Okay, What Is It About This That I’m Not Understanding?
Union leaders note that under the law, workers whose family income is less than four times the poverty line will qualify for subsidies in the form of tax credits to obtain health insurance in the exchanges, with insurance sold by for-profit, nonprofit and cooperative companies. The union leaders say they want similar treatment — for unionized workers to qualify for those tax credits to help finance their Taft-Hartley insurance plans, which covers about 20 million workers and retirees.
“We just want to be treated like equals — we don’t want special treatment,” Mr. Taylor said. “An employer will say, ‘O.K., your plan costs about $10,000 a year. Let me get this straight. I only pay a $2,000 penalty if I drop you. That’s an $8,000 saving for me.’ That’s actually going to happen all over this country.”
— Unions’ Misgivings on Health Law Burst Into View, Steven Greenhouse and Jonathan Martin, New York Times, today
Because of Obamacare, an employer will say, “O.K., your plan costs about $10,000 a year. Let me get this straight. I only pay a $2,000 penalty if I drop you. That’s an $8,000 saving for me.”? That’s actually going to happen all over this country?
Why, then, haven’t those employers said years ago, “O.K., your plan costs about $10,000 a year. Let me get this straight. If I drop your plan, that’s a $10,000 saving for me.”? Why hasn’t this actually been happening all over this country, for years?
Well, it has, of course, except when union contracts prevent it, or where the employer thinks healthcare insurance is a benefit that it makes economic sense to provide as part of employee compensation–a tax-exempt part.
Why is it suddenly more attractive to these companies to save $8,000 a year per employee than it has been for those companies to save $10,000 a year per employee?
C’mon, y’all. Explain this to me. What is it about this issue that I’m not understanding?
Business is business. But the pathological blind rage of retaliation is priceless.
Unions are worried about:
1. workers being shifted to part-time, and then not qualifying for health coverage under the contract
2. ACA doesn’t work well with multi-employer plans, common in such industries as construction and trucking (workers work for various employers throughout the year, the employer fund a plan administered by the union)
The unwillingness of the administration to fix some obvious blunders is stunning.
Funding Democratic campaigns – expensive.
Being double-crossed – priceless.
Rusty, I don’t know anything about how the multi-employer union-administered plans work, but I assume that, what matters regarding the ACA is that the person/family has insurance; the source, whether a single one more than one, doesn’t matter. I don’t see how the ACA changes anything for these union members or for their employers; the employers already are insuring them.
But your other point–worry that workers will be shifted to part-time, and then not qualifying for health coverage under the contract –why is that any more likely to happen because of the ACA than otherwise? These people already are covered. If the employer wanted to keep from covering them, then what’s stopping the employer from shifting them to part-time work now, that would no longer keep the employer from shifting them to part-time work once the ACA takes effect?
It seems pretty clear from the NYT article and from your comment that what’s happening is that people are blaming the ACA for trends that have been going on for a while and that the ACA will not affect at all, one way or the other.
Should say: “… but I assume that what matters regarding the ACA is that the person/family has insurance; …”
Also, should say: “… the source, whether a single one or more than one, doesn’t matter.”
Rusty got half of it: a lot of the remaining private-sector unions are not of the one company-one worker-one union model that is the basis of ACA. There isn’t a company in the world that wants to pay for a full year of health-insurance for a worker (think carpenter, plumber) who works for them for four months and their competitors for the other eight.
The other half is the NYT again trying to lump people in: retirees with health-care as part of their pensions. (Note, for instance, that IBM just announced moving its retirees to the HIEs, possibly to address just this issue.) If said retiree is making $35K, s/he would be entitled to subsidized insurance–which pension insurance is not set up to provide.
If you look at the first couple years of Massachusetts (or even Hawaii, which has had a better version of RomneyCare since 1974/5), you’ll see many medium-sized employers who tried the “I’ll pay the penalty” move. (Most of them later Made a Commitment –they either wanted to grow and recruited people who value insurance or became.smaller and more insular and voted for Scott Brown.)
There will be many stories over the next year or two of firms that “choose” to pay the penalty and try to blame Obamacare for their own inability to have a viable business model.
while you’re all into what aint being understood about ACA, was this supposed to happen?
