of the flex workforce, about 80% work part-time by choice. The percentage is even higher (90%) among independent contractors. A third of those working part-time do so in order to attend school or training. A quarter work part-time for family or personal reasons. Only about 4% of voluntary part-timers (3% of all part-timers) work part-time because of child care problems.

Of those part-timers who are involuntary, most (55%) are so because of slack work or business conditions. Only the two smallest groups of flex workers, temporary help workers and on-call workers, express a significant preference for regular full-time work.

The vast majority of part-timers, independent contractors and self-employed workers, who make up almost 90% of all flex workers, prefer their arrangements. Although there are worries of job uncertainty and security, the most common view is that risk is inherent in any economic activity and that the economic rewards of contracting more than outweigh the risk.[31] Most temp workers, who make up 3-6% of all flex workers (1-2% of the overall workforce) transition into full-time jobs within a short period, often facilitated by their temporary help employment.[32]

The high proportion of college graduates among long-term temps reaffirms that individual choice may be an important factor there as well. The largest share of temporary employees who have over 48 months of tenure are college graduates (32%) compared to only 14% who have less than a high school education.[33]

Union leaders view temporary work as a very big problem in corporate America. They believe that corporations are trying to create a disposable work force with low wages and no benefits.[34]

Many employment and labor laws exclude flex workers from coverage:

·      Until recently, the National Labor Relations Act made unionization by temp workers extraordinarily difficult.

·      The Family and Medical Leave Act has strict employment thresholds.

·      Temp workers have far less access to unemployment compensation.

·      Fair labor standards may go unenforced, and

·      Creditors may not accept flex work as stable employment.[35]

ARE FLEX WORKERS A GROWING TREND?

In the absence of data on the growth of the flex workforce, analysts have used data in the growth of the temporary service industry to estimate the spread of flex labor. These data imply spectacular growth. Flexible work may represent as much as 25% of all new jobs created in recent years. Between 1991 and 1996 the percentage of the temporary help industry's payroll represented by office clerical and medical work declined, while the technical, industrial and professional segments became more important.[36]

Although only 1.5% of jobs were temporary in one 1997 report, another indicates that employers created many more "temp" than permanent jobs over a 12 month period. Other reports indicate that as many as 35% of workers are temps. Some employers are now using flex workers to fill 30-80% of their jobs.[37]

The most visible sign of an increase in the flex workforce is the rapid rise of temporary agencies. For example, in Santa Clara County:

1.     Over a four year period in the early nineties, employment in temporary agencies grew by 48%, while overall employment declined by 2%.

2.     Temp agencies now employ more than 32,000 people out of a workforce of some 800,000. This is nearly triple the national average.

The temporary services industry grew by 361% between 1982 and 1994.[38] Bank of America slashed thousands of full-time jobs in their California branches and rehired many of those same employees on a part-time basis with no benefits. Now, 80% of their almost 25,000 branch employees in California are part-time or hourly workers.

There are dissenting points of view regarding growth of the flex workforce. BLS has collected data on part-time workers for decades. The data show that part-time work has not increased in 15 years. Since the early 1980s, it has remained relatively constant and is currently at 18%.

BLS also has data on self-employed workers - half of whom are independent contractors and half of whom are business owners. There has been little change in self-employment over the last 15 years. The assertion that flexible work has been growing rapidly is based entirely upon growth in temporary help employment - a group that accounts for about 3% of all flex workers and 1% of all employment. For most nonstandard workers there has been no increase.

Evidence also suggests that most temporary workers do not stay temporary for long. In a survey of former temporary help employees, NATSS (National Association of Temporary Staffing Services) found that the median length of employment as a temp was 24 weeks. NATSS found that 72% (6 million individuals) moved into permanent jobs from temporary help within a year. [39]

A survey released in 1997 by the BLS showed that the proportion of contingent[40] workers declined by nearly 700,000 from 1996-1997, from 4.9% to 4.4% of the labor force. The number of involuntary part-timers has declined by nearly 400,000 in the same period of time.  Using the BLS definition of "temporary" worker, the number of temporary employees has remained constant (around 1.2-1.3 million) since 1995.

The proportion of longer-term temporary workers remains very small; less than three tenths of one percent of total employment in 1995, 1997 and 1999. Only 342,000 individuals in 1999 had been engaged in temporary services for a year or more.[41]

HEALTH COVERAGE

People who have chosen or are compelled to earn a living outside a traditional job are much less likely to have health insurance: about 53% of temporary workers were uninsured in 1997 as were 27% of independent contractors and a third of "on-call" workers.[42] The proportion of flexible workers with health insurance from any source ranges from 57% to 65%, according to the BLS, compared with 82% of non-contingent workers. Those flex workers with health coverage are much less likely to get it through an employer.[43] Only 12% of flex workers receive health insurance coverage through their employers, compared with 53% of all employees. And only 13% of flex workers receive pension coverage, compared with 47% of all employees.[44]

Workers in flexible jobs are less likely to receive two types of fringe benefits from their employer: health insurance and pensions. However, many receive coverage from other sources, typically family members. For example, while only 6% of temporary help workers receive health insurance through their employer, nearly 50% of temps have health insurance. Similarly while only 16% of part-time workers receive health insurance directly from their employer, another 36% receive it indirectly (through spouses or parents) and another 28% receive health insurance from other public or private sources. 84% of full-timers have health insurance coverage, compared to 79% of part-timers.[45]

Part-time employees, independent contractors, and long term staffing employees are covered by health insurance almost to the same extent as traditional full-time employees. The coverage is not typically acquired through their own employer (e.g. through a spouse's plan) but the coverage is there nonetheless. Although temporary employees and on-call workers are not covered to the same extent as full-time employees, part of the difference is a result of the short tenure of people in temporary jobs and the fact that, on average, temporary employees are younger and less likely to demand insurance coverage.

With increasing competition among temp agencies for good candidates, some agencies are now offering benefits of their own. Temps & Co. in Washington, DC offers health insurance to their "favorite" employees after one month of employment.[46] Not such a bad idea, as recent federal guidelines indicate that either the staffing agency or the host company can be considered the legal employer for liability purposes under discrimination laws and under the Equal Pay Act. Additionally, flex workers may be "third party beneficiaries" of the contract between the staffing firm and the host company.[47]

Temps with more tenure are more likely to receive health benefits. Almost 19% of temporary workers with tenure of more than 2 years were eligible for pension benefits and about 46% were eligible to receive health care benefits through their jobs. However, of temporary workers with tenure of more than one year, only 53% chose to participate in their employer's pension plans compared to 79% of traditional employees. Overall, only 29% of these temporary workers elected to enroll in health plans through their jobs versus 85% of traditional employees,[48] due in part to cost sharing requirements and the availability of spousal coverage.

Interestingly, for workers aged 55 and over, there is almost no difference in coverage rates between independent contractors and traditional workers for health insurance (87% vs. 90%) and pensions (52% vs. 53%).[49] However, 16% of 61-64 year olds are uninsured, up from 14% in 1989, and there is a sharp drop off of employer-based and privately purchased coverage for this age group. A little more than 67% of people ages 45 to 60 have employer-sponsored coverage, for example, compared to 52% of 61-64 year olds. And while almost 70% of 57-60 year olds have some form of private health insurance, the proportion drops to 63% for 61-64 year olds; this leaves more uninsured. The percentage of 61-64 year olds with some form of private coverage (employment based or individually purchased) has declined from 68% in 1989 to ??.[50]

Another reason for the decline in employer based coverage is the increased use of "waiting time". Usually, an employee starting a new job has benefits withheld until he has worked a certain number of weeks or months. Waiting periods effectively mean no coverage, and they are extremely common. A 1990 study by the BLS found that 49% of employee health plans and 51% of life insurance plans impose waiting periods. That means changing jobs leads to a loss of coverage. "Job interruptions", or temporary departures from the labor force, are tracked by the BLS; data shows that women and African-Americans experience many more job interruptions than white men.[51] In 1997, 27% (2.7 million) of the 10.1 million people who were ineligible for health insurance at a job were in this "waiting period" predicament because they had not worked at the job long enough.

COBRA provides access to coverage, but not affordable coverage for young women and men making job changes. Less than 5% of those eligible for COBRA opt for it because of the high cost.

HIPAA was passed as a federal law in 1996 to address portability problems. However, it does not eliminate waiting times for coverage. Overall, there is little evidence HIPAA has been much help in extending coverage to workers who have lost employer-based coverage, mainly because insurers are allowed under the law to charge such individuals substantially higher premiums.[52]

As employers shift to flexible benefit packages with fixed contributions to cover an array of living expenses, families on tight budgets must increasingly choose between child care expenses, other family living expenses, and health benefits.[53]

Health care projections for the next decade include 400,000 to 1.3 million people losing coverage between 1999 and 2008 as businesses drop coverage, shift costs to workers, or turn to flex workers (an average of 40,000 to 130,000 a year).[54]

RECOMMENDATIONS

Ideally we would increase access to health coverage for the flex workforce through a universal health insurance system in which people have access to health coverage by virtue of being residents, not through an individual's employment relationship. In the interim, other more piecemeal efforts include tax credits for the uninsured, tax deductibility for the self-employed, expansion of public programs and various portability reforms to allow workers to maintain health coverage during changes of employment.

In his 1992 State of the Union address, President Clinton noted that the 18-year-old of today will probably retrain eight times during his work life to keep pace with job demands. But our benefit system functions like a 1940s Ford plant -- it assumes that the good worker is the one who stands still.

Many of the needed changes seem almost like technical adjustments. Waiting periods, vesting rules, and recency requirements don't entangle us in constitutional combat or in deep moral quandaries. The idea of modifying them is not shocking.[55]

Portable Benefits: These new structures would provide workers with benefits, particularly health care and pension programs, that they can maintain as they move from employer to employer and even during periods of unemployment. Collective bargaining programs need to be geared towards an employer contribution to these portable benefit plans.[56] Currently, no one is specializing in portable benefits that workers can carry from employer to employer; health insurance is portable and also expensive only when it’s entirely self-financed.[57]

Strategies and Options for Improving Coverage and Quality of Plan Choices:

·      Expansion of public programs to low-wage working adults

·      Tax policies for the uninsured flex workforce

·      Pooled purchasing options for flex and self-employed workers

·      Integration of private and public programs

·      Financing options

·      Earned Income Tax Credit

·      Direct subsidies for health care to the uninsured could be used to expand coverage[58]

Flex Workforce Models from Across the Country

Flexible jobs are implanted in every sector and all fields of the economy. Their diverse ranks include high-tech software engineers and office workers; janitors and taxicab drivers (often misclassified as independent contractors); adjunct college professors; and home healthcare workers.  This implies a labor problem that transcends income classes. Of the 8 million employees who move in and out of flex work each year, most are paid less than full time workers, lack health care and other benefits, and many times fall through the cracks in labor and employment law.[59]

A handful of unions and dozens of advocacy groups are experimenting with a tactically and politically diverse range of approaches. Many of these advocacy groups offer legal aid and job counseling. Others are lobbying cities and states to pass laws that would help temps with everything from benefits coverage to unemployment insurance.

Unions are concentrating their new organizing efforts in four areas: the booming high-tech industry; flex workers; workers in union-free manufacturing jobs in the South; and low wage workers, including recent immigrants and farm workers. However, flex workers are a particular challenge for union organizers because temp employees are employees of their temp agencies and cannot be the object of collective bargaining at the company where they are assigned. Therefore, they cannot pay union dues like full-time workers at the company.[60]

Unions see flex workers as an obstacle to organizing efforts, but high tech firms like the flexibility that temporary workers allow them. Labor unions have so far had spotty success in attracting high income, high tech temps.  Nonetheless, unions are targeting dissatisfied temps, as they have at Microsoft and other high-tech firms.

MICROSOFT/WASHTECH

In Washington State, thousands of software engineers, technical writers, web designers, and other high tech workers worked at Microsoft and other companies for years yet are technically considered temps. At Microsoft, temps and independent contractors make up about 20% of its US work force; Microsoft’s use of temporary workers climbed from about 440 in June of 1989, to over 6,000 today.[61] However, many are denied health and pension benefits and access to stock purchase plans, paid lower wages, and placed in job classifications below their real skill levels. 

An increasing number of contractors and "professional" temps are seeking collective bargaining agreements; workers at 50 high-tech companies are organizing a union called the Washington Alliance of Technology Workers (WashTech), affiliated with the Communications Workers of America. They have won important legal victories, recently upheld by the Supreme Court, entitling them to benefits.

An estimated 10,000 current and former independent contractors and other longtime temp employees are due to receive what may be more than $100 million, thanks to a federal appeals court’s decision. A ruling by the 9th U.S. Circuit Court of Appeals stated that some of the workers at Microsoft essentially become “common law” employees.[62]

The company has made some changes in its arrangements with temporary agencies in recent years.  Microsoft now requires the agencies to offer a medical and dental insurance package to their workers, 13 days of paid vacation per year, training opportunities and a retirement plan.[63] As a result, some temp employees at other firms now enjoy wage parity with those in standard jobs, and many have seen their jobs reclassified in recognition of their skills and expertise.

