More Unions are Angry about the Unintended Consequences of Obamacare

Posted by PITHOCRATES - May 26th, 2013

Week in Review

The unions and President Obama were tight.  Once upon a time.  They helped the president win two elections.  Dumped truckloads of campaign money into his coffers.  And the thanks for all of this?  Obamacare.  Which they once enthusiastically supported.  But now they are learning what the opponents have been saying about Obamacare all along.  That it will make health insurance more expensive.  And likely that people will lose coverage they like and want to keep.  It’s getting so bad that unions are now coming out in opposition of Obamacare (see Some unions now angry about health care overhaul by SAM HANANEL, Associated Press, posted 5/24/2013 on Yahoo! News).

…some unions leaders have grown frustrated and angry about what they say are unexpected consequences of the new law — problems that they say could jeopardize the health benefits offered to millions of their members…

“It makes an untruth out of what the president said, that if you like your insurance, you could keep it,” said Joe Hansen, president of the United Food and Commercial Workers International Union. “That is not going to be true for millions of workers now.”

The problem lies in the unique multiemployer health plans that cover unionized workers in retail, construction, transportation and other industries with seasonal or temporary employment. Known as Taft-Hartley plans, they are jointly administered by unions and smaller employers that pool resources to offer more than 20 million workers and family members continuous coverage, even during times of unemployment.

The people who work in construction may work for many different construction companies throughout their working life.  But they have consistent benefits because of the one constant during their union life.  Their union membership.  Which makes these jobs different than someone working in the same UAW assembly plant all of their life.  Who also work for the same company all their working life.

A lot of people will stay in a job they don’t like because of their health insurance benefit.  Construction workers don’t have to worry about being stuck in a job they don’t like.  If they don’t like an employer they can quit.  Go to the union hall.  And pick up another job.  All without any interruption in their benefits.

Construction companies collectively bargain contracts with these unions.  For example, electrical contractors will negotiate a contract with the local chapter of the union representing electricians.  And health care costs are a big part of those negotiations.  For it is these electrical contractors that pay for the health insurance plans managed by the union.  And it’s costly.  Raising a contractor’s cost when bidding new work.  Which is why union construction companies try to keep nonunion companies from bidding their work.  Because nonunion companies don’t have this massive cost to pay for this generous union benefit.  Which can provide uninterrupted health insurance for an unemployed worker sitting at the hall for months waiting for another job.  As well as for his wife and his children.  Something people don’t enjoy when they get laid off from most other private sector jobs.

The union plans were already more costly to run than traditional single-employer health plans. The Affordable Care Act has added to that cost — for the unions’ and other plans — by requiring health plans to cover dependents up to age 26, eliminate annual or lifetime coverage limits and extend coverage to people with pre-existing conditions.

As it has added to the cost for ALL insurance plans.  There’s a reason why before Obamacare plans didn’t cover dependents up to age 26, had annual or lifetime coverage limits and excluded pre-existing conditions.  Because they add great cost.  Insurance companies aren’t greedy.  They’re just trying to provide insurance.  Having people pay a little bit for a policy to insure against a large financial loss.

For insurance to work you need a lot of responsible people paying a little bit for those policies.  Forcing plans to cover pre-existing conditions, though, makes people NOT buy health insurance.  For they think why should I pay years of health insurance premiums when I can just buy a policy when I’m sick?  Which they will.  So they will consume a lot of health care costs that have to be paid by people who are buying policies.  While contributing nothing to the pot for others.  Making those policies under Obamacare very expensive.  Because with preexisting conditions covered a few people will now have to a pay a lot.

Workers seeking coverage in the state-based marketplaces, known as exchanges, can qualify for subsidies, determined by a sliding scale based on income. By contrast, the new law does not allow workers in the union plans to receive similar subsidies.

Bob Laszewski, a health care industry consultant, said the real fear among unions is that “a lot of these labor contracts are very expensive and now employers are going to have an alternative to very expensive labor health benefits.”

“If the workers can get benefits that are as good through Obamacare in the exchanges, then why do you need the union?” Laszewski said. “In my mind, what the unions are fearing is that workers for the first time can get very good health benefits for a subsidized cost someplace other than the employer.”

You see, the Obama administration cannot give a subsidy to the unions.  Because they have to pay for subsidies they give to low-income people with a ‘tax’ on other insurance plans.  That is, the people who can afford to pay for health insurance have to pay the subsidies for those who can’t.

The ultimate goal of Obamacare is to put the private health insurers out of business so the government can step in and get what they want.  National health care.  Of course, doing that has one big drawback for these unions.  With national health care you don’t need to belong to a union any more for the kind of health care benefit that provides for you and your family even when you’re unemployed.

Labor unions have been among the president’s closest allies, spending millions of dollars to help him win re-election and help Democrats keep their majority in the Senate. The wrangling over health care comes as unions have continued to see steady declines in membership and attacks on public employee unions in state legislatures around the country. The Obama administration walks a fine line between defending the president’s signature legislative achievement and not angering a powerful constituency as it looks ahead to the 2014 elections.

The cost of unions has pushed most of U.S. manufacturing offshore.  Public sector unions are bankrupting city and state governments.  And even the state of Michigan, home of the automotive industry, has voted to become a right-to-work state.  The heyday of the unions is over.  And they’re struggling to hold onto what little they have.  Especially in the private sector.  Where their ranks have done nothing but fall since the Sixties.

The unions poured money into the reelection of President Obama because Democrats are supposed to make things better for unions.  Not worse.  At this rate unions may start voting Republican.  For though they may not have as generous union contracts they may at least still have union contracts.  Because with the business-friendly environment of the Republicans there may at least be a building boom.  And more union construction jobs.

As the 2014 midterm elections draw close you may see a louder voice for the repeal of Obamacare.  This time coming from one-time vocal supporters.  Perhaps giving Democrats a difficult time at winning their elections.  Unless they come out for the repealing of Obamacare, too.  For unions may have at one time thought about how nice it would be to get rid of that costly benefit from their benefit package.  Which will happen if Obamacare evolves into national health care.  But now they’re seeing that this outcome may make unions irrelevant.  And are likely thinking, “My God, what have we done?”

It just goes to show you have to be careful what you wish for.  Because sometimes those wishes come true.

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