Why unions are worried about ObamaCare

"We are disappointed that the nonprofit health plans offered by unions have not been given the same consideration [by the Obama administration] as the Catholic Church, big business, and Capitol Hill staffers," Unite-Here President D. Taylor told The Hill. It is a complaint that President Barack Obama will come face to face with this fall, even after he canceled his trip to California, where he was to address the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) convention this week.

The unions were a key ally in the passage of the Affordable Care Act. They spent a large sum of money on the congressional campaigns of Democrats in 2006 and 2008, and union leaders lobbied in favor of health care reform in 2009 and 2010. But labor has grown increasingly worried that the law's provisions will prompt employers to trim workers' hours and tax the union-negotiated health plans, forcing workers off their union health plans and onto ObamaCare's potentially more expensive insurance exchanges.

So far, the appeal representatives of three of the nation's largest unions sent to Senate Majority Leader Harry Reid of Nevada and House Minority Leader Nancy Pelosi of California has not been addressed. "When you and the president sought our support for the Affordable Care Act, you pledged that if we liked the health plans we have now, we could keep them. Sadly, that promise is under threat," read their July letter. "Right now, unless you and the Obama administration enact an equitable fix, the ACA will 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."

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

The letter was authored by James P. Hoffa, the general president of the International Brotherhood of Teamsters; Joseph Hansen, the international president of the United Food and Commercial Workers International Union; and Donald Taylor, the president of Unite-Here, a union representing hotel, airport, food service, gaming, and textile workers.

The union leadership is seeking "reasonable regulatory interpretations" to the Affordable Care Act that would help prevent the destruction of non-profit health plans. Approximately 20 million union workers are covered by nonprofit multi-employer "Taft-Hartley" health plans.

However, according to the letter, earlier requests for government action have been "disregarded and met with a stone wall by the White House and the pertinent agencies." This disregard compares unfavorably with how the administration responded to requests made by other so-called stakeholders, they wrote, citing the government's decision to make a "huge accommodation" for the employer community by extending the deadline for the employer mandate and penalties.

The letter listed three complaints. First, the law creates an incentive for employers to keep workers' hours below 30 hours per week. Second, millions of Americans, including a great majority of union members, are covered by non-profit health insurance plans. But with the implementation of ObamaCare, union workers will be "treated differently and not be eligible for subsidies afforded other citizens." Finally, the letter argued that while union, non-profit plans will not receive the same subsidies, they will be taxed to pay for those subsidies.

Hoffa, Hansen, and Taylor believe that there are "common-sense" fixes that can be made to the legislation that will allow union members to keep their current plans and benefits as Congress and President Barack Obama promised. Unless the changes are made, they said that promise is hollow. The unions have outlined one main fix — the administration amend the Affordable Care Act's provisions so that union plans will be treated as qualified health plans that can earn tax credit subsidies. Without those subsidies, employers would have an incentive to eliminate the non-profit plans and push workers onto the exchanges.

"The Democrats have completely given the store away to the for-profit industry," Taylor told the Hill. "Without any question, we have a scenario set up that ObamaCare has turned all the money over to the for-profit plans, and the nonprofit plans will fade away."

The administration has said that it is committed to ensure that ObamaCare works for those on the Taft-Hartley plans, but it has not offered to amend the law in a way that would resolve union concerns. However, the reform law has been changed to allow religiously affiliated organizations to not cover birth control for their employees as originally intended. Business groups lobbied for the employer insurance mandate to be postponed for a year and it was delayed until 2015 — and Congress members and staffers will continue to have health plans subsidized by the federal government.

While Unite-Here was the first national union to endorse Obama during his 2008 presidential campaign, if members lose their health coverage, they "will blame the people who passed that bill and did nothing to fix it," Taylor told the Hill. "The administration has found resolutions for a whole variety of issues, and the fact that their biggest supporters will be put at the mercy of the for-profit insurance industry will leave a very bad, bad taste," he added. "You can't blame the Republicans on this one. This is a Democratic bill through and through."

More from Wall St. Cheat Sheet...

• Now, it's time to talk about ObamaCare
• Here's how confusion may threaten the success of ObamaCare
• 10 big brands that may be heeding Warren Buffett's advice