DAY LABORERS

Day laborers are also demanding better wages and working conditions, and many times initiating their own hiring halls and unions. In Chicago, an estimated 40,000 people, mostly Latino, make their living by day labor.  Some are paid less than $30 for an eight-hour day; many are women. They recently held street protests, public hearings, and a one-day strike against a notorious employment agency. They shut down two agencies operating outside the law, and are now pressuring the city to establish eight hiring halls to be run by the day laborers themselves.[64] Chicago Coalition for the Homeless is helping these temps and day laborers to form workers’ centers and co-ops to negotiate better wages and working conditions.

In Portland, Oregon, every morning, several hundred workers, mostly immigrant men stand on corners and wait for someone to offer them a day's work (usually $6.50 an hour; the state's minimum wage). Portland day laborers, in association with the Worker's Organizing Committee Workers' Center, have formed their own union and pledged not to accept a job less than $8 an hour.[65]

UNIONS

Some unions and advocacy groups are organizing flex workers directly into existing unions.  For example, in Los Angeles, 74,000 homecare workers classified as independent contractors joined SEIU (Service Employees International Union) in February 1999 and set up a public agency to act as their employer in collective bargaining with the county. SEIU is one of the most dynamic unions in the AFL-CIO at organizing flex workers; it is also the nation's largest healthcare union, representing some 600,000 workers in the industry.  It began with a "Justice for Janitors" campaign in Los Angeles in the 1980s. SEIU Local 100 in New Orleans has organized and won contracts for temp garbage truck workers.[66]

Unions in the manufacturing and services sectors have also recently begun initiatives to meet the needs of flex workers.  A series of cooperative ventures between the UAW and the Big Three auto manufacturers focuses on training and job placement of flex assembly line workers. An agreement between the American Federation of State, County, and Municipal Employees (AFSCME) and the state of Pennsylvania has created an internal pool of clerical temporary workers to reduce the state’s reliance on private sector temporary agencies.  Temp workers in the pool are eligible to join AFSCME and are given priority for permanent job vacancies. [67]

AMERICAN FEDERATION OF STATE, COUNTY, AND MUNICIPAL EMPLOYEES (AFSCME)[68]

AFSCME believes that the best way to prevent the replacement of full time employees with an involuntary flex workforce is to represent part-time and temporary workers.  This provides current full-time workers with the option of moving into a part-time or temporary position if they wish to without losing job security, contract benefits or union status, as well as giving flex workers career advancement and development opportunities.

There are a series of contract provisions that AFSCME councils and locals have developed for flex workers. Although a majority of AFSCME agreements only cover employees who work over 20 hours a week, there are exceptions:  1995-96 agreement with the state of Minnesota covers employees working 14 or more hours a week or 35 percent of the normal workweek in the employee’s bargaining unit; 1992-95 agreement between Inglis House, a wheelchair community and District 1199C in Philadelphia covers all part-time employees.  Although a fair number of AFSCME contracts cover part time workers, most contracts exclude temporary workers. There were exceptions: in the 1995-96 agreement with the state of Minnesota, Council 6 negotiated a recognition provision covering temporary workers who are employed 67 or more working days in any calendar year.

AFSCME councils and locals prorate benefits for part-timers across the board, based on the number of hours worked.  Prorated health insurance and pension costs can be prohibitively expensive for part-timers; an alternative is a prorated addition to wages in lieu of benefits. However, this approach will not ensure that the employee will choose to use that money to purchase health coverage.

Under the 1992-95 agreement between Inglis House and District 1199C, all part time employees are entitled to health and pension benefits under the Benefit Fund for Hospital and Health Care Employees and the Pension Fund for Hospital and Health Care Employees. Under the 1992-95 agreement between Greenwich Services, Inc. and District 1199C, the employer contributes to the Benefit Fund for Hospital and Health Care Employees based on a full-time workweek for all employees working 22 hours or more a week.  In turn, these employees are entitled to full health coverage for themselves and their dependents.

Under the 1993-96 agreement between Council 13 and the State of Pennsylvania, permanent part-time employees (expected to be in active pay status at least 50% of the time every pay period) get fully paid employee health benefits coverage through the Health and Welfare Fund.  In addition, the fund provides 50% of dependent coverage.

Other unions, advocacy groups, and flex workers are creating their own nonprofit or employee-owned agencies to provide an alternative to commercial temporary service companies. The Solidarity Sponsoring Committee, a new organization of low-wage workers sponsored by AFSCME and Baltimoreans United in Leadership Development (BUILD) is establishing their own temporary agency.  The agency, WeCare, will concentrate in two specific market niches: clerical and light industrial markets.  Targeted clients include the state of Maryland, the city of Baltimore, as well as local hospitals.  WeCare will seek arrangements with client firms that provide secure temporary employment opportunities for its members and pay a living wage and benefits.[69]

Another temp labor union, Working Partnerships USA was launched by San Jose’s South Bay AFL-CIO Labor Council in 1995. It runs a nonprofit temp firm, Together@Work that offers health insurance to its dues paying members, and provides a hiring hall that aims to provide more stable employment. Amy Dean, director of the project has also started the nonprofit agency called Solutions @ Work to help temps find good jobs, focusing on low-wage clerical jobs in Silicon Valley.  It is negotiating with health care plans for a group rate.[70]

In Lakewood, New Jersey, temps formed the Puerto Rican Congress, billing over 50,000 work hours by the spring of 2000 and providing an average of 70 workers daily to area employers. ICA Group in Boston has partnered with organizations in Washington and Brooklyn to start worker-owned temp agencies.

Unions, community groups and flex worker organizations are also creating codes of conduct designed to raise standards of employers and employment agencies and to help the temp industry undertake voluntary reforms. In South Carolina, the Carolina Alliance for Fair Employment (CAFE), a statewide membership organization of low wage working families, developed a code of standards for temp agencies. The state government is the largest employer of these temp workers.

Bergen County Employment Action Project, a union backed non-profit organization in New Jersey, coordinated efforts to develop and promote a voluntary code of conduct for temporary agencies that it says will address injustices faced by the increasing population of temp workers.  The code calls for a "living wage" and a generous benefits package, including insurance, paid vacations and increased training for New Jersey temps.[71] New Jersey Temp Workers Alliance drew up 24 “Principles of Fair Conduct” and invited all 500 temp agencies in the state to sign in 1997.  Thirty-two New Jersey temp agencies have signed the code.  9to5 and the Massachusetts Campaign on Contingent Work have also developed codes of conduct for flex work.

Flex workers are beginning to change the laws that make inequality for temp jobs legal. In Rhode Island, low wage workers officially classified as temps routinely work for years in the state's factories doing jobs formerly done by workers classified as permanent employees. Agencies fail to tell them their job descriptions, pay rates and work schedules. The temp workers joined the statewide United Campaign for Permanent Jobs and the United Workers Committee of Progresso Latino.  By involving unions, churches and community groups, they won legislation requiring agencies to provide temps with essential information about their jobs.[72]

Massachusetts temp agencies tried to change the law so that the state's more than 70,000 temporary employees could be more easily prevented from collecting unemployment benefits when their jobs came to an end. Massachusetts Campaign on Contingent Work mobilized temp workers and other activists, and succeeded in saving temps' rights to unemployment compensation.[73] 

In northeastern Massachusetts, the Merrimack Valley Project (MVP) has organized hundreds of workers, mostly immigrants, to press the mayor of Lawrence to establish an Employment Rights Commission.  MVP is organizing a "workers' congress" where a Temp Workers' Bill of Rights will be adopted and an organizing campaign established to pressure temp agencies, client employers, and public officials to sign the Bill of Rights.[74]

In New York City and elsewhere, immigrant garment workers work for undercapitalized fly-by-night contractors who close business with no notice, leaving workers unpaid. The garment workers brought suit against the manufacturers for unpaid overtime wages.  A group of over 500 grocery delivery workers from African countries recently filed a similar lawsuit against major grocery and drug store chains and against their delivery contractors for the workers' unpaid minimum and overtime wages.  Grocery delivery workers made as little as $1 an hour working 80 hours a week. The National Employment Law Project represented both groups.[75]

Tennessee Industrial Renewal Network (TIRN) has worked over a decade with flex workers, and has pushed state legislation to end abuses in the temp industry.  TIRN is currently involved in living wage campaigns in Knoxville, Nashville, and the University of Tennessee.[76]

LEGISLATION

Legislation is another opportunity for flex workers to advance their agenda. Washington State House Bill 2756, drafted by WashTech and sponsored by Rep. Steve Conway, aims to force temp agencies to disclose to their workers how much they charge employers per hour for their services.  In Maine, the Labor Committee is considering a bill that would prevent companies from hiring temporary workers for more than 90 days unless the worker is replacing someone taking leave under the Family and Medical Leave Act.[77]

There is a thirty-five group umbrella coalition called the National Alliance for Fair Employment that promotes a flexible range of solutions. On their legislative docket are: the Massachusetts Workplace Equity Bill, sponsored by dozens of state legislators, which would require equal pay and benefits for flex workers who do the same work as permanent employees; congressional measures authored by Illinois Representative Lane Evans that would prohibit companies from cutting flex workers out of pension plans, extend health and safety protections to temps and outlaw pay discrimination against temps; and Washington State’s Employee Benefits Fairness Act of 2000, which would ban “permatemp” strategies of misclassifying employees as temp or contract workers which denies them benefits such as paid leave and stock discounts.[78]

Korean Immigrant Workers Advocates (KIWA) is part of Sweatshop Watch, a statewide coalition in California that helped pass AB633 or the Wage Guarantee Act, which holds manufacturers responsible for unpaid wages of garment workers, many of whom are contingent workers in subcontracting shops. It also is working with immigrants who work as janitors and are forced to pay an "up-front" fee of up to two and half months' salary and accept independent contractor status.[79]

LITIGATION

Government agencies are also filing litigation on behalf of workers in flexible jobs.  The Department of Labor, in October 1998, filed suit under the Employee Retirement and Income Security Act (ERISA) against media giant Time Warner, challenging as illegal the company's misclassification of hundreds of workers as independent contractors or temporary employees.  Affected workers were photographers, writers, news stringers, and artists who freelance for publications such as Time, People, and Sports Illustrated.[80]

"Permatemps" have also won precedent setting lawsuits recognizing their employee status against the city of Seattle; King County, Washington; and Microsoft. Unions have won similar battles with Harvard University, city of Madison, Wisconsin, and Santa Clara County, California.  Legal battles are pending against ARCO, Los Angeles and other employers.[81]

ACADEMIA INITIATIVES

Harvard University[82]

In addition to its regular workforce, Harvard University employs, in any given pay period, between 1,200 and 1,500 “casual” or flex workers who work less than half time or for periods of less than 3 months. Three-quarters of these workers are students, retirees, or people supplementing income from other jobs.

All regular employees receive health insurance subsidized by the University.  Limited regulars who work half time or less and “casuals” do not receive University subsidized health insurance.  Three quarters of the companies that contract for service work on the Harvard campus provide health insurance to their full-time workers. None provide health insurance to part time workers.

Harvard University’s President Rudenstine appointed the Ad Hoc Committee in April 1999 and asked it to review the University’s current policies with respect to its flex workforce and to make recommendations as necessary. 

The committee recommended that the University extend eligibility for subsidized health insurance to service employees who work a minimum of 16 hrs per week.  Currently to be eligible for benefits, a service employee must work more than 20 hours per week.  This change would give those who work at least 2 days access to health insurance.  The committee recommends that these workers be included in the current University health plans, paying the same rates as other eligible employees.

The committee recommended further that the University adopt guidelines specifying that its hiring managers should decline to contract with outside service contractors employing more than 20 employees, for contracts of $50,000 or more, extending for nine months or more, unless such companies offer subsidized health coverage for all Harvard based employees who work 16 hours per week or more.  Such insurance should be provided either in unionized settings, consistent with industry-wide union benefits programs, or in non-unionized settings, equal to the health coverage provided for the company’s full time employees.

Among the employees who would benefit are 247 limited regulars who work at least 16 hours per week, and part time employees of outside contractors (approximately 500 per year). Cost would be approximately $500,000 per year for limited regular employees, or $2,000 per employee per year.

Urbana-Champaign campus of the University of Illinois[83]

Students enrolled in credit courses and in attendance on the Urbana-Champaign campus are assessed two health fees: one covers health service at the McKinley Health Center and the Counseling Center, and the other provides group health insurance. Spouses of Urbana-Champaign graduate and professional students may pay a fee allowing them to use the services of McKinley Health Center, providing they have the following criteria: 1) they have health insurance that covers medical care McKinley does not provide (such as hospitalization, specialty health care, and emergency department visits) and 2) they meet the University’s immunization requirements. The fee provides access to the primary outpatient medical care, psychiatric services, and preventive programs provided by McKinley.

The University Student Health Insurance plan provides worldwide coverage.  The plan is independent of McKinley Health Center and benefits are not contingent upon McKinley Health Center referrals.  Fee for the plan is automatically assessed along with other tuition and fees.  For dependent coverage, the student must be insured under the Student Insurance Plan, and must be enrolled for each semester during the enrollment change period.  Insured students who will not be enrolled for the next term may elect to continue coverage for the next subsequent term.  Upon graduation, a student may continue coverage for two subsequent terms, but coverage must be applied for at the time of graduation.