GE, IBM Ending Retiree Health Plans in Historic Shift – America’s biggest employers, from GE to IBM, are increasingly moving retirees to insurance exchanges where they select their own health plans, an historic shift that could push more costs onto U.S. taxpayers. Time Warner Inc. (TWX) yesterday said it would steer retired workers toward a privately run exchange, days after a similar announcement by International Business Machines Corp. General Electric Co. (GE) last year said it, too, would curb benefits in a move that may send some former employees to the public insurance exchanges created under the 2010 Affordable Care Act..
Whether the unions’ fears are rational I will leave to others. There is also a fear in the construction unions that their labor will be priced out of more markets than now (union labor rarely builds single family homes these days).
The interesting story is the lack of interest from Obama. As I was taught long ago “don’t mes with the Teamsters!.”
RJS – the law of unintended consequences, new costs in a weak economy get backlash.
Ken, I still don’t understand why, or how, the ACA changes anything in the way that the union-administered multi-employer plans will work. As far as the ACA is concerned, all that matters is that the employees have insurance–and all the employers under contract with the unions have to continue to pay their proportional share to the union for the insurance, because that’s what the union contract requires. So how does the ACA allow some of the employers to renege and try to place the entire burden on other seasonal employers under contract with the same union?
Rjs, I don’t know anything specific about the reasons for the GE and Time Warner decisions, but I do know–because I read a detailed article about it a day or two after IBM announced the chance–that the reason for the change was that, for a number of years, the premiums for these retiree plans had increased so much that many of the retirees could no longer afford their share of the premiums, as well as that the company itself was increasingly financially strained from paying its share. Many retirees were asking the company to look for cheaper alternatives, with lesser coverage. I assume that the reason for the change at GE and Time Warner is the same. So this is another instance of blaming the ACA for something that the ACA is not responsible for. This isn’t the law of unintended consequences, it’s the law of false assumptions and a jaw-droppingly inept communications response by the Obama administration to the false assumptions.
Which brings me to Rusty’s final point. The interesting story is the lack of interest from Obama about the massive misunderstandings about the way the ACA will operate–and about almost every other policy or law about which misunderstandings about have caused huge problems. The stimulus; the dramatically decreasing (rather than increasing) budget deficit; basic Keynesian economics; the effect of huge public-sector layoffs around the country; etc.
We have a president who lacks either the ability to understand the basic premise of the importance of explaining and refuting, or lacks the interest and energy to bother.
” … workers whose family income is less than four times the poverty line will qualify for subsidies in the form of tax credits to obtain health insurance … ”
I don’t know too much about this issue but how well are tax credit type subsidies going to work if they those who need them are — by definition — among the 47% who are too poorly paid to pay income tax. ??? I’m sure it can’t be that stupid.
Aren’t the president and democrats generally unable to make fixes to the law that require legislation because the republicans generally refuse to allow fixes to be made and have the votes in the house to stop them?
Perhaps there are things the administration could do without congress, and I suppose we may well see some of that going forward. Right now the relevant agencies are probably simply busy with the rollout and everything else has to wait a bit.
Denis, I think–but am not sure–that the tax credits will work like the earned income tax credit (or whatever it’s called) works, which is that the recipient of the tax credit will receive what is called a tax refund but may actually be more than the person’s withholding tax was. Something like that. But most healthcare insurance premiums are paid monthly, not yearly, so I’m not sure about the specific mechanics of how it will work.
Jeff, what you say is true, but, best as I can tell, some of the fixes being called for are about things that don’t actually need to be fixed, because the people who are concerned about the particular issue misunderstand the relevant part of the ACA. Case in point: that union leader quoted in the NYT article fearing that, suddenly, employers will decide that they want to end healthcare insurance as part of their employee compensation in order to save, say, $8,000, when as things stand without the ACA they could save $10,000 by doing the same right now. It wouldn’t take an act of Congress, or even a tweaking of the applicable regulations, to correct misunderstandings of this sort. All it would take is a quick explanation by the president, who just doesn’t DO explaining or responding to misunderstandings–of anything important. It’s ridiculous.
AFL_CIO resolution, passed yesterday i believe:
The resolution states: “The ACA should be administered in a manner that preserves the high-quality health coverage multi-employer plans have provided to union families for decades and, if this is not possible, we will demand the ACA be amended by Congress.”
Apparently there is another issue floating about.
The administration wants to severely limit the very popular business self-insurance plans, and force most of the businesses into commercial insurance plans or exchanges.
