Union Report Castigates Health Care Reform 'Inequality'

Echoes of employers' claims that the ACA deters hiring full-time employees

By Stephen Miller, CEBS Mar 14, 2014

According to a new report by Unite Here, a union representing service-industry workers, the Affordable Care Act (ACA) is increasing income inequality in America. "Yes, the Affordable Care Act will help many more Americans gain some health insurance coverage, a significant step forward for equality," the report states. "At the same time, without smart fixes, the ACA threatens the middle class with higher premiums, loss of hours, and a shift to part-time work and less comprehensive coverage."

The report echoes employers’ claims that the ACA's requirements are acting as a deterrent to their hiring full-time employees, and advocates that union plans be exempt from some of the law's plan-design mandates. "Having already made efforts to accommodate businesses, churches and congressional staff, it is ironic that the administration is now highlighting issues of economic inequality without acting to preserve health plans that have been achieving the goals of the ACA for decades," the report contends.

"The 40 percent excise tax on especially expensive plans—the so-called Cadillac tax—is going to hit union plans especially hard" when (or if) it takes effect in 2018, policy analyst Megan McArdle commented in a blog post at Bloomberg View. "Although Labor Secretary Thomas Perez proposed some rules changes in December to exempt 'excepted benefits' (vision, dental and employee assistance programs) from some of Obamacare's provisions, that did little to answer union concerns."

Unite Here's report isn't the first union critique of the ACA. In a July 2013 letter, Senate Majority Leader Harry Reid, D-Nev., and House Minority Leader Nancy Pelosi, D-Calif., were warned: “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 workweek that is the backbone of the American middle class.” The letter was penned by James Hoffa, general president of the International Brotherhood of Teamsters, Joseph Hansen, international president of the United Food and Commercial Workers International Union, and Donald “D.” Taylor, president of Unite Here.

Fee Exemption for Union-Managed Plans

The administration hasn't ignored union pleas entirely. For instance, the ACA creates a transitional reinsurance program in each state to help cover the expense of treating high-cost enrollees from 2014 through 2016. Fees to support the program are assessed against both fully insured and self-funded group health plans. On March 5, 2014, the Health and Human Services Department released a final rule that exempted self-insured plans that are also "self-administered" from these fees for the 2015 and 2016 plan years. According to an analysis by law firm Proskauer Rose LLP: "This exemption could apply to any self-insured and self-administered plan, but it is generally perceived that larger multiemployer [union] plans are most likely to satisfy these [fee exemption] requirements."

Critics of the exemption for union-managed health plans, in turn, have charged that this will cause the per-capita fees paid by other employer-provided health plans to rise in order to meet the program's revenue requirements.

Stephen Miller, CEBS, is an online editor/manager for SHRM.

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