 

 

ORGANIZATION INITIATIVES

Working Today[84]

Working Today is a national nonprofit membership organization promoting the interests of America's independent workforce-freelancers, consultants, independent contractors, temps, part-timers, the self-employed, and contingent employees-through service, education and advocacy. It focuses on harnessing affordable and portable healthcare and other benefits for New York’s self-employed and other independent contractors, while advocating policy reforms for its members nationwide. 

Its members now total over 93,000 and range from low-income contingent workers to high-income consultants. Members join either as individuals or through one of the 26 organizations that have signed on with the Working Today Network to date. Working Today offers members access to health insurance, discounts on dental and alternative care, and free consumer-oriented legal, tax, and retirement planning advice.

Working Today claims 60,000 members from more than 18 professional groups, including Asian Women in Media, the Computer Game Developers Association, and the Society of Telecommunications Consultants. By paying its $10 membership fee, workers get discounted rates on health insurance, office supplies, computer software, and airline tickets. New Yorkers who join Working Today, for example, can buy a package including drug, dental, vision and life insurance with a $1,000 deductible for $255 a month. Membership also includes a prepaid legal plan.

Its policy agenda for independent workers includes tax reforms that would allow all parties to deduct 100% of their health insurance premiums from their taxes; legislation that would allow nonprofits, worker groups, churches and CDCs, among others, to create savings plans for independent workers for retirement, education and training, asset building, and times of unemployment; protection under anti-discrimination laws, and more.

Working Today currently offers access to a health insurance plan to members in downstate New York who are independent contractors or small business owners. The plan is offered through Group Health Incorporated (GHI) and includes doctor and specialist visits, prescription drugs, and hospitalization and emergency room services.

Working Today launched a Portable Benefits Plan pilot project to help independent workers build a safety net. It designed the plan to provide new media freelancers with access to affordable, high-quality health insurance, dental discounts, retirement savings plans, and more. It hopes to accomplish this by mimicking aspects of the employer based insurance system, particularly by bringing independent workers together as a group and thereby diversifying the risk pool. 

The fund will allow workers to keep their benefits as they move from employer to employer and project to project. It will also make it easy for employers to contribute to a health insurance or retirement plan, thereby increasing the security of free agents. In May, the World Wide Web Artists Consortium, New York's most prominent new media, joined the Working Today network.

Working Today has received funding from both the State of New York and the City of New York to develop the model.  Portable Benefits Plan also has received funding from the following foundations: Altman, Elebash, Ford, JP Morgan, New York Community Trust, and United Hospital Fund.

Their strategy is to help organize freelancers so that they function as a group in order to contain risk in the individual market.  The approach is to allow freelancers access to the plan after they have been dues-paying members of participating associations for a minimum number of months or have freelanced for a participating employer who can verify a minimum amount of work within a given period of time. Reentry requirements, such as a waiting period and an increased application fee, are set for people who have dropped out of the plan and wish to join again.

SAG and Construction Worker Trusts[85]

Free-lance workers are prevalent in the film production and construction arenas. Members of the Screen Actor’s Guild (SAG) need to earn only $7500 in a calendar year to qualify for full health benefits for the entire subsequent year. SAG also provides very generous pension benefits. In order to pay for these services, SAG contracts stipulate that producers must pay a large surcharge, which amounts to as much as 30 percent of an actor’s base pay, into the Guild’s benefits fund. The problem is that employment in the entertainment industry is highly cyclical, and this translates into very low coverage rates for guild members. 70% of AFTRA members and 66% of SAG members are not covered by their union's plan.

Construction workers are also typically employed on a project basis, often moving from firm to firm when they finish one project and go to the next.  Construction trade unions offer their members fully “portable” health and pension benefits.  Members can maintain one health plan and continue paying into the same pension fund, regardless of which firm employs them on a particular project.

National Association of the Self-Employed (NASE) [86]

The National Association of the Self-Employed (NASE) offers health insurance and other benefits to its members at highly competitive rates. NASE endorses several financially strong insurance carriers that offer a variety of products and plans customized to meet the needs of the self-employed individual or small-business owner. The self-employed lose very few workdays to illness and thus constitute a very attractive pool for health insurers.

STATE INITIATIVES

New Hope

New Hope is the anti-poverty demonstration project in Milwaukee and encompasses a health insurance component.[87] The model expects all participants to contribute to their health insurance costs, regardless of their income level.  Although the contribution can be as low as $6 per month, the intent is to hold participants responsible for meeting their own needs in a way similar to that of working people outside the program. It requires that participants contribute towards program benefits; the comprehensive model ensures that if they consistently meet the 30-hour work requirements, they will be able to provide coverage for their families.

Requirements for health coverage are: the family must be enrolled in the New Hope project, must work at least 30 hours each week, and the family income must be below 150% FPL.  New Hope covers all members of a household, both adults and children through age 19 (or age 25 if the dependent is a full time student). It combines multiple benefit packages, including the Earned Income Tax Credit, childcare supplements, health care supplements, and a New Hope Income Supplement, at graduated levels, to participating families.  The extent of these benefits depends upon the current family size and income of the participants.

Washington-Basic Health Plan

Washington State’s Basic Health Plan provides a no-frills package of health care benefits. Residents with incomes at or below 200% FPL can buy into the Basic Health Plan with the government providing a sliding scale subsidy. 

Guild Coverage[88]

Since temporary professionals like the Microsoft "permatemps" described earlier share the same occupation if not always the same workplace, some in Silicon Valley are proposing to resurrect guild coverage in which new unionism would center on the job rather than the job site.

Guilds could provide a stable home for their members as they move from job to job. One of the most important services guilds could offer to American workers would be access to health insurance at reasonable cost; they could accomplish this by bringing their members together to create risk pools of their own, which will allow for the purchase of group health coverage at more competitive rates. 

University alumni associations have long provided placement and professional networking services, and many now offer their members access to life insurance, low-interest credit cards, and investment advising.  It is not difficult to imagine them extending health coverage, continuing professional education, and possibly other employment based benefits to the components of the flex workforce.

These guilds would likely emerge out of self-selecting groups of workers who come together based on affinity-for example, those who have the same profession, have shared similar experiences or live in the same area.  Among the organizations most likely to emerge as guilds are those based on occupational bonds: professional societies and labor unions.

Guilds can subcontract to third-party companies for health insurance and retirement benefits in order to create larger actuarial pools and achieve administrative scale economies.

Significant obstacles to widespread adoption of the guild concept are the tax and insurance codes which do not treat other forms of insurance with the same protections and benefits as employer subsidized coverage.  Without a level playing field, flex workers will continue to be at a disadvantage. 

CALIFORNIA MODELS

There are various efforts throughout California from employers, unions and health plans to cover the flex workforce. These efforts are mostly organized by occupation into the following broad categories: agriculture, small business, child care, construction, entertainment, home care, nursing, public work, Taft Hartley trusts, and temporary work. We interviewed individuals associated with those efforts and asked them to describe their own projects as well as provide us with recommendations on steps they would suggest to cover the flex workforce.

AGRICULTURE[89]

Western Growers Association

Among associations providing coverage to agricultural employers and employees, the largest is the Western Grower’s Association. About 75% of WGA members use WGA to purchase coverage. Western Growers Association will cover any type of flex worker: seasonal, temporary, part time provided they are working at least 20 hours a week). The employer, however, makes the decision to define the classifications of workers to be covered. If an employer chooses WGA, qualifying criteria for the workforce are specified at the time of sale.  Employers pay monthly for those seasonal or part-time workers to be covered; typically this means each month’s eligibility is based on the worker's prior month’s earnings. To avoid adverse selection caused by high employee premium contributions, WGA specifies that 75% of employees and dependents must be covered.

Employers must be members of Western Growers Association to participate in the MEWA. There are 3 categories of membership:

·      Regular members must be growers, shippers, and packers, and must pay an annual membership fee of $250 to receive all services of WGA: legal services, legislative representation, workers compensation and health insurance (must pay premium themselves). 

·      Associate members must be in services directly related to fresh produce (i.e. purveyors of seed, pesticide, and water); they pay a $250 annual fee as well as a monthly fee per negotiated package. The monthly fees end up being approximately $1000 a year.

·      Affiliate members are service providers to Western Growers members (i.e. mechanics, wineries, and even lawyers); they only receive insurance services.

WGA has 3,300 members and150, 000 lives covered. Soon it will be growing to 4,000 members due to mergers with other agricultural associations. A majority of members are rural small businesses that the other plans and brokers do not court aggressively.

WGA is a state licensed MEWA (multiple employer welfare arrangements) and did not find the licensure procedures onerous; however, the growing number of state and federal mandates are problematic in keeping premiums affordable. For example, due to AB 88 (mental health parity), plans report experiencing a 3-5% increase in rates. ERISA self-insured plans are able to provide equivalent coverage at a better price than through state licensed MEWAs due to lack of state mandates.

WGA offers transitional coverage to employers, which will cover seasonal workers during lay off periods (up to 6 months); the employer makes the payment. This option is not utilized very much. Continuity of employee coverage is not a problem as long as the seasonal worker goes from one WGA member employer to another. The field hand package is the most popular for the seasonal workforce. Field hand packages are all comparable; they include podiatry, chiropractor, prevention, low copays and a low annual cap. COBRA coverage can be quite costly. It is now required to be all or nothing coverage; the employee has to take the total package of medical, dental and vision benefits or no benefits at all.

SMALL BUSINESS AND THE FLEX WORKFORCE[90]

California Small Business Association (CSBA) is a non-profit association encompassing over 185,000 small employers (average size is 16 employees). It is both an advocacy organization and a service organization for small businesses.  CSBA’s immediate goal is to increase coverage for uninsured dependents of full time employees, not flex employees. CSBA's studies suggest that many small businesses cover their workers, but not dependents.[91] Recent studies suggest a significant increase in small businesses offering coverage.[92]

In CSBA's experience small business' priority is coverage for full time employees, first before part time. While the flex workforce is essential to small employers, their health insurance is a lower priority than full time employees and their families. In CSBA's experience, small business uses temps and part time workers, but not seasonal, provisional or contract workers who are more typically used by large business.

Consultants and other self-employed individuals are not CSBA’s constituency. Health insurance is a much higher priority for the self employed (1.5 million) than for part time workers who often are covered as dependents. CSBA does not do outreach to the self-employed, and suggests that the best way to cost effectively market to the self employed is through the web.

 

HEALTH PLAN EFFORTS

LA Care is the Local Initiative providing managed care to over 600,000 Medi-Cal enrollees in Los Angeles County. LA Care is an amalgamation of six different health plans serving the Medi-Cal population. They have been developing a medical access card, which affords the uninsured access to care at discounted prices, and think it’s a bridge to a product for the working uninsured. The medical access card will debut January 1, 2001. Their eventual target is coverage for unbenefitted workers, and they want to develop a low cost product. [93]

Sharp Health Plan is a San Diego based health plan, which has been operating a subsidized product for the uninsured (FOCUS); it has attracted considerable local interest from uninsuring employers. The subsidy is quite extensive, averaging 50% of premium. In Sharp's experience the market demand has not yet developed for coverage of the flex workforce. The plan is not seeing the demand for coverage for or from this workforce. Most of the demand is associated with the full time employees whose employers do not offer coverage. 

In Sharp’s experience, employers are not interested in covering flex workers, and this is not going to change. Marketing to uninsuring employers of the flex workers is too difficult; so they suggest marketing to the uninsured flex workers, which requires an individual product.  Sharp is seeking DOC approval of an individual product in the fall. 

The first step in covering the flex workforce is identifying the population: where do they work and in what configurations. Most likely they work in retail, restaurants and include high proportions of students working and going to school.  As the information base increases, follow up focus groups and questionnaires at work sites will be needed. [94]  

 

CHILD CARE WORKERS[95]

Licensed child care providers are a mostly female work force who are employed in either a day care center or a family home. There are approximately 200,000 child care providers in California in both family and day care center settings.  Family home child care is delivered in a home setting with 1-2 child care providers. Child care centers are larger averaging 6 employees. Child care providers lack insurance at the rate of 16% for center staff, and 21% for family home providers. Of those who have insurance, only 55% of family providers and 38% of center staff cover the entire family.

 

San Francisco Family Child Care Workers[96]

In fiscal year 1999-2000 the City and County of San Francisco allocated $250,000 to cover uninsured child care workers. An estimated 150-200 individuals will be eligible for subsidies to offset the cost of health plan premiums.

Any family child care provider or child care center can participate. A premium subsidy is available to uninsured child care providers who meet specific criteria. Phase 1 of San Francisco's plan extends premium subsidies to the uninsured in family child care homes. Phase 2 will extend premium subsidies to the uninsured in child care centers.

The qualifying criteria for the subsidy in Phase 1 are 1) the individual must be uninsured, have income above MediCal and less than 250-300% of FPL, and 2) must be a self employed family child care provider or an employee of a family child care home working at least 30 hours per week. Phase 2 will extend the same criteria to uninsured child care center employees.

