Topics: Labor Unions

Even the labor unions are souring on Obamacare

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Opinion,Op-Eds,Labor unions,Obamacare,Labor,Pacific Research Institute,Health Care

President Obama's health reform law may have claimed a new victim — organized labor.

Thanks to Obamacare, labor unions are facing higher health insurance costs — as well as steeper out-of-pocket bills and wage cuts.

Consequently, these erstwhile allies of the president appear to be signing on with the majority of Americans who oppose his signature law.

Obamacare's many coverage mandates and taxes are to blame for this upturn in the cost of insurance. Overall, union officials project that Obamacare will increase their members' health coverage costs by 5 to 12.5 percent.

The requirement that health plans cover enrollees' children until they turn 26 is one reason why. This provision alone has increased employer coverage expenses by 1 to 3 percent.

Obamacare also drives up union health expenses with new taxes. One levy on multi-employer plans, which are jointly run by unions and private businesses, extracts $63 per beneficiary this year — and $44 next year.

Those per-person charges can add up quickly in plans that cover thousands of union workers and their families.

And there are more cost-inflating taxes to come. In 2018, a "Cadillac" tax on high-cost health plans will take effect.

This 40 percent levy on insurance policies with premiums greater than $10,200 for individuals and $27,500 for families is projected to take in more than $100 billion for the federal government.

Labor unions tend to negotiate generous health care packages for their members — exactly the sorts of plans that the Cadillac tax will target. So union employers and their workforces will be primary payers of the tax.

Septa, Philadelphia's unionized transit operator, estimates that the Cadillac tax will raise its annual health coverage costs by $15 million — a 12.5 percent increase.

The agency won't be able to just eat those costs — it'll have to pass some of them along to workers. Septa has already tried to get one of its unions to chip in 1 percent more toward its members' health costs, but that request was voted down.

Obamacare has also led to labor strife elsewhere. In February, flight attendants for Alaska Airlines rejected a contract because it failed to protect them from future surges in the cost of their health benefits.

Thousands of unionized casino employees in Las Vegas casinos threatened to strike in early June, in part because of unhappiness with the cost of health benefits.

According to Donald D. Taylor, president of UNITE HERE, the parent organization of the local Las Vegas union, "the biggest hurdle to reaching settlements in Vegas is the new costs imposed on our health plan by Obamacare." A last-minute deal kept them on the job.

Unions may take little solace in the fact that Obamacare is increasing costs for most employers — and thus most other workers.

According to a new Aflac WorkForces report, over half of employers increased worker insurance copays and premiums last year. Fifty-nine percent plan to do the same this year.

A separate survey from the independent consulting firm Mercer found that 80 percent of employers are considering raising deductibles to compensate for Obamacare.

Union leaders are beginning to regret ever backing Obamacare. As Jim Ray, a lawyer for the Laborers' International Union of North America, recently put it:

"When we first supported the calls for health-care reform, we thought it was going to bring costs down."

A report from Unite Here concludes that Obamacare "threatens the middle class with higher premiums, loss of hours, and a shift to part-time work and less comprehensive coverage."

The union estimates that cost increases driven by the law have effectively cut worker pay by five dollars an hour.

In a letter to Senate Majority Leader Harry Reid of Nevada and House Minority Leader Nancy Pelosi of California, Teamsters' President James Hoffa wrote, "Congress wrote this law; we voted for you. We have a problem; you need to fix it."

The only way lawmakers can satisfy his request is by repealing and replacing Obamacare. Until they do, American workers — union and nonunion alike — will have to deal with higher health costs and lower wages.

Sally C. Pipes is president, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute. Her latest book is "The Cure for Obamacare," (Encounter 2013).

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