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Treasury Rejects Labor’s Top Obamacare Demand

David MobergOn Friday afternoon, following a major labor convention at which many union leaders forcefully advocated revisions in the Obama administration’s interpretations of the Affordable Care Act (ACA), the Treasury Department released a letter that effectively dismissed at least one of labor’s key demands.

A major concern at the quadrennial AFL-CIO conference in Los Angeles this week was the ACA implementation looming in October, particularly the exclusion of multi-employer health plans—which are jointly administered by unions and employers in many industries—from the state health exchanges. UNITE HERE, the United Food and Commercial Workers and the Teamsterswere particularly concerned because many of their members use the multi-employer plans.

As the administration had promised, President Obama met on Friday with a labor delegationheaded by AFL-CIO president Richard Trumka to discuss labor’s request for administrative changes to address their problems with ACA. Obama told the delegation that their multi-employer union plans would not  be eligible for participation in the exchanges, according toForbes. Then shortly afterwards, the Treasury letter, addressed to Sen. Orrin Hatch (R-Utah), came to public attention. Hatch had previously written to the Treasury asking if they agreed with him that multi-employer plans should be kept out of the exchange.

Originally made possible by the predominantly anti-labor Taft-Hartley law in 1947, the multi-employer, non-profit plans allowed workers in fields such as construction—who may work in short stints and for multiple employers—to have a steady source of insurance. Union analysts think the lack of subsidies will put Taft-Hartley plans at a disadvantage, incentivizing employers to abandon the plans and buy insurance directly from exchanges. This would leave workers in the lurch when they are between jobs.

The Taft-Hartley plans would also be put at other disadvantages in the new insurance market. Even though the non-profit multi-employer plans have never discriminated on the basis of pre-existing conditions, they will still have to help pay for for-profit insurance companies to newly cover people previously excluded on this basis. Unions argue that this arrangement unjustly increases the costs of their Taft-Hartley plans. Some union plan officials also want more time to adjust to the cost of eliminating caps on how much any insured individual can receive in insurance payments over a year or a lifetime. There are other concerns, ranging from insurance requirements for federal contractors to definitions of part-time workers, for whom employers do not have to provide insurance.

Most union leaders have not commented on the letter. Staff-level talks between unions and the administration are scheduled for this week, and many leaders apparently still hope to salvage some ACA reforms, even if they don’t win everything.

Union passions on the subject run hot, and some leaders, such as LIUNA president Terry O’Sullivan, wanted the AFL-CIO to pass a resolution at the conference calling for the repeal of the ACA if the administration did not agree to reforms. Instead, the resolution endorsed single-payer insurance as labor’s ultimate goal, but called for improvements in the ACA (and in Medicare as well). Meanwhile, most unions appear ready to continue negotiating with the Obama administration and see what they—like big business, which won huge exemptions recently (notably a year delay in implementing the key mandate to provide insurance)—can finally win from their frustrating talks.

This article was originally printed on Working In These Times on September 18, 2013.  Reprinted with permission.

About the Author: David Moberg is a senior editor of In These Times, has been on the staff of the magazine since it began publishing in 1976. Before joining In These Times, he completed his work for a Ph.D. in anthropology at the University of Chicago and worked for Newsweek. He has received fellowships from the John D. and Catherine T. MacArthur Foundation and the Nation Institute for research on the new global economy.

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