·      In Phase 1, the subsidy is 2/3rds of premium; the individual pays 1/3 of premium. Average pmpm is $183; an individual’s premiums are based upon a composite rate. The expected number of subsidized participants when Phase 1 is completed is 400. 

·      In Phase 2, the public's subsidy will be 1/3rd, the center will pay 1/3rd and the uninsured employee will pay 1/3rd. The expected number of subsidized participants in Phase 2 is 500. Another 1,500 individuals will be eligible to buy in for coverage, but will not be eligible for subsidies.

SF Health Plan (SFHP) will recruit eligibles, determine eligibility, administer and receive premium subsidies. They are collaborating with SF Family Day Care Assn. (SFDCA) who assists in identifying the market, sending out newsletter and mailers and making follow up phone calls.  SFDCA and SFHP will determine eligibility for subsidies. Financial eligibility will be assessed using tax forms. Length of eligibility will be based on eligibility recertification every 6 months. Only the individual is eligible for the subsidy, the individual can enroll eligible children in Healthy Families or can enroll other dependents by paying 100% of premium.

Plan has limited copays and comprehensive benefits, including dental and vision. Provider network will be as broad as possible, consistent with an affordable package. Knox Keene approval is pending and is anticipated to be complete by December 1, 2000. Coverage will be offered through an individual plan, not an association plan. While they are working with SFDCA, the members will be covered as individuals, not as assn. members. There will be no underwriting of child care providers to protect against adverse selection; however, the family home must be in the child care business and operating at least at 65% of licensed capacity.

Community Health Group[97]

Community Health Group (CHG) is a non-profit HMO based in San Diego. CHG got its start in Medi-Cal, then moved to covering the uninsured, and is just beginning to cover the flex workforce.

One target for CHG is those uninsured child care workers working at least 20 hours per week. They are proposing funding for a pilot project to the county Prop 10 commission. The proposed employer contribution will be a flat percent of payroll – e.g. 3%. Employee contribution could be either $20 pmpm or 20% of premium. Healthy Families coverage will wrap around to cover the family's children.

It will be the employers’ decision as to when coverage -- 30, 60 or 90 days after employment. If CHG can enroll a large number of centers, they will be able to provide continuity of coverage for child care workers changing jobs.

San Diego Educational Association for Young Children (SDEAYC) will help with the marketing. Either the county or SDEAYC will administer the subsidy. Proposed funding includes $300,000 for uninsured child care center employees and $300,000 for uninsured family home providers. Family home care providers will be subsidized to purchase individual coverage, and uninsuring child care centers will be subsidized to purchase group coverage.

CONSTRUCTION WORKERS[98]

McGregor, Van De Moere is a nationwide employee benefits consulting firm based in San Diego. Their efforts to cover the flex workforce include construction, realtors and domestic workers. They are making little headway on health coverage for domestic workers due to the lack of a subsidy source.

They are working on coverage options for 10,000 uninsured roofers, who typically make $8-9 an hour. Current plans are to offer the employees a choice of two benefit packages: the low cost plan has 70/30 split with an out of pocket maximum of $1000.  It costs $80 pmpm. This is the plan of choice for roofers below the age of 30. The high cost package would offer 100% HMO coverage and costs $150 pmpm. McGregor, Van De Moere recommends using the same carrier for both packages, as the carrier will get both the good and bad risks and is willing to negotiate a favorable composite rate.

Plans for construction workers often split the workforce between higher and lower risk workers -- based in part on employee ages and their occupational risk or hazard. For example there may be a higher cost plan for the commercial construction workers, who are older and work on more hazardous high rises, and a different and lower cost plan for the residential construction workers, who are younger and work on homes.  For the same reasons of risk and its impact on premiums, roofers and metal workers are typically in separate plans. Occupation is quite significant in assessing premium cost in the construction industry.  It is important to note that as the covered groups expand to bring in older workers, premium costs will go up for the younger workforce to cross subsidize an older and often better paid workforce.

ERISA trusts: McGregor, Van De Moere recommends use of an ERISA trust mechanism. Trusts may be unfamiliar ground for some carriers, but they are easier for carriers as they bypass state mandates.

The trust’s strategy for purchasing coverage is crucial; health plans want 100% of a purchaser's business and do not want to share the market with other plans. A plan may offer two benefit packages: a higher cost plan with $10 copays and a more affordable plan with $20 copays, as long as the carrier keeps both benefit packages in house, it does not suffer adverse selection in competing with other carriers.

Plans will waive their hourly requirements, which screen out part time workers if the employer will offer the same percentage of premium for all covered workers and open coverage to all part timers regardless of hours. It is essential that the employer contribution (e.g. 80% of employee premiums) is the same across the board.

Realtors can be difficult to insure because they combine three different workforces: the realtor and paid staff, the brokers and the sellers. The realtor’s association uses an association mechanism to purchase coverage; it pays 100% of premium for salaried employees and 50% for “1099” sellers; the plan covers about 1000 persons. Many of the sellers are older women past child bearing age who may find individual coverage unaffordable or unavailable except through the realtor’s association.

Construction trusts are comprised of several classes of employees: the hourlies, the office workers, supervisors, foremen, and the owners. There may be two benefit packages, one higher cost for more benefits and one lower cost with fewer benefits, for workers to choose. Some employers use two premium contribution levels: e.g. 80% and 100%; on occasion, higher wage workers receive the higher employer contribution in order to assure retention of key employees. 

The structural challenges of covering flex workers can be resolved with ERISA and Taft Hartley trusts.  Trust advantages:

·      Saves costs for employers

·      Avoids state mandates

·      Provides hour banking services

·      Reduces employer paperwork and administrative burdens

·      Avoids deep pockets liability for plan choice; trust is liable for everything, not the employer

Trust structure is able to assure continuity of coverage:

·      Does hours banking

·      Mitigates impacts of a change of employers: e.g. residential dry wallers have 30% transient workforce, but they all stay within trust and thus coverage is maintained.

·      Waivers of coverage can be more easily cross checked in larger purchasing entities

This helps employers be competitive in attracting and retaining employees, and allows employees to retain continuous coverage. Once the whole family is covered, the employer and the employee are not going to drop coverage, and the employee is not going to leave this job. Coverage is far more important to women employees and the spouses of male employees.

There are three somewhat different trust structures:

·      ERISA requires a non profit entity, fiduciary trustees, and annual audits. 

·      Taft Hartley requires a voting block that is 1/2 labor and 1/2 management. 

·      San Diego schools participate in a VEBA, a Taft Hartley with tax protection. 

McGregor Van De Moere believes that as a result of ERISA, non union employers are able to get better benefits than union based employers and employees. For example, McGregor Van De Moere recently cut the premiums in half for one company by using a trust. The employer is turning the savings into improved coverage, including dental, life insurance and vision benefits.

While many HMOs are leaving these markets, Community Health Group (CHG) is now bidding on coverage for construction trusts.

ENTERTAINMENT INDUSTRY[99]

The entertainment industry employs about 500,000 individuals in Southern California. A surprisingly small share (between 1/4 and 1/2) work for the major studios and networks, between 1/2 and 3/4 are flex workers. Many of the flex workers are members of the Actors, Writers, AFTRA, IATSE and Directors Guilds and receive their benefits through the unions. Many also work for very small companies. In Southern California, 92 entertainment companies employ more than 100 persons as compared to 4,500 companies employing 4 or fewer and 325 companies employing 5-9 employees.

The problem in maintaining health insurance in the entertainment industry is the highly cyclical, boom or bust nature of the work and the frequent shifts of employment. This translates into workers who go off and on their unions’ health programs. In order to assure continuity of coverage, the union plans set the income earnings qualifying thresholds quite low --$7500 for SAG and AFTRA, $24,000 for DGA. In addition, there is cross subsidization from the higher to the lower earning guild members. The intergroup subsidy is extremely important -- high wage earners in a given year subsidizing low earning actors, writers and directors in a given year – because of the boom and bust nature of entertainment industry work. Despite these and many other creative solutions within the entertainment community, many writers, directors, actors and other entertainers still go on and off coverage. 70% of AFTRA members are not covered by their union plan and two thirds of Screen Actors are not covered by their union’s plan. Half of DGA and Writer’s Guild members are not covered by their union plan.

A survey of entertainment industry employers found most (90%) were small businesses (2-50 employees). Of these small businesses approximately 50% offered heath insurance coverage. A survey of individuals showed two thirds were insured and one third were not. Of the insured, half were self-purchasing and half were covered through the industry’s plans. At a given point in time: 20% of the individuals in the entertainment industry were working full time, 30% part time, 20% free lanced and 16% were between jobs.[100]

HOME CARE WORKERS[101]

Many of California’s home care and domestic workers are uninsured, low wage workers. They work varying hours depending on the needs of their patients (clients) and the authorizations for services of the county IHSS program. Funding for home care workers under the In Home Supportive Services (IHSS) program is a mix of state, federal and county funding. Home care workers are considered independent contractors. The state of California has authorized counties to set up authorities to serve as employers of record to purchase coverage for IHSS workers. San Francisco County was the first county to develop coverage for county IHSS workers.[102] Health care carriers are often reluctant to offer a plan for domestics because they are perceived as a high risk group (95% are middle aged women, low education, low-income, no checking account, etc.).

Santa Clara Valley Health Plan

Santa Clara Valley Health Plan is a health plan for Santa Clara County employees that also play a major role in providing Medi-Cal and Healthy Families coverage for the beneficiaries of public programs. Santa Clara Valley Health Plan is developing coverage for home care workers in Santa Clara County through the AFL-CIO Local #715.

There are 6000 registered IHSS workers in the county. The county set the eligibility threshold to qualify for coverage at 35 hours per month. 1500 meet the required hours threshold.  Workers' hours vary widely from month to month and due to reporting lag times, it takes up to two months to find out that an individual no long meets the hour qualifier. The county uses a worker's average monthly hours to allow workers to remain eligible and extends one month of grace period for the worker to catch up on eligibility. Out of the potential 1500 eligible uninsured home care workers, 500 have enrolled. Some are MediCal eligible themselves. The on and off problem is difficult for the health plan to administer and for the workers.

The demographics of the IHSS workers are mostly Vietnamese, Chinese, eastern Europeans, and Hispanics.  As a result SCVHP needs different language services to communicate, needs medical services through ethnic doctors, and needs to translate their written materials into new languages. 

Funding for the premiums is $3 million of which part is federal matching, part state contribution, part county tobacco settlement and part a worker $7 a month share of premium.  The premium subsidy is delivered through the public authority (county Administration on Aging), and they deduct the worker’s contributions of $7 per month.

Program administration involves the county Administration on Aging (AOA), county benefits department, the union, social services, county health plan and the client. The union is actively involved in project; however, the county health plan and AOA handle most of the administration.

The provider network includes county hospital and clinics, community clinics, and Vietnamese and Chinese doctors. No underwriting is used although the age of workers is older. The premium payment is a composite rate. The health plan has not favored reduced or alternative benefit packages, believing those efforts are not effective, instead they provide a full scope of benefits.

Home Care Workers in Los Angeles County

Michael Cousineau has researched coverage for home care workers in Los Angeles County and made a series of recommendations for coverage.[103] The county has not adopted these recommendations; however they do serve as the basis of SEIU's negotiations with the county to cover the up to 70,000 IHSS workers who have joined the union. Cousineau found that in Los Angeles setting eligibility qualifications at 25 hours per month would cover 80% of IHSS workers. His research found that 50% are relatives of the patient, 80% of the workforce are women and many are middle aged (45-65) mostly working with those who have chronic illnesses.

Cousineau recommended financing for a premium subsidy could come from existing county spending matched by the state and federal Medicaid match for IHSS services.  The employee would pay $3 per month for coverage, with the duration of eligibility for 3 or 6 months.

Cousineau recommends the state MRMIB for administration of coverage statewide. However the Governor has taken the position that coverage is at county option and approved a financial matching incentive for the counties. Cousineau believes that local programs such as Cal Optima, or LA Care, San Diego County Health Department or Los Angeles County Department of Health Services and the Governing Board of Personal Assistants could serve as the purchasing entity or health plan for IHSS workers. In Los Angeles, he points out that LA Care could combine with one of its plan partners, or could use its own Healthy Families network. 

Under Cousineau's recommendations, there would be no underwriting exclusions. Benefits would be standard: medical, hospital, dental and prescriptions. The state could act as catastrophic payor of last resort/reinsurer.  The provider network must be geographically close to the enrollees, and have a mix of public and private providers to meet the preferences of enrollees. It could include clinics, private doctors, a broad medical network and a narrow hospital network.

SEIU: Home Care Workers/Janitors/Public Employee Temps[104]

SEIU has been involved in efforts across the country to cover home care workers, janitors, part time workers and temps in the public sector.  Two thousand temps are part of the Los Angeles County workforce, including cleaners, clerical, service, maintenance, for the most part, they are in low end, less skilled and entry level positions. SEIU and AFCSME have been involved in union organizing and bargaining with the County of Los Angeles to cover these workers for health insurance to the same extent as the rest of the county's workforce.[105]

Home care workers are classified as independent providers, self employed, contractors -- albeit with public funding. Their wages average about $7 an hour and their hours vary depending on the needs of their clients and the authorizations of the county social services worker. To solve the affordability problem for home care workers who can afford very little or nothing out of pocket, there must be both an employer of record to collect the premiums and purchase coverage and a public funding source to pay the premiums.