The administration and its liberal allies are trying to crush the self-insured plans by severely reducing the availability of stop-loss coverage.
Problems is, the union multi-employer plans need stop-loss coverage as well.
Jimmy Hoffa jr. is not happy. That is not good for the “Ds.”
interesting phrase: “their labor will be priced out of markets..”
meaning the unions will be broken and labor will have to accept subsistence wages?
maybe all those house carpenters will become insurance accountants.
far more useful to society.
In your face, Jimmy Hoffa Jr!
This one is easy to answer. Employers can drop the plan because they now know that their employees can get excellent, subsidized coverage through the exchange. The employers are happy because they save $8000. The employees are happy because they get to pick a plan that say costs them only $33 per month and gives them no deductible $3 co pays and a $2000 max out of pocket. Plus they get to pick their doctors.
The union loses out on the cushy insurance administration jobs and any fees or kickbacks that they get for administering the plans. The taxpayers foot the bill for the insurance.
How Will Obamacare Affect Unionized Workers?
by DAVID MACARAY
With most major provisions of the Patient Protection and Affordable Care Act (PPACA), commonly and often pejoratively referred to as “Obamacare,” set to go into effect in January 2014, union members across the country have been wondering how the PPACA will affect the health care benefits already laid out in their union contracts.
Although it’s a bit unnerving how few people in positions of authority (plant managers, HR reps, health care administrators, etc.) seem to know exactly how the PPACA will work, the answer to the question, “How will Obamacare affect my union health care benefits?” is fairly clear. The answer is that it will likely have no effect whatsoever.
As a general rule, contract language supersedes everything. Unless the language in question is in clear violation of state or federal law, it is going to trump all else. Indeed, that’s not only the whole point of a binding agreement, it’s the virtue of a union contract, the beauty of an employee having access to the collective bargaining process, and the advantage of not being treated like a doormat.
A recent article in the Washington Post raised what might otherwise have been a red flag. The Post reported that UPS announced that, as of January 1, it was no longer going to allow its employees to provide health care coverage for working spouses. If you had a wife or husband who was working elsewhere, you could no longer cover them. The change is expected to affect approximately 15,000 workers.
Because the PPACA requires employers (with 50 or more employees) to provide affordable health insurance, UPS management saw an opening and decided to exploit it. It was an opportunity to get out from under what they considered a fairly significant financial burden. But the article was careful to note that this applied only to its non-union workforce, and had nothing to do with its unionized employees (mainly Teamsters).
In theory, labor unions have the ability to control their own destiny via the collective bargaining process by customizing and adapting a contract to fit their specific needs. This is not something that came easily; it took organized labor more than 100 years to carve out that niche. So what’s the lesson for those non-union UPS workers and their spouses who just received the bad news? Not to be glib, but the lesson is that they need to organize.
Because much of this PPACA package is provisional, and because, presumably, everyone is going to be looking for loopholes and exceptions, there’s no way of knowing for certain what kind of health insurance these employers are going to provide. Yes, the coverage is mandated by federal law, but how good will it be? Only when you negotiate a medical plan at the bargaining table are you assured of knowing what you’re getting (and even then it’s often unclear).
But there’s some irony here. Prior to the PPACA, management could announce that it was no longer going to provide union employees with medical coverage. Although a company risks a strike by pulling a stunt like this, it’s been done in the past, and with replacement workers looming as the wild card, some companies have gotten away with it without going to war. A weak union, or a union dealing with a struggling company, wouldn’t have much of a choice.
However, with the PPACA in place, companies won’t have the option of unilaterally eliminating medical coverage. Removing this expensive item from the contract will no longer automatically result in cost savings because federal law will require that they provide it in any event.
And based on how most businesses regard government mandates, it’s safe to say they’d rather take their chances with a union bargaining team. Of course, as always, the bottom-line is going to dictate what happens in the health care arena, and if the PPACA card can be used as leverage, management will definitely play it.
Oddly, there’s a flip-side to this. It may turn out that fewer workers want to join a union once they realize companies are required to provide affordable health insurance. In truth, the main reason some people join a union is to have access to health insurance, so this scenario isn’t that farfetched. In any event, one thing is clear: Union-wise, Obamacare could very well be—as so many have predicted—a mixed bag.
David Macaray, an LA playwright and author (“It’s Never Been Easy: Essays on Modern Labor”), was a former union rep.