Avik Roy
Labor unions are among the key institutions responsible for the passage of Obamacare. They spent tons of money electing Democrats to Congress in 2006 and 2008, and fought hard to push the health law through the legislature in 2009 and 2010. But now, unions are waking up to the fact that Obamacare is heavily disruptive to the health benefits of their members.
Last Thursday, representatives of three of the nation’s largest unions fired off a letter to Harry Reid and Nancy Pelosi, warning that Obamacare would “shatter not only our hard-earned health benefits, but destroy the foundation of the 40 hour work week that is the backbone of the American middle class.”
The letter was penned by James P. Hoffa, general president of the International Brotherhood of Teamsters; Joseph Hansen, international president of the United Food and Commercial Workers International Union; and Donald “D.” Taylor, president of UNITE-HERE, a union representing hotel, airport, food service, gaming, and textile workers.
“When you and the President sought our support for the Affordable Care Act,” they begin, “you pledged that if we liked the health plans we have now, we could keep them. Sadly, that promise is under threat…We have been strong supporters of the notion that all Americans should have access to quality, affordable health care. We have also been strong supporters of you. In campaign after campaign we have put boots on the ground, gone door-to-door to get out the vote, run phone banks and raised money to secure this vision. Now this vision has come back to haunt us.”
‘Unintended consequences’ causing ‘nightmare scenarios’
The union leaders are concerned that Obamacare’s employer mandate incentivizes smaller companies to shift their workers to part-time status, because employers are not required to provide health coverage to part-time workers. “We have a problem,” they write, and “you need to fix it.”
“The unintended consequences of the ACA are severe,” they continue. “Perverse incentives are causing nightmare scenarios. First, the law creates an incentive for employers to keep employees’ work hours below 30 hours a week. Numerous employers have begun to cut workers’ hours to avoid this obligation, and many of them are doing so openly. The impact is two-fold: fewer hours means less pay while also losing our current health benefits.”
What surprises me about this is that union leaders are pretty strategic when it comes to employee benefits. It was obvious in 2009 that Obamacare’s employer mandate would incentivize this shift. Why didn’t labor unions fight it back then?
Regulations will ‘destroy the very health and wellbeing of our members’
The labor bosses are also unhappy, because of the way Obamacare affects multi-employer health plans. Multi-employer plans, also called Taft-Hartley plans, are health insurance benefits typically arranged between a labor union in a particular industry, such as restaurants, and small employers in that industry. About 20 million workers are covered by these plans; 800,000 of Joseph Hansen’s 1.3 million UFCW members are covered this way.
Taft-Hartley plans, they write, “have been built over decades by working men and women,” but unlike plans offered on the ACA exchanges, unionized workers will not be eligible for subsidies, because workers with employer-sponsored coverage don’t qualify.
Obamacare’s regulatory changes to the small-group insurance market will drive up the cost of these plans. For example, the rules requiring plans to cover adult children up to the age of 26, the elimination of limits on annual or lifetime coverage, and the mandates that plans cover a wide range of benefits will drive premiums upward.
But the key problem is that the Taft-Hartley plans already provide generous and costly coverage; small employers now have a more financially attractive alternative, which is to drop coverage and put people on the exchanges, once the existing collective bargaining agreements are up. That gives workers less reason to join a union; a big part of why working people pay union dues is because unions play a big role in negotiating health benefits.
So the labor leaders are demanding that their workers with employer-sponsored coverage also gain eligibility for ACA subsidies. Otherwise, their workers will be “relegated to second-class status” despite being “taxed to pay for those subsidies,” a result that will “make non-profit plans like ours unsustainable” and “destroy the very health and wellbeing of our members along with millions of other hardworking Americans.”
‘The law as it stands will hurt millions of Americans’
The leaders conclude by stating that, “on behalf of the millions of working men and women we represent and the families they support, we can no longer stand silent in the face of elements of the Affordable Care Act that will destroy the very health and wellbeing of our members along with millions of other hardworking Americans.”
President Obama, of course, pledged that “if you like your plan, you can keep your plan.” But the labor leaders say that, “unless changes are made…that promise is hollow. We continue to stand behind real health care reform, but the law as it stands will hurt millions of Americans including the members of our respective unions. We are looking to you to make sure these changes are made.”
Delay of employer mandate ‘troubling’
These aren’t the union leaders who have been critical of Obamacare. Kinsey Robinson, president of the United Union of Roofers, Waterproofers and Allied Workers, said in April that their concerns “have not been addressed, or in some instances, totally ignored,” and that “in the rush to achieve its passage, many of the act’s provisions were not fully conceived, resulting in unintended consequences that are inconsistent with the promise that those who were satisfied with their employer-sponsored coverage could keep it.”
Richard Trumka, head of the AFL-CIO, is unhappy with the White House’s one-year delay of the employer mandate, calling it “troubling.” Hoffa, Hansen, and Taylor note that “this is especially stinging [and] most disconcerting” because the administration has responded to the concerns of businesses, but not those of labor.
But it’s the employer mandate which is responsible for all of the disruptions that Trumka’s labor brothers are complaining about. If we repealed the employer mandate, we’d get rid of the incentive that restaurants and other employers have to cut the hours of part-time employees.
Government health care harms unions
What a lot of people may not realize is that for much of our history, labor unions opposed universal coverage. “Unions…derive some advantage of good will, power, or profit from serving as a financial intermediary in health care,” writes Paul Starr in his Pulitzer Prize-winning history of the American health-care system, The Social Transformation of American Medicine.
If unions’ role in negotiating health coverage is taken over by the government, unions lose a big chunk of their utility. “Employers and unions had both tried to use medical care to strengthen their hand in the battle for workers’ allegiances,” Starr continues.
Labor unions opposed FDR’s half-hearted attempt at universal coverage, and split on Truman’s related proposal. Unions were fine with Medicare and Medicaid, because health benefits for retirees and poor people weren’t as relevant to their interests. It wasn’t until the 1970s that the goals of progressives and labor unions became closely aligned on national health care.
Now, my primary concern isn’t the power and influence of labor unions—rather, it’s the ability of Americans to have access to good jobs and affordable health insurance. And those latter goals are best achieved in a system where people buy health coverage for themselves, instead of getting it through their employers or the government.
That Obamacare encourages more people to buy insurance on their own, in part by incentivizing employers to drop health coverage, is one of the law’s few salutary qualities. It’s unsurprising that this outcome makes labor unions unhappy. But they had every opportunity to take the bill in a different direction in 2009. That they didn’t is no one’s fault but their own.
Link:
http://www.forbes.com/sites/theapothecary/2013/07/15/labor-leaders-obamacare-will-shatter-their-health-benefits-cause-nightmare-scenarios/
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