New York home care workers for example are covered through a Taft Hartley Trust. The state pays $1.12 an hour into the trust, this in turn increases the Medicaid rate for home care, and the federal government pays half the premium through the Medicaid match.  Those working at least 80 hours a month are covered. In New York, unlike CA, home care workers are mostly full time. Home care workers cycle on and off the trust in New York, and then the workers cycle on and off Medicaid as well. This puts financial pressure on the financial stability of the union's Taft Hartley fund. In response New York has created a new entity: Health First, which will provide bridge, transitional coverage, using the COBRA mechanism and financed through Medicaid to assure continuity of coverage. Eventually the state's Child Health Plus programs and Family Health Plus will contribute to subsidize coverage as well, the provider network uses only unionized facilities. The benefits are good; the plan does not cover long term care.

In Los Angeles, the state is only contributing 60¢ an hour for health coverage of home care workers. The County is resisting paying its share; many of the workers are part time, and there is no effective structure yet in place for purchasing and administering coverage.

Janitors[106], on the other hand, work for private contractors of the building owners; many work part time, and they are a predominantly immigrant workforce. Coverage of janitors is a purely private transaction; there is no government subsidy, except through the tax system and this is of little benefit for low wage workers. The organizing alternative is to target the building owners, who often have far more substantial assets than the janitorial contractors do. The unions use a Taft Hartley fund and vary the benefit package to keep it affordable. Coverage in the union contract costs about $1 or $1.50 an hour.

Family coverage is very expensive, and the janitors must use S-CHIP (Healthy Families) as a wrap around to cover dependents. Immigration issues however pose a huge barrier to the use of public programs. In CA, the opportunities to wrap around Healthy Families have not been good due to immigration issues, non-responsiveness of MRMIB to unions and employers and the complex application process. Instead the union has sought family coverage through negotiations, pressure and collective bargaining with the employers.

The private coverage model has worked well for full time janitorial workers, but the employers (contractors) may then switch their employees to part time. This model is working well for unionized janitors in New York City, Denver, Washington DC and LA. New York City offers the best coverage and benefits because of the extraordinarily high value of Manhattan office buildings. 

NURSING REGISTRIES

Hospitals use registries for nurses, therapists, lab tech. pharmacists and pharmacy tech. Registries consist of full time employees moonlighting in part time capacities. Full time employees comprise over 70% of registries. The other 30% typically have coverage through spouses or individual coverage. Registries do not ordinarily buy health insurance for nurses, etc. Sharp Hospital's nursing registry offers benefits; their coverage would be more affordable if contributions were tied pro rata to hours worked. 

PUBLIC WORKERS[107]

Jerry Levey and Associates is a benefits consulting firm, specializing in representing unions. They are seeking to cover school union members without coverage due to lack of an employer contribution.  This includes teachers in public and private schools and community colleges. Many teachers are teaching part time and not eligible.  They are also interested in coverage for uninsured non union employees of employers with union contracts

They recommend a benefits package that would emphasize low copays for prevention services and higher deductibles for high cost services such as hospitalizations. They are still in discussion with health plans for an affordable product, but have no takers as yet. They are discussing the use of unilateral trusts (i.e. no employer contributions or participation) to cover these teachers with Department of Labor.

They need to develop a premium subsidy from government agencies for uninsured teachers with incomes over 100% of FPL and under 300% of FPL. The teachers would part pay premiums on a sliding scale basis between 100% and 300% and pay the full cost of premium above 300%. Teaching hours to qualify should be flexible, but should average 20 hours a week to qualify.

SEIU Local 99 consists of school employees other than teachers.  Many of its union members lack health benefits because they do not have sufficient hours to qualify for employer contributions towards coverage.  A majority of those unbenefitted are the cafeteria and playground workers who are paid $7-8 an hour. Both part time and sometimes seasonal employees lack coverage.

Local 99 has worked with Kaiser Health Plan and Blue Cross to develop affordable coverage. The MediFam limited benefits package developed by Blue Cross did not have much appeal. Local 99's experience is that limited benefit plans should be avoided, as the participation will be minimal.

SEIU’s experience with its uninsured members is that one third are not interested, specifically the young. One third are covered through their spouse, and one third are desperately interested.  SEIU 99 Care uses the Kaiser plan; the plan costs $150 pmpm, including prescription and dental benefits. 300 of the 1200 eligible participate. 

Local 99's current proposal to the school district calls for the school district to contribute $1.25 an hour, which an unbenefitted employee can match to buy a district approved health plan. However the $1.25 can only be used for health benefits.

99 Care has proven very expensive to administer. Local 99 proposes to administer the purchasing entity to determine who is eligible, track the hours and collect the premiums while the district buys the coverage. There would be no underwriting, which could prove to be problematic; Blue Cross dropped its participation due to adverse selection. 

TAFT HARTLEY TRUSTS[108]

The Institute for Health Policy Studies examined the potential for using Taft Hartley trusts to cover the uninsured and concluded this was not a promising approach. Their rationale was that the trustees believed this was counter to their mission and their responsibilities to the union membership. 

Taft Hartley trusts are the result of unionization and collective bargaining. They are exempt from state regulation. Half the voting power resides with union trustees and half with management trustees. They have hours banking capacities and can serve a workforce drawn from multiple employers. They are very cohesive and there is little adverse selection. Employer contributions are typically high due to the collective bargaining process. Some plans allow individuals to self pay for continuation coverage when they are employed at less than the hours and earnings eligibility thresholds.

The largest plans are for commercial food workers, the entertainment industry, agriculture and the Teamsters.  Smaller plans exist for the construction industry.

IHPS recommended this structural model as a promising approach if modified to account for the lack of unionization and the need for public subsidies given the low wages prevailing among the flex workforce.

TEMPORARY WORKERS[109]

Working Partnerships was founded in 1994 under the auspices of the South Bay AFL-CIO in San Jose to address economic justice issues associated with the fact that 40% of the Silicon Valley workforce are flex workers, which is twice the national average. Working Partnerships' target is contingent workers, independent contractors, part time workforce, temp workers and those with individualized employment agreements.

 

Working Partnerships believes that the low wage flex workforce requires subsidized coverage. The higher income contingent workers, especially the independent contractors, could buy through an unsubsidized pool.

Working Partnerships’ first focus is coverage for clerical and temp workers. Those temp agencies that do offer coverage set high thresholds to qualify for example hours and duration with a particular employer must average 40 hours a month over several months for a particular employer. The employee shares of premium cost are high, while family coverage is impossibly expensive and quality of coverage and providers is poor.

Kaiser has offered its STEPS program through Working Partnerships. In order to qualify, you must be W-P Assn. member and registered with a temp agency. Premiums under STEPS are related to earnings, i.e. 20% of premium for the lowest wage workers in their first year of coverage, the it increases to 40% in the second year, 60% in the third year and 100% in the fifth year. W-P and Kaiser agree that the step increases will be unaffordable to workers and are developing an alternate premium subsidy approach, based on worker earnings.

W-P believes that it is essential to assure continuity of coverage; they urge that the standard to qualify for coverage should be consistent employment and meeting a particular earnings threshold over a year’s time even though the temp worked for multiple employers or multiple temp agencies.

WP has made a major effort to enroll eligible kids in M-C/HF. Healthy Families enrollment is difficult because of income limits and residency exclusions. Much of the Silicon Valley flex workforce earns over the 250% of FPL limit to qualify for Healthy Families. W-P is working with the Santa Clara Family Health Plans, the county and the city of San Jose to develop and fund coverage for all uninsured children in the county.

Union Privilege is an AFL-CIO benefits purchasing entity for workers without benefits in union sites.[110] Their target is temporary employees who are full time, but kept in temp status to avoid need to extend benefits. Another target is the part time employees kept below the hour’s threshold to qualify for benefits. They seek to develop a health plan, which meets the needs of these employees.

In Union Privileges’ view, benefits need to be limited and targeted to be less costly than those on the existing market are. Benefits should have strong prevention incentives and incentives to stop smoking and it should cover MD visits and prescriptions. While plans with large deductibles work for upper and middle income workers, they do not work well for low wage employees. The role for government might be to pick up catastrophic hospital costs as they do through Medi-Cal and county health programs in order to hold down premiums.

Union Privilege believes that if unions push for coverage, the unorganized sector will follow to avoid unionization drives. UP’s goal is affordable, accessible coverage with strong financial incentives for employers and employees to participate.

SHARP Health Plan recognizes that because temps work for several temp agencies at the same time, it will be key to pool funds and hours.[111]  This would aid the temp worker, as agencies cover them once they reach a set hour threshold – e.g. 230 hours.  The trick is to keep them covered; the workers have to maintain their hours once they meet the threshold.  Instead, many have fluctuating eligibility for coverage based on their fluctuating hours.

Marian Mulkey, California HealthCare Foundation studied temp agencies coverage of temp workers.[112] Her study interviewed 11 industry executives and leaders about their efforts to extend health coverage. Their observations were that temp worker industry turnover was high, employees’ interest was very low, temp wages were low making employee contributions unaffordable and for some Temp Agencies plan administration was difficult because temp workers’ participation and eligibility fluctuated greatly. The executives reported that employee interest was low whether the plan was full or limited benefits and whether the employee contribution was 100% or 50%.  The best opportunity to increase coverage was for high end, long term temps, who are less than a quarter of the temp workforce.

CALIFORNIA RECOMMENDATIONS

From the Field[113]

AGRICULTURE

50% of agricultural workers are uninsured and over 70% of Mexican nationals in agriculture have no coverage. To increase coverage of the rural uninsured flex workforce, we need:

1.     Financial incentives for employers to cover their employees; some of their employees are covered through state programs i.e. MediCal, Healthy Families.

2.     A level playing field between small struggling companies and large successful ones; we should consider setting health insurance premiums as a percent of compensation and as a percent of operating costs.

3.     Subsidies to cover low wage agricultural workers; refundable tax credits or vouchers are the best approach.

4.     An interface with Healthy Families to pay for dependent coverage.

 

FLEX WORKFORCE

Financing: In terms of affordability, financing must combine government, employer and employee resources. We need to treat flex workers equal to but not better than full time employees. We need a study on the amount of subsidy it would take to motivate employers and employees to respond.

Keep it simple: small employers want no more paper work.

Make the subsidy accessible: many of those that should benefit from tax credits would not qualify as they file short forms and have limited or no tax liability. Tax credits need to be refundable, timed quarterly or bimonthly, tied to the lowest cost plans and most efficient purchasing.

Individual Market Reform: There’s a need to reform the individual market. It may be more effective to cover parts of the flex workers as individuals rather than through their employers because individuals’ motivation to enroll is higher, and it would be easier to tailor benefits to their choices. If young healthy males want coverage for emergency services only, sell them at least that level of coverage at an affordable price.

An individual market reform plus vouchers with either a flat $20 or $40 or $50 premium may be the easiest way to reach low wage working adults. There is no stigma attached to a one page mail-in form with a recent pay check or last year’s tax return in order to receive a voucher.

Selling individual coverage through the web has the potential for the lowest overhead, much lower than adding in the costs of PacAdvantage or MRMIB and brokers. This low cost model has yet to be achieved. We should also use brokers, associations and government agencies, such as SBA and SBDC to reach these workers and businesses.

Underwriting: should be guaranteed issue and renewal, if feasible

Structure of purchasing: It is difficult to reach seasonal workers except through employers and associations. The web is not a good way to reach low wage, migrant and other low wage seasonal workers. Associations are critical to maintain continuity of coverage for flex workers with frequent changes of employers and hours. AB 1672, the underwriting rules for small businesses, favors long established associations over new associations by giving them greater protection and ability to secure favorable rates.

We need to make sure new associations get the same benefits/protections as old associations under AB 1672. ERISA trusts appear to be the best structure for employees who frequently change hours and jobs.

Long term funding principles: Due to the limitations on local finance, we should finance at the federal or state level, but we greater federal flexibility to organize and deliver coverage at the local level. California needs to seek §1931 funding and 1115 waiver to extend Healthy Families style coverage for working adults and parents.

1.     We need a payroll deduction option so employees can ask their employers to withhold the premiums and forward them to Healthy Families.

2.     We need the state legislature to flexibility to MRMIB to design a workable purchasing credit for employers and unions seeking to increase coverage of the flex workforce.

Further study: We need to better know the income and composition of flex workforce before designing subsidies.

CHILDCARE WORKERS

In order to cover the 20% of the child care workforce that is uninsured, we need sustainable funding and appropriate employer incentives for the state and local First 5 Commissions and the state agencies (Department of Social Services and Department of Education), which fund child care.

 

CONSTRUCTION WORKERS

For coverage of low wage flex construction workers, we need the flexibility to use more limited benefits -- e.g. full coverage for medical and prescriptions and $500 deductible for hospital care.  We need to use trusts to reach this workforce and administer coverage. The trust would determine eligibility and contribution levels.  The employers in the trust would be required to offer coverage for part timers and pay at least 70-75% for full timers.

