Big Labor Burned by ObamaCare

Unions furious to learn the law will apply to them too.

0724-midwest-labor-unions-2012-election-obama_full_600Unions that undoubtedly believed they were part of the Obama administration's select group of "winners," have discovered otherwise. In a scathing letter addressed to Nancy Pelosi (D-CA) and Harry Reid (D-NV), the presidents of UniteHere and the Laborers' International Union of North America (LIUNA) declared they were "bitterly disappointed" that the proposed regulations to ObamaCare would be detrimental to their interests. In short, unions that supported the president's two election campaigns are apparently just discovering what many Americans have known for years: Obama's promises are worthless.

The unions are incensed that ObamaCare does not provide subsidies for union-negotiated trust funds known as Taft-Hartley plans. Because there employers already pay for these plans, the Treasury Department insists they are not eligible for tax breaks or subsidies. The administration contends that if the unions got what they demanded, they would be getting two tax breaks, even as the rest of America gets one. That's because the unions want their employers and the government to fund their benefits. They are further enraged that the $63 surcharge ObamaCare levies on non-profit, self-funded plans to subsidize insurance companies that take on higher risk patients didn't end up in union coffers.

Robert Laszewski, a health policy consultant in Washington, illuminated the administration’s position. “The unions here are asking to double dip,” he said. “It is an unfair request. The Obama plan is very simple: If your employer pays for your health plan, you are not eligible for a government subsidy. What the unions are asking for is government and employers to fund their benefits.”

In a series of meetings with the White House, labor leaders made their concerns about Taft-Hartley known, and they were apparently placated by a series of false promises. In one ironic twist, these leaders met for an hour on September 13 with Obama and other top administration officials to voice their concerns about the Taft-Hartely problems -- even as they subsequently discovered a letter revealing the plans would not receive subsidies was being sent to GOP lawmakers around the same time frame.

The administration's duplicity represents the latest in a string of disappointments for a labor movement that shoveled massive amounts of money into pro-Obama organizations in both 2008 and 2012. They also deployed millions of grassroots volunteers, convinced that ObamaCare was the big-government answer to their healthcare concerns. Their disappointment is amplified by what they consider a lackluster effort on the part of the administration to support card check legislation that would have facilitated organized labor's ability to form unions.

Labor leaders expect the twin snubs to further fuel an intensifying debate within America's labor movement about how much time, energy -- and money -- they should continue to invest in Democrat candidates. There are already rumblings about pulling support for Democrats candidates in the 2014 mid-term elections. Moreover, LIUNA has established relations with the GOP's Chris Christie, endorsing him for reelection as New Jersey's governor in 2013. They also donated $300,000 to the Republican Governors Association headed by Christie, and there are preliminary talks between union officials and Christie's aides about his possible appearance at a union convention.

UniteHere president Donald Taylor, whose union represents about 400,000 hotel and restaurant workers, said it was unlikely that his union would follow suit, but he indicated their previous level of support for Democrats might be a thing of the past. “You can’t just order people to do stuff,” Taylor said. “If their health plan gets wrecked, why would they then go campaign for the folks responsible for wrecking their health care?”

Taylor also noted that UnitedHere officials met with White house leaders 48 times. During that the the parameters of ObamaCare were being considered, “we were told that ‘if there were problems, don’t worry, we’ll get them fixed. We thought that if we made the case to the agencies dealing with regulations to correct problems that hurt, really destroy, self-funded nonprofit health plans, it would be resolved,” Taylor said. “That clearly was naive or stupid.”

Taylor is not alone. Last September, administration officials persuaded the AFL-CIO to alter a union resolution that initially called for ObamaCare's repeal. When the wording of the resolution was changes to "repair," it passed unanimously. LIUNA president Terry O’Sullivan expressed a concern that now resonates with many Americans, both in and out of the labor movement. “We’ll be damned if we’re going to lose our health insurance because of unintended consequences in a law. It needs to be changed, it needs to be fixed, and it needs to be fixed now.”

It was after that resolution passed that the aforementioned September 13 meeting with Obama took place. Thus, despite their decision to alter their calls for ObamaCare's repeal, it soon became apparent they were being duped by the same administration that did the same thing to millions of other Americans.

The administrate did attempt to quash union discontent last October indicating that they would do what they do best: grant an ObamaCare exemption to a key ally. The administration quietly proposed exempting “certain self-insured, self-administered plans” from the $63 reinsurance fee for the years 2015 and 2016. That wording covers a number of the Taft-Hartley trust funds that are co-managed by unions and their employers, and who act as as their own insurance company and claims processors. Those plans are regulated the Taft-Hartley Act of 1947 and the Employee Retirement Income Security Act (ERISA). 

When Republicans complained about the carve out, union officials noted that many of their plans use third party administrators to process claims, making them ineligible to take advantage of the change. A Health and Human Services official echoed that sentiment. "This definition would exempt any self-insured group health plan that does not use a third party administrator for claims processing or enrollment, not only union plans," the official told

Yet Republicans insisted that the change was aimed at unions, especially since it was made after some prominent union leaders demanded relief. Furthermore, much of the current discontent is about the administration's refusal to offer an exemption for 2014, when the fee will be the greatest. It goes to $42 in 2015 and $26 in 2016 and then ends.

Other labor leaders who didn't sign the letter have indicated they are equally upset with the administration's cavalier treatment of the labor movement. They include the International Brotherhood of Electrical Workers and the Building Trades Unions. 

Several corporations and churches also maintain self-funded, non-profit insurance plans. They have formed a Corporate Health Care Coalition, which is a similar effort to do away with the tax on self-funded plans. They have been joined by several unions.

Yet as the letter sent to Pelosi and Reid indicates, union officials believe they have been gamed by the administration, noting that Labor Secretary Tom Perez had sent a letter to Congress suggesting union concerns had been addressed. "This is simply not true regardless of the Secretary's good intentions," the letter states. 

By the end of the letter, the scales had apparently fallen from their unionist eyes. "If the Administration honestly thinks that these proposed rules are responsive to our concerns, they were not listening or they simply did not care," the letter states. "We have examined various healthcare exchanges and should members be forced to purchase insurance on an exchange, their out of pocket costs are likely to be significant, reaching into the thousands of dollars, even if they are eligible for a subsidy under the act. It would be a sad irony indeed if the signature legislative accomplishment of an Administration committed to reducing income inequality cut living standards for middle income and low wage workers."

One would suspect they mean a cut in the living standards of middle income and low wage union workers. Otherwise, they're more than a bit late in voicing their concern for the millions of Americans who have been enduring precisely the same experience since they began purchasing policies on the individual market more than five months ago. One is hard-pressed to recall any outpouring of union sympathy for the millions of Americans relegated to part-time employment due to ObamaCare, or the 91.8 million Americans who have left the workforce altogether. Moreover, it is no secret that the labor movement is still in bed with the administration when it comes to the so-called comprehensive immigration reform that will further harm American workers.

Thus, the best that can be said regarding union discontent is better late than never. Maybe it will begin to occur to them that they are as vulnerable to the capriciousness of the Obama administration as the rest of America.

Freedom Center pamphlets now available on Kindle: Click here.