Tuesday, May 27, 2014

ObamaCare and Unions: So Much for Solidarity

Union solidarity ain’t what it used to be.


Historically American unions have been the single biggest contributor to the Democratic party and to Obama’s presidential campaigns.   The magnitude of their contributions ($670 million)  in 2012 make the Koch Brothers contributions to Republicans that year ($18 million) and $130 million in the upcoming November elections look like chump change.

Obama may no longer be able to count on the unions, either for cash or to round up voters to bring them to the polls. Workers and employers are now engaged in contract talks with Obama officials as to who should pay for costs attributed to the Affordable Care Act over and who shall  pick up the tab for mandates, such as coverage for dependent children to age 26, as well as future costs, such as a tax on premium health plans starting in 2018.  Tens of thousands of labor contracts covering millions of workers expire in the next several years, with ACA-related cost increases ranging from 5% to 12.5% in current talks.
·         In Philadelphia, the dispute about how much workers should contribute to such health-plan cost increases has stalled talks between the region's transit system and its union representing 5,000 workers as they  renegotiate a contract that expired in March.

·       In Los Vegas,   2000 housekeepers voted to go on strike  June 1 if they don't reach agreements on a series of issues, the thorniest of which involve new ACA-related provisions.

·        In Alaska,  flight attendants at Alaska Airlines voted down a tentative contract agreement with management in February, in part because it didn't provide enough protection against a possible surge in ACA-related costs, union members said. 

As  early  supporters of the health-care law, unions have sought without luck  to win concessions from the Obama administration on issues now involved in the labor talks.

One problem is the higher costs of mandates, especially the requirement that health plans expand coverage for dependents. For Unite Here, adding that coverage for 14,000 dependents raised costs in the health-care fund run by the union's Las Vegas local by $26 million since 2011, said union spokeswoman Bethany Khan.  The union plan covers 55,000 workers and 120,000 people in total. Casinos on the Strip have agreed to pay more to meet the higher health-care costs, according to contract summaries. 

Another unknown  is the Cadillac tax on high-cost health plans scheduled to take effect in 2018. The provision imposes a 40% tax on the annual cost of health care above $10,200 for individual coverage and $27,500 for family coverage.

The regional transit system in Philadelphia, Septa, estimates the tax will boost its health-care costs by $15 million a year, or 12.5% of the $120 million it currently spends each year on health coverage.
People in those plans aren't eligible for the subsidies toward the cost of premiums that the law offers some people buying coverage on their own. Many multi-employer plans must pay a $63 tax this year per covered individual to help subsidize plans sold through the new insurance exchanges. Unions and large employers had campaigned against the fee. 

Another provision of the law that eliminates caps on annual and lifetime health-care costs has forced multi-employer plans to purchase their own insurance to prevent potential runaway costs from bankrupting plans.

In other cases, the law has resulted in workers losing coverage from multi-employer plans. Last year, the United Food and Commercial Workers agreed to eliminate existing coverage for thousands of newer part-time workers at New England supermarkets, in order to preserve benefits for full-time workers.
The union says it replaced the coverage with a combination of benefits, including health savings accounts. 

These and other negotiation have been going on for more than two years, as reported in a blog I wrote two years ago.

In the past, American unions have offered  more generous pay,  and richer health care benefits than  in private employee plans.  These propositions rest on the premise that union members will work a 40 hour week with extra pay for overtime.  This scenario,  in turn,  is based on the assumption that America will have a full-time economy. 

Obamacare threatens these goals.  If present economic conditions  persist, Obama and Democrats are in danger of losing labor and government unions as core constituents.   Certain provisions of the health law -  a 40% tax on premiums over $10,200 for each individual union member and $20,500 for every family,  and $2000 penalties for businesses with 50 employees or more who do not offer workers health insurance -  endanger unions.  

Unions are accustomed to vast networks of doctors and hospitals,  low out-of pocket costs, and generous benefits. Under Obamacare, these may be things of the past.

The Obama Presidency, now in its sixth year, has been a winter of discontent for unions.  The number of American workers in unions has declined,   workers are moving to states with right to work laws,  the rate of economic growth is  2% or less,  effective unemployment remains at 14%,  and, in the latest jobs report,  9 of 10 new jobs were temporary rather than full-time.    

 Kelly services, the temporary workers firm,  is now the nation’s second largest employer.    Due in no small part of Obamacare and its 50 employee-mandatory health provision,  Kelly services have become a part-time worker nation with fewer union members, and no health care benefits for part-time workers.
Add political partisanship, and we have a “Disunited We Stand,  Unionized We Fall” situation.   Unions depend on economic growth, full-time jobs  and attractive health benefits to grow.  At the moment,  unions have none of these factors going for them. 

Unions have woken up to the reality  that Obamacare may decrease jobs, with less pay, with no health benefits for those working 30 hours or less.  In a 2012 letter to Obama officials,  James Hoffa, President  of the International Brotherhood of Teamsters,  Joseph Hansen, International Food and Commercial Workers,  and Donald Taylor, President of United-Here, representing hotel, airport food service and textile workers,   the three union presidents  wrote Obamacare would “shatter” our health care benefits,  create “nightmare scenarios,” and “destroy the very health and well being of our members.”  In related events,  Congress,  covered under the Federal Employee Health Benefit Plans (FEHBP) and the National Treasury Employees Union (NTE)  “squirmed” to get out of Obamacare and pleaded “Please don’t throw us into Obamacare.”  

There you have it,  a tone of desperation and disapproval among unions over the higher costs and fewer  benefits of  traditional health plans  on health exchanges.  The obvious question is: if Obamacare isn’t good enough for Congress members and their staffs and for  public and private unions,  why is it good enough for the rest of us.”   

Tweet:  A revolt is brewing among national unions about higher premium costs and fewer benefits of plans to be  offered on health exchanges.

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