A trust should negotiate a net rate with the carrier: take out 10% agents’ commission, the 7% for administration, and the administrative load on prescriptions. The trust would be responsible to handle that. One carrier for example, cuts its pmpm from $135 to $107. 

The age bands in AB 1672 are too tough for employers to understand. Composite rates are much easier for employers to understand.

Tax credits are an important selling point for businesspeople; phrases such as vouchers and subsidies are less well-received.  Accountants and brokers can better promote coverage for the flex workforce to an employer with a tax credit. Tax credits should perhaps be targeted to workers making less than $12 an hour; make it equivalent to $.25-.50 an hour. Tax credits should be tied to benefits package comparable to what is in the private market now; it should not be tied to the rich MediCal benefits structure.  The pressure is on the uninsuring employers to get good workers; they cannot compete with the insuring employers without offering health insurance. Now is the time to develop and offer targeted financial incentives for difficult to cover workforces.

ENTERTAINMENT INDUSTRY

Coverage for all the uninsured entertainment industry personnel is a massive and expensive undertaking. There is a need to develop and promote interim coverage plans for those cycling on and off the union plans, such as the one offered by the MPTF through the Industry Advantage Plan.

There are multiple creative ongoing initiatives to address the problem; these include association coverage, private label health plans, less costly benefit plans, studio coverage of production workers and industry wide philanthropy. Other options worthy of examination include an entertainment industry purchasing pool, an informational campaign on coverage options for small businesses and private label coverage for small businesses in the entertainment industry. It would require increased flexibility under AB 1672 to develop packages to increase coverage of the entertainment industry’s flex workforce.

HOME CARE WORKERS

Subsidies: The state has approved the concept of an employer of record to purchase coverage for IHSS workers. The Governor’s proposed a 60¢ an hour contribution. With the federal Medicaid matching rate and county match, this is the best way to solve affordability for home care workers. It is now up to counties and unions to negotiate acceptable terms of coverage locally.

A carefully targeted refundable tax credit, tied to group purchasing, is a possibility for purely private employees, but we need to know more about how it would work. Vouchers/subsidies need to be kept simple, involving as few intermediaries as possible. We should screen for eligibility for public programs and use pooling of existing programs’ money to buy group health coverage through a trust mechanism.

In terms of vouchers/subsidies for the flex workforce, it’s very difficult to administer the subsidy effectively if you give it directly to the individual. Funding through tax returns is a very difficult way to collect premiums. It is much easier to associate the subsidy with an employee’s wage check and to arrange for a payroll deduction.

PUBLIC WORKERS

Subsidies: As one approach we recommend setting the employee contribution at 20% for low wage employees, moving up to 80% for high wage workers; while the employer contribution would operate at mirror image -- set at 80% for low wage workers moving down to 20% for high income employees.

Tax credits could ease the financial burden of coverage for low wage earners. They should be kept very simple and made easy to administer. It would be ideal to offer them to the uninsured individual. They should be refundable, and timed to premium payments. We need to study the extent of employer subsidy necessary to get desired participation. The credits should be tied to group purchasing.

Financing: Public programs and safety net financing could be used to finance the subsidy. Financing could be operated in conjunction with a Healthy Families expansion to parents through a public program buy in (i.e. adult employees in plan for flex workers and their children in Healthy Families), but the structure must be kept very simple for the flex workforce and interested employers.

Purchasing entity could include ERISA or Taft Hartley trusts and Purchasing Alliances such as PERS or PacAdvantage. Group purchaser should have the option to either use or bypass health plans, depending on health plan willingness to negotiate. Group purchaser should have the options to use limited provider networks and/or safety net plans if they are willing to offer favorable rates.

Underwriting rules should be the same as 1672: i.e. guaranteed issue and renewal, rates based on age and geography, but not health status or claims experience. Guaranteed issue should not apply to individuals not affiliated with an employer group or association. The average age of the flex workforce is young, well under 40.

TEMPORARY WORKERS

Affordability needs to be resolved through a mix and match of employer, employee and government; we are not sure in what proportions. A percentage of wages for employees and possibly a defined pro rata contribution from employers may be the best model for contributions.

Employer contributions: strong incentives will be needed, as these employers have already decided not to cover these workers. We are not sure how to create the incentives for temp agencies. There could be a code of conduct, developed by the employers and the temp agencies, offering temp employees affordable and accessible health coverage.

Government contributions: Deductibility does not work, but voucher/tax credits might. Subsidy should be 50% of premiums and distributed on a sliding fee scale based on employee wages. There are large numbers of older self employed consultants. We need a Medicare early buy in for the older flex workers.

We should enroll part timers into Healthy Families for their kids; MRMIB needs to collaborate with unions and employers to enroll workers children in Healthy Families.

Purchasing entities: We should use union trusts and employer associations as the negotiating entities and create trusts (i.e. Working Partnerships, ERISA, Taft Hartley) like the construction trusts to handle coverage for flex workers. Tying subsidies to group purchasing is a good idea; the approach can percolate to non purchasers. We are uncertain as to whether it is best to organize coverage by geography or by industrial sector.

Underwriting ideal would be large pool, shared risk, guaranteed issue and renewal and portability. Coverage should be portable – i.e. individual owns coverage while and when changing jobs.

OPTIONS FOR COVERING THE FLEX WORKFORCE

There is no single approach that can be recommended to cover all of the uninsured in the flex workforce short of a Clinton style mandate or a Canadian single payor system; however there are approaches to reduce the numbers of uninsured flex workers. Some of these approaches will work better for particular groups of flex workers. For example, the higher income self-employed and independent contractors may fare better under individual market reform with vouchers. Low income temporary, seasonal and part time workers may fare best with purchasing pools and premium subsidies or enhanced incentives for employers to offer coverage for flex workers. 

California has a very low rate of employment based coverage, about 10 points below the national average and 20 points behind high performing states such as Wisconsin. If there were cost effective methods guaranteed to increase employment-based coverage in which uninsuring employers and uninsured employees contribute part of the costs, these approach would be best. California needs to experiment with different approaches to increase private coverage of flex workers.

California has a higher rate of public coverage than the national average and access to as yet untapped opportunities to expand public coverage through Medicaid and Healthy Families. This would allow for federal matching rates of 1/1 and 2/1. Moreover California’s public programs are very cost effective. However, California’s health programs have yet to effectively penetrate the very different reservations that immigrant communities, working families and the business community have about public programs. California policy makers need to seriously test public/private partnerships with California’s employers, unions and immigrant communities to increase public coverage.

Option 1: The individual market with tax subsidies/vouchers

Portions of the flex workforce such as the self employed already use the individual market in significant numbers to purchase coverage.[114] The rest of the flex workforce does not use the individual market much and has no favorable tax subsidy when they do so.[115] The self-employed have the advantages of tax deductibility and, on average, higher incomes than the rest of the flex workforce.[116]

Tax deductibility is most useful for high-income employees and of very little use to low wage workers.[117] As a matter of tax fairness, it should be available to all employees, regardless of whether their employers contribute to their coverage or not. There should be no illusion that tax deductibility will measurably decrease the numbers of uninsured.

There is bipartisan interest in Washington DC in refundable tax credits/vouchers for individual coverage as a way to increase coverage of the uninsured, and both parties’ presidential candidates are supporting tax credits to some extent.[118]

The triple difficulties with individual tax credits involve timing, refundability and targeting. The timing issue requires that the tax credit be received monthly or quarterly as individual premium payments are due; this makes the tax credit look more like a voucher than a credit.

Tax refundability is significant because many of the uninsured do not have federal or state tax liability equal to or exceeding their families’ prospective health insurance premiums. The Health Insurance tax credit needs to be closer to the model of the Earned Income Tax Credit to be workable. Again this approach is more comparable to a voucher than a tax credit.

Targeting is very difficult because the issues of efficiency conflict with tax fairness.  An efficient approach would be to extend credits only to the uninsured. However that penalizes all like individuals in the same circumstance who have already purchased coverage. The fair approach subsidizes those who newly purchase coverage, those who already purchase individual coverage as well as those who would move from the employer market to the individual market to avail themselves of subsidies. This is very expensive and has little cost effectiveness.[119]  We recommend the target should be individuals below a certain income threshold – e.g. 300 or 400% of FPL for a family of three. An alternative would be to give individuals a choice of refundable tax credits or tax deductibility; thus the credit naturally phases out as an individual’s income and tax liability increases.

The size of the tax credit subsidy increases the likelihood it will induce individuals to purchase. Below the federal policy level, there should be 100% subsidy of health coverage; a partial tax credit is therefore not an effective mechanism to covering low wage workers.

We suggest a 50% tax credit. The rationale for this level of subsidy is equity -- high income earners who are covered through their employer already receive a 50% tax subsidy and their employer is footing the bill. There is certainly an argument for a higher tax credit, but the larger the tax credit the more likely there will be spill over from group employment coverage, thereby increasing the cost and decreasing the cost effectiveness of the tax subsidy. We recognize that most individuals with income below 200% of FPL would not have adequate income even with the tax credit to purchase coverage and that other approaches are necessary to cover flex workers with income below 200% of FPL. To give employers an incentive to contribute pro rata for the premiums of their flex workers, we recommend that employer contributions towards the coverage be tax deductible to the employer and tax free to the individual employee.

Why then should we consider tax credits/vouchers at all? First, it mirrors the existing private market where most individuals are covered tax free through their employers. Second, it is easier to spend the surplus with tax policies that return money to the tax payers and provides tax equity between those already with coverage and tax advantages and those without. Third, tax credits lack the stigma associated with government programs, bureaucracies and subsidies that are unattractive to the working population. Fourth, the individual contributes towards the costs of coverage, has a choice of plans and owns the plan purchased.

Individual coverage is portable, but the market is less regulated than the small employer market. It permits carriers to deny coverage or charge high premiums to those with serious medical conditions who are in their view poor risks. The transaction between purchaser and seller is not readily transparent – i.e. the purchaser cannot easily shop for coverage and compare plan prices for comparable coverage as s/he can for a car or car insurance.[120] The individual purchaser has weak bargaining powers vis a vis a large insurer or HMO. The transaction costs of individual purchasing are high.

If individual tax credits are to be enacted, they should be accompanied by market reforms to guarantee issuance, control premium variations other than age, plan choice and geography, permit individuals to associate, negotiate and purchase collectively and provide readily accessible price and benefit comparisons

At least 11 states have already adopted guaranteed issue.[121] The insurance industry is opposed to guaranteed issue citing adverse selection concerns. These concerns can be allayed by bringing new healthy individuals into the market with a tax credit and preserving the 12 month long pre-existing condition exclusion.

Several states including New York, New Jersey and Vermont adopted strict community rating, eliminating age differentials. This has caused young, and often lower income individuals to cross subsidize older and typically higher income individuals.[122] We recommend preserving age rating and subsidizing individual premiums on the basis of income.[123] 

One state, Kentucky exempted association coverage, leading carriers to enroll the healthy in association coverage and leave the less healthy and more costly within the individual market. The solution is to apply the market reforms to association coverage as California’s AB 1672 does for small businesses. California’s existing market reforms do not give ample flexibility to associations to collectively bargain with carriers for price discounts. That law needs amendments to give all associations the ability to negotiate with carriers for net or discount rates, reflecting the savings of bulk purchasing.

Option 2: The employer market with tax subsidies

Employers do offer coverage to some of the flex workforce; for example, 31% of part time and 35% of temporary workers are eligible for coverage through their employers.[124] In addition, employers often cover the flex workforce as the dependent child or spouse or domestic partner of an employee.[125] The questions are what can employers do to increase employment coverage of the flex workers and what combination of policies would create the right incentives? Government already subsidizes employment based coverage through tax free benefits; this subsidy averages about one third of employer premiums, but the benefits are distributed disproportionately to higher wage workers who as a consequence have very high rates of coverage.[126] The steady erosion of employment based coverage is concentrated most heavily among near poor families, dependents and early (50-64 year old) retirees.[127]  The cause of the erosion is the cost pressure on employers, which has in part been shifted to employees as increasing shares of the premium, and in the growth of the unbenefitted flex workforce. [128]

Employers can allow flex workers to buy in or purchase the coverage, which they have already negotiated. Employers can contribute a pro rata equivalent to their contributions for coverage of full time employees but adjusted for the reduction in hours, days or months of part time or seasonal workers. Employers can reduce the qualifying thresholds (e.g. hours or duration of work) to qualify for coverage. Employers can decrease the amounts employees contribute for dependent coverage. In order to compete for employees in a tight labor market or in response to pressure from unions, some employers are already taking these steps.[129]

Government through tax policies can encourage employers to extend coverage to uninsured flex employees. This year in California, Assemblyman Knox introduced a measure to provide refundable tax credits to small businesses, which cover part time workers, and Assembly members Thomson and Campbell introduced a measure to provide refundable tax credits to small businesses, which cover low wage workers (up to three times the minimum wage).

