Union leadership strongly supported the passage of the Affordable Care Act in 2010 without reading the bill, as did many Congressmen. Now the law of unintended consequences is coming into play and some union leaders are screaming “foul”. It seems as if the health care benefits of their members are being harmed and it is unfair. So, what are they complaining about?
For one thing, employers are reducing employee hours to less than 30 per week so that as part-timers they will not have to be covered under the ACA. The unions refer to this as a “perverse incentive”. In addition to not having health insurance, these employees’ wages will be reduced so that they may have to have an additional part-time job to make up for the lost wages.
Secondly, the union leaders fear that President Obama’s promise that “If you like the health plan you have now, you can keep it” will be a false promise. The unions have so-called Taft-Hartley multi-employer health plans which, under the ACA, will not qualify for subsidies. Multi-employer plans are negotiated between a union and employers in a specific industry such as the restaurant business. These plans stand to lose out to health insurance plans offered on the ACA exchanges because exchange plans will be subsidized; the union multi-employer plans will not. The unintended consequence: these many small employers that participate in the multi-employer plans will drop these plans and shift employees to the exchanges at a significant cost savings. Thus, the unions will lose an attractive feature to joining a union–health care benefits.
Here is the union letter to Leader Reid and Leader Pelosi (emphasis added):
Dear Leader Reid and Leader Pelosi:
When you and the President sought our support for the Affordable Care Act (ACA), you pledged that if we liked the health plans we have now, we could keep them. Sadly, that promise is under threat. 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.
Like millions of other Americans, our members are front-line workers in the American economy. 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.
Since the ACA was enacted, we have been bringing our deep concerns to the Administration, seeking reasonable regulatory interpretations to the statute that would help prevent the destruction of non-profit health plans. As you both know first-hand, our persuasive arguments have been disregarded and met with a stone wall by the White House and the pertinent agencies. This is especially stinging because other stakeholders have repeatedly received successful interpretations for their respective grievances. Most disconcerting of course is last week’s huge accommodation for the employer community—extending the statutorily mandated “December 31, 2013” deadline for the employer mandate and penalties.
Time is running out: Congress wrote this law; we voted for you. We have a problem; you need to fix it. The unintended consequences of the ACA are severe. Perverse incentives are already creating 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.
Second, millions of Americans are covered by non-profit health insurance plans like the ones in which most of our members participate. These non-profit plans are governed jointly by unions and companies under the Taft-Hartley Act. Our health plans have been built over decades by working men and women. Under the ACA as interpreted by the Administration, our employees will treated differently and not be eligible for subsidies afforded other citizens. As such, many employees will be relegated to second-class status and shut out of the help the law offers to for-profit insurance plans.
And finally, even though non-profit plans like ours won’t receive the same subsidies as for-profit plans, they’ll be taxed to pay for those subsidies. Taken together, these restrictions will make non-profit plans like ours unsustainable, and will undermine the health-care market of viable alternatives to the big health insurance companies.
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.
We believe that there are common-sense corrections that can be made within the existing statute that will allow our members to continue to keep their current health plans and benefits just as you and the President pledged. Unless changes are made, however, 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.
James P. Hoffa
International Brotherhood of Teamsters
So, stay tuned for more changes to the ACA from the Administration to appease these union leaders. The President may carve out a “deal” to get their support in the future. Maybe these leaders should take an aspirin or two and call in the morning. For more on this, read Avik Roy’s article at Forbes.