The triple difficulties with employment based tax credits also involve timing, refundability and targeting. The timing issues can be resolved with quarterly tax credits. Refundability is critical for many marginal small businesses. Coverage for flex workers may not be their major concern as coverage for full time employee’s dependents is likely to be a higher priority than coverage for flex workers.  Tax credits do not reach non-profit and government employers that use flex workers.

The targeting issues are even more critical than for individual tax credits because many employers already offer coverage.  As an example, the projected impacts of the Keene small business tax credit of 1990 were that 95% of the tax benefit would go to employers who already cover their employees.

We recommend that refundable tax credits for employers be large (e.g. up to 50% of premium) but very carefully targeted – i.e. restricted to coverage for low wage (up to two or three times the minimum wage) flex workers, regardless of employer size and to very small businesses. There is low coverage of flex workers regardless of employer size,[130] and larger employers may be more receptive than small employers to tax incentives to cover their flex workforces. We suggest that the tax credit be contingent on an employer contribution pro rata equivalent to those for full time workers. 

For smaller businesses, we think that tax credits should be targeted at low wage workforces. The target should be both those very small employers who do not offer coverage and those small businesses who pay for coverage for the employees, but contribute minimally or not at all for coverage of the entire family. It may be easier to reach those who already offer employee only coverage.  This would allow small employers to be more competitive in attracting and retaining skilled workers while reducing the numbers of uninsured.

Option 3: Group purchasing with tax subsidies

California has purchasing pools for small employers, large employers and government agencies in place. It has associations, ERISA and Taft Hartley trusts, MEWAs, VEBAs and JPAs that purchase coverage for agriculture, bankers, printers, car dealers, public employees, construction workers and accountants, realtors and super market employees. While only small percentages of large and small employers participate in purchasing pools, a greater number participate in the larger universe of group purchasing.

Group purchasing can reduce transaction costs, negotiate price discounts and in some instances bypass state “mandated” benefits to reduce the costs of coverage to those insured with group purchasing.[131] Group purchasing is also insular; its prime concern is how to get the best price for the particular group, not how to cover uninsured flex workers.[132]

What could group purchasing do, if properly motivated? It can do cost effective purchasing as it does for existing groups; it could also permit buy in and distribute premium subsidies to the uninsured flex workers.[133] The barriers are group purchasers’ concern that premium costs to their already insured would increase as new entrants are brought in. Additional barriers include a series of restrictions on the ability of group purchasers to compete and cover the uninsured. For example, a union or an employer trust has fiduciary duties to its own members, can it use its bargaining powers to negotiate and purchase coverage at a discount for non-members or is it restricted to bargaining exclusively on behalf of its own members?

How do we motivate group purchasers? As many purchasing entities are non profit, they will not respond to tax incentives.

If premium subsidies are limited to those who use group purchasing, it is both inequitable to those who are not served by group purchasers and limits the opportunities and creativity of alternative forms of reaching the flex worker.

We recommend that premium subsidies for the flex workforce be made available through, but not limited to group purchasing and that the statutory and regulatory restraints on group purchasing be systematically evaluated and lifted. The Department of Labor has begun this process at the federal level.[134] 

Option 4: A Public or Public/Private Purchasing Pool with premium subsidies

California has in place one public purchasing pool with premium subsidies – MRMIB that covers pregnant women, the medically uninsurable and moderate income children. It may soon expand to cover moderate income parents. MediCal operates a purchasing pool for low income families. Some (20% or less) of the seasonal and part time workforces already participate in public programs.  Either MRMIB or DHS could run a purchasing pool with premium subsidies for flex workers. California has one of the worst records in the country at covering low wage working parents and other low wage working adults; this could change with effective implementation of Healthy Families coverage for parents.[135]

Assemblyman Gil Cedillo introduced a measure to create a purchasing pool for low wage uninsured workers with incomes up to 250% of FPL. It would allow employers to buy in to coverage by paying at least 50% of the premium and use existing government programs to subsidize the premiums of the uninsured. States including Massachusetts, Wisconsin, New York and Washington have similar employer programs already in place, but with no track records.[136]

The federal guidelines for S-CHIP (Healthy Families in California) permit states to test out employer buy-ins if the employer pays at least 60% of the premium. California’s Healthy Families and MediCal programs already authorize employer buy-ins, provided the coverage is cost and benefit equivalent. Neither provision has been implemented in part because of concerns about inducing employer crowd out of existing coverage and providing less comprehensive coverage to children in the private market. 

The advantage of a single state purchasing pool with subsidies is that it is easy to administer and has the potential to be the most cost effective way to cover the uninsured. The disadvantages are that small businesses, working and immigrant populations have each for different reasons not participated much in state purchasing programs in the past and a statewide entity by its nature insists on uniformity and has difficulty reaching and responding flexibly to local and individual concerns.

It is possible that a public/private entity would have more appeal to the businesses and workers that the pool must attract to reach its target markets. What are possible examples of public/private entities? PERS, DWP, and public authorities governing airports, seaports, water and hospital districts are all examples.

We recommend a public or public/private purchasing pool with premium subsidies and a buy in for employers and flex employees.

Other Options:

Successful litigation has been brought to secure benefits for temp workers. See Vizcaino v. Microsoft Corp. and Herman v. Time Warner.[137]

Universities have opened their health insurance plans to flex workers.[138] Universities, including most recently the University of California, are both arranging coverage opportunities for students (a significant share of the flex workforce) and requiring them to be covered.[139] 

The National Association of the Self-Employed sells health insurance for the self employed through its own web site.[140] Working Today sells individual health insurance to flex workers in New York through its web site.[141] Working Partnerships offers subsidized coverage for low wage temp workers who are members of its association.[142]

[1] HH Schauffler and ER Brown, The State of Health Insurance in California 1999 (January 2000)

[2] Ibid

[3] Center for Work Technology and Organization - Why do Contractors Contract? The Theory and Reality of High End Contingent Labor: June 1999 www.si.umich.edu/ICOS/MOTREV.html 

[4] America Wants - Timothy J. Bartl: 1998 www.Ipa.org/HRBookstore/BookPages/AmericaWantsFlexibleWork.html

[5] LMEA - Contingent and Alternative Employment Arrangements www.wa.gov/esd/Imca/srepts/newsp/cae.html

[6] American Demographics - Temps are Here to Stay - Jan Larson: February 1996 www.demographics.com/publications/ad/96ad/AD878.html

[7] CPS Publications - New Data on Contingent and Alternative Employment Examined by BLS: February 1995 www.bls.census.gov/cps/pub/conemp0294.html

[8] In 1998, the Economic Policy Institute (EPI) released a report titled, "Nonstandard Work, Substandard Jobs: Flexible work arrangements in the U.S." Their central finding, that "typically all types of nonstandard jobs are inferior to regular full-time work," suggests to them a series of policy prescriptions such as raising the minimum wage, the creation of a universal child care system, and expanding family and medical leave benefits. The EPI study creates a new terminology, "nonstandard work" by adding all of the categories included in the BLS definition of alternative employment to part-time workers and self-employed workers. Taken together these categories account for almost 30% of the workforce. Part-timers comprise the majority of this group -- in 1995, about 18% of the workforce. Employment Policy Foundation Issue Backgrounder - Nonstandard Work is Preferred by Most "Contingent" Workers: January, 29, 1998

[9] Most work (flexible or otherwise) is not "contingent" work. 25-30% of the workforce is not involved in traditional full-time work; this includes part-time employees, independent contractors, temporary employees, on-call workers, leased employees, etc. Only 17% of these individuals meet the true BLS definition of a contingent worker; as such, less than 5% of the workforce is "contingent". America Wants - Timothy J. Bartl: 1998

[10] American Demographics - Temps are Here to Stay - Jan Larson: February 1996

[11] CPS Publications - New Data on Contingent and Alternative Employment Examined by BLS: February 1995

[12] Center for Work Technology and Organization - Why do Contractors Contract? The Theory and Reality of High End Contingent Labor: June 1999

[13] American Demographics - Temps are Here to Stay - Jan Larson: February 1996

[14] New York State Bar Journal - Cost Savings From Hiring Contingent Workers May Be Lost If Their Status Is Challenged: September/October 1999: Vol. 71, No.7 www.nysba.org/media/barjournal/sepoct99/frumkin.html

[15] CPS Publications - New Data on Contingent and Alternative Employment Examined by BLS: February 1995

[16] Employers Association of New Jersey - Message from the Executive Director - The Contingent Work Force - John J. Sarno.  www.eanj.org/news012.html

[17] Employment Policy Foundation - Employment Trends - Temporary Work, A Catalyst for a Stronger Economy - Krishna Kundu: June 15, 2000 www.epf.org

[18] National Coalition on Health Care - Down a Dangerous Path: The Erosion of Health Insurance Coverage in the United States - Findlay & Miller: May 1999 www.americashealth.org/releases/erosion.html

[19] Working Partnerships - Shock Absorbers in the Flexible Economy - The Rise of Contingent Employment in Silicon Valley - Chris Benner: May 1996 www.atwork.org/temp/safe96exe.html

[20] Cornell University Press - The State of Work in America - Mishel, Bernstein & Schmitt: January 1, 1999 www.csf.colorado.edu/gimenez/soc5035/work.html

[21] American Demographics - Temps are Here to Stay - Jan Larson: February 1996

[22] Employment Policy Foundation - Contemporary Issues in Employment and Workplace Policy - Temps: Tempest in a Teapot: Max R. Lyons: 1999 Volume V, No. 2 www.epf.org/ff/ff990202.html 

[23] Employment Policy Foundation - Contemporary Issues in Employment and Workplace Policy - Is There a Part-time Worker Pay Gap? - Max R. Lyons: April 1999 Volume V, No. 4 www.epf.org/ff/ff990414.html 

[24] Employment Policy Foundation - Contemporary Issues in Employment and Workplace Policy - Independent Contractors -- A Positive Alternative Work Arrangement - Max R. Lyons: April 1998 Volume IV, No. 8 www.epf.org/ff/ff4-8.html

[25] Center for Work Technology and Organization - Why do Contractors Contract? The Theory and Reality of High End Contingent Labor: June 1999

[26] However, there could be serious tax and employee benefit ramifications if someone classified as a flex worker is later determined to be an employee. New York State Bar Journal - Cost Savings From Hiring Contingent Workers May Be Lost If Their Status Is Challenged: September/October 1999: Vol. 71, No.7

[27] Society for Human Resource Management Foundation - Why Hire Contingent Workers? 2000 www.shrm.org/foundation/conexpert2.html

[28] GovExec.com - The Workforce - Permanent Temps - Michael Burr: March 1997 www.govexec.com/features/0397s5.html

[29] ASAE - Contingent Employees: Do the Benefits Outweigh the Disadvantages? - Maureen Smith: January 1, 2000 www.asaenet.org/newsletters/display/0.1901.50059.00.html

[30] America Wants Flexible Work - Timothy J. Bartl: 1998

[31] Center for Work Technology and Organization - Why do Contractors Contract? The Theory and Reality of High End Contingent Labor: June 1999

[32] Employment Policy Foundation Issue Backgrounder - Nonstandard Work is Preferred by Most "Contingent" Workers: January, 29, 1998 www.epf.org/backg/b980129.html

[33] Employment Policy Foundation - Contemporary Issues in Employment and Workplace Policy - Temporary Work - A Catalyst for a Stronger Economy - Krishna Kundu: June 15, 2000 www.epf.org

[34] Twin Peaks - Temporary Work as a Growing Phenomenon - The Disposable Workforce - Kai Blum: 1997 www.uni-leipzig.de/~amerika/tp/tp406.html#top

[35] National Alliance for Fair Employment - Contingent Workers Fight for Fairness - Why Contingent Work is a Problem www.fairjobs.org/report/whyprob.php

[36] Center for Work Technology and Organization - Why do Contractors Contract? The Theory and Reality of High End Contingent Labor: June 1999

[37] Career Center - Job Hunting in the Temporary Staffing Service Industry: October, 4, 1998 www.fsu.edu/~career/thunt.html

[38] Twin Peaks - Temporary Work as a Growing Phenomenon - The Disposable Workforce - Kai Blum: 1997

[39] Employment Policy Foundation - Issue Backgrounder - Nonstandard Work is Preferred by Most "Contingent" Workers - Max R. Lyons: January 29, 1998 www.epf.org/backg/b980129.html

[40] BLS is using a narrow definition here, see n. 9

[41] Employment Policy Foundation - Employment Trends - Temporary Work, A Catalyst for a Stronger Economy - Krishna Kundu: June 15, 2000 www.epf.org 

[42] National Coalition on Health Care - Down a Dangerous Path: The Erosion of Health Insurance Coverage in the United States - Findlay & Miller: May 1999

[43] American Demographics - Temps are Here to Stay - Jan Larson: February 1996

[44] National Alliance for Fair Employment - Contingent Workers Fight for Fairness - Why Contingent Work is a Problem

[45] Employment Policy Foundation Issue Backgrounder - Nonstandard Work is Preferred by Most "Contingent" Workers: January, 29, 1998

[46] Twin Peaks - Temporary Work as a Growing Phenomenon - The Disposable Workforce - Kai Blum: 1997

[47] Employers Association of New Jersey - Message From The Executive Director - The Contingent Work Force - John J. Sarno

[48] Employment Policy Foundation - Contemporary Issues in Employment and Workplace Policy - Temporary Work - A Catalyst for a Stronger Economy - Krishna Kundu: June 15, 2000

[49] Employment Policy Foundation - Contemporary Issues in Employment and Workplace Policy - Independent Contractors -- A Positive Alternative Work Arrangement - Max R. Lyons: April 1998 Volume IV, No. 8

[50] National Coalition on Health Care - Down a Dangerous Path: The Erosion of Health Insurance Coverage in the United States - Findlay & Miller: May 1999

[51] The American Prospect Online - Coming Unfringed: The Unraveling of Job-Based Entitlements - Mary E. O'Connell: Issue 13 Spring 1993 www.propsect.org/archives/13/13ocon.html

[52] National Coalition on Health Care - Down a Dangerous Path: The Erosion of Health Insurance Coverage in the United States - Findlay & Miller: May 1999

[53] The Commonwealth Fund - Issue Brief - Erosion of Employer-Sponsored Health Insurance Coverage and Quality - Cathy Schoen and Karen Davis: September 1998 www.cmwf.org/programs/insurance/schoen/erosion.ib297.asp

[54] National Coalition on Health Care - Down a Dangerous Path: The Erosion of Health Insurance Coverage in the United States - Findlay & Miller: May 1999

[55] The American Prospect Online - Coming Unfringed: The Unraveling of Job-Based Entitlements - Mary E. O'Connell: Issue 13 Spring 1993

[56] Working Partnerships - Shock Absorbers in the Flexible Economy - The Rise of Contingent Employment in Silicon Valley - Chris Benner: May 1996

[57] American Demographics - Temps are Here to Stay - Jan Larson: February 1996

[58] The Commonwealth Fund - Erosion of Employer-Sponsored Health Insurance Coverage and Quality - Cathy Schoen and Karen Davis: September 1998

[59] A Leg Up for the Lowly Temp.  June 21, 1999 Depending on the definition and data used, the flex workforce ranges up to 30% of the US workforce (about 36 million workers). www.businessweek.com/careera/content/content/jan1990/b3634132.html

[60] Unions Organizing in the New Economy.  By Philip F. Kelly, Jr. March 2000 www.capitalresearch.org/laborwatch/lw-0300.html

[61] Revenge of the Temps.  By Kirstin Downey Grimsley.  Sunday, January 16, 2000. www.washingtonpost.com/wp-dyn/business/A47136-200Jan14.html

[62] Ibid

[63] Ibid

[64] Workers in Contingent Jobs are Fighting Back. National Alliance for Fair employment www.fairjobs.org/report/fightback/php 

[65] Temps Demand a New Deal. Christopher Cook (March 27, 2000) www.thenation.com/issue/000327/0327cook.html 

[66] Ibid.

[67] Flex Work Arrangements and 21st Century Worker’s Guilds.  By Robert L. Laubacher & Thomas W. Malone. Sloan School of Management, Massachusetts Institute of Technology October 1997. www.ccs.mit.edu/21CWP004.html

[68] The Union and the Contingent Workforce.  AFCSME Spring 1996 www.afcsme.org/workplace/cbr2962.html

[69] Ibid

[70] A Leg Up for the Lowly Temp.  June 21, 1999.

[71] Unions Organizing in the New Economy.  By Philip F. Kelly, Jr. March 2000

[72] Workers in Contingent Jobs are Fighting Back

[73] Ibid.

[74] Ibid.

[75] Ibid.

[76] Ibid.

[77] Unions Organizing in the New Economy.  By Philip F. Kelly, Jr. March 2000

[78] Temps Demand a New Deal.

[79] Workers in Contingent Jobs are Fighting Back

[80] Ibid.

[81] Ibid.

[82] Harvard University Office of the Provost.  Report from the Ad Hoc Committee on Employment Policies. www.provost.harvard.edu/adhoc.execsummary.html

[83] Health Service & Insurance. University of Illinois, Urbana-Champaign Campus, www.grad.uiuc.edu/gradhandbook/XIII.html

[84] Working Today, www.workingtoday.org

[85] Flex Work Arrangements and 21st Century Worker’s Guilds.  By Robert L. Laubacher & Thomas W. Malone.  October 1997

[86] Ibid.

[87] New Hope and Wisconsin’s W-2 Program.  By Kendra Lodewick. www.lafollette.wisc.edu/newhope/w2.html

[88] Flex Work Arrangements and 21st Century Worker’s Guilds.  By Robert L. Laubacher & Thomas W. Malone.  October 1997.

[89] Based on interviews with Mary Eadson, Western Growers Association

[90] Based on interviews with Betty Jo Toccoli, President of the California Small Business Association and Scott Hauge of the San Francisco Small Business Network

[91]  See "Insuring Dependent Children: a Report on Small Business Employer and Employee Survey Data

Regarding Health Insurance Coverage for Dependent Children". By: the Resource Group. 

[92] See "Tax Subsidies for Health Insurance: Costs and Benefits" by Jonathan Gruber and Larry Levitt Health Affairs: Volume 19, Number 1. Jan/Feb 2000. 

[93] Based on interviews with Dana McMurtry of the LA Care Health Plan

[94] Based on interviews with Kathlyn Mead, CEO of Sharp Health Plan

[95] See Wulsin, Bassoff at al, Issues and Approaches to Increasing Coverage of the Child Care Workforce (Dec, 1999) at www.itup.org/childcare-workgroup.html

[96] Based on interviews with Renu Nanda of the Starting Points Initiative, Janie Tyre of San Francisco Health Plan and Tangerine Brigham of San Francisco Department of Public Health

[97] Based on interviews with Betty Bassoff of San Diego State University and Ruth Kaplan of Community Health Group

[98] Based on interviews with Ralph Van de Moere of McGregor, Van de Moere

[99] Based on Health Access 2000: a Report to the California Health Care Foundation (Motion Picture and Television Fund, May, 1999) and interviews with Donna Bender of the MPTV Fund

[100] See Health Access 2000: a Report to the California Health Care Foundation by the Motion Picture and Television Fund (May, 1999)

[101] Based on interviews with Greg Price, Santa Clara Valley Health Plan, Michael Cousineau, USC School of Public Administration and Carol Regan, Service Employee's International Union. See also Cousineau, Providing Health Insurance to IHSS Providers in Los Angeles County: a Report to the California HealthCare Foundation (June, 2000) at www.chcf.org/topics/healthinsurance/index.cfm?itemID=12471

[102] See Cousineau, Providing Health Insurance to IHSS Providers in Los Angeles County

[103] See Cousineau, Providing Health Insurance to IHSS Providers in Los Angeles County and phone interview with Michael Cousineau.

[104] Based on an interview with Carol Regan, SEIU

[105] See AFCSME, Exposing Los Angeles' Green Sweatshop: an Agenda for Ending Exploitation in Los Angeles' Recreation and Parks Department (Oct., 2000)

[106] Based on an interview with Carol Regan, SEIU

[107] Based on interviews with Jerry Levey of Jerry Levey and Assoc. and Tom Newberry of SEIU Local 99

[108] Rafe Forland, An Assessment of the Potential for Taft Hartley Plans to Reach Uninsured Workers in California: a Report for the California HealthCare Foundation (Institute for Health Policy Solutions, Feb. 2000)

[109] Based on Interviews with Sarah Zimmerman and Phaedra-Ellis-Lamkin of Working Partnerships

[110]  Based on Interviews with Joel Michael Lyle of Union Privilege

[111] Based on interviews with Kathlyn Mead of Sharp Health Plan

[112] Based on interviews with Marian Mulkey of the California HealthCare Foundation and her unpublished study of the Temp Help industry.

[113] Based on interviews with individuals throughout California who are seeking to increase coverage of the flex workforce.

[114] Private Health Insurance: Millions Relying on Individual Market Face Cost and Coverage Trade Offs (US General Accounting Office, 11/25/96) HEHS-97-8 http://www.gao.gov/docsearch/app_processform.php?app_id=docdblite_date&page=2

[115] Part time full year workers use the individual market at twice the rate of full time full year workers, but it only accounts for 8% of their coverage and 4.4% of full time seasonal workers as compared to 19.7 of the self-employed. Ibid.

[116] The individual market is comparatively more important for coverage in rural communities and persons working in construction, entertainment, agriculture, logging and fishing. Ibid.

[117] R. Helms, Market Based Approaches to Insurance Reform (American Enterprise Institute, 1998). While individual coverage is more commonly used by higher income individuals, GAO reports that 3.7% of poverty level individuals are covered by individual insurance, a ratio not much lower than the 4.7% reported for individuals with incomes above federal poverty levels. Private Health Insurance: Millions Relying on Individual Market Face Cost and Coverage Trade Offs

[118] See discussion in Health Affairs (Dec. 1999)

[119] Gruber & Levitt, Tax Subsidies for Health Insurance: Costs and Benefits, Health Affairs 2000)

[120] This can be readily fixed with a web site or price and plan comparisons that offers relevant inter and intra carrier comparisons: price, coverage, networks, minimum loss ratios, actuarial equivalence, performance on prevention issues such immunizations, prenatal care and breast cancer screening, and comparison ratings on customer service.

[121] Carrier declination rates appear to average about 15% in the individual market absent guaranteed issuance. See GAO, Private Health Insurance.

[122] The individual market covers 3.7% of individuals aged 20-29 and 9.6% of individuals over 60. Ibid.

[123] Idaho, Iowa, Kentucky Louisiana, Maine, Minnesota, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oregon, South Carolina, Utah, Vermont, Washington and West Virginia all adopted restrictions on carrier’s underwriting practices in the individual market during the 1990s, California did not. Typically the rating reforms preclude carriers from varying rates by more than 10-25% from the mean based on factors other than age and geography. Some of the reforms restrict the variations based on age to no more than 3-1 which appears to be an average variation based on age in unregulated markets. Ibid.

[124] The offer rate is 19% for small employers under 50 employees and 57% for employers of over 200 employees. The take up rate is about half the offer rate, apparently because many have coverage through other sources, typically a spouse’s or parent’s employer. See Employment Based Coverage: Medium and Large Employers Can Purchase Coverage, but Some Workers Are Not Eligible ((US General Accounting Office, 7/27/98). Coverage of part time and temporary workers is most common in manufacturing and transportation and least common in agriculture, retail and construction. Ibid.

[125] 17% of part time workers are covered through their own employer and 58% through other sources. Two thirds of temporary workers received coverage from a source other than their own employer. Ibid.

[126] See Private health Insurance: Continued Erosion Linked to Cost Pressures (General Accounting Office, 7/24/97)

[127] Ibid.

[128] Ibid.

[129] Employer Health Benefits, 2000 Annual Survey (Kaiser Family Foundation and Health Research and Educational Trust, August 2000)

[130] The offer rate to part time employees for small employers under 50 employees is 19% as compared to 66% for full time employees, and 57% of part time employees for employers of over 200 employees are offered coverage as compared to 96% of full time employees. The take up rate for part timers is about half the offer rate as many flex workers have coverage through a spouse or parent. The take up rate for full time employees is about 85%. See GAO, Medium and Large Employers Can Purchase Coverage, but Some Workers Are Not Eligible

[131] Cooperatives Offer Small Employers Plan Choice and Market Prices (General Accounting Office, 3/31/2000). GAO points out that cooperatives have not been able to amass significant shares of the small group market in order to negotiate price reductions, not otherwise available in the small employer market.

[132] See Rafe Forland, An Assessment of the Potential for Taft Hartley Plans to Reach Uninsured Workers in California (Institute for Health Policy Studies, Feb. 14, 2000)

[133] See Tollen, Laura A., "Purchasing Private Health Insurance through Government Health Care Programs: A Guide for States," Institute for Health Policy Solutions, Inc., June 1999

[134] See Advisory Council on Employee Benefit Plan, Report of the Working Group on the Benefit Implications of the Growth of a Contingent Workforce (US Department of Labor, November, 10, 1999). DOL and other federal agencies are reviewing the tax code, labor code, anti trust laws and ERISA to determine what steps can be taken to assist employers in their efforts to cover the flex workforce.

[135] See Spillman, Public Health Coverage of Adults: How States Compare (Urban Institute New Federalism Studies, July, 2000)

[136] See Wulsin, Clinics, Counties and the Uninsured, Phase Two (Insure the Uninsured Project, April, 2000)

[137]

[138] See e.g. University of Baltimore Office of Human Resources, Benefits at www.ubalt.edu/hr/benefits University of Maryland at inform.umd.edu/union/hr/contingentemployment; Ad Hoc Committee on Employment Policies at Harvard University at www.provost.harvard.edu/adhoc.

[139] See Glionna, UC Set to Require Student Insurance, Los Angeles Times p. 3 (September, 14, 2000) and Health Insurance for Graduate Students at the University of Illinois at www.grad.uiuc.edu/grad_handbook

[140] See www.nase.org.

[141] See www.workingtoday.org. The coverage costs $283 per member per month, which is very costly by comparison to California policies. For example, the 1999 Kaiser premiums through PacAdvantage in Los Angeles were $110 pmpm for employees under 30 and $181 for employees aged 50-54.

[142] See discussion at p.