Labor Unions Regret Backing Affordable Care Act as Costs Rise

February 6, 2013 - NCPA

During the political debate over the Obama administration's health care overhaul, labor unions exuberantly backed passage of the bill. Now that the dust has settled and the true costs of the Affordable Care Act (ACA) have been revealed, union leaders are realizing the overhaul may not be such a good deal, says the Wall Street Journal.

• The ACA eliminates caps on medical benefits and prescription drugs used as cost-containment measures in many health care plans. Additionally, the law allows children to stay on their parents' plans until they turn 26.
• Because of these changes, the nation's largest labor groups are seeking federal assistance for their lowest paid workers to help cover the increased costs of remaining on their plans.
• The subsidies were originally intended for low-income workers without employer coverage and the Obama administration has commented that any new rules on the issue are still being written.

Roughly 20 million Americans are covered by health care plans that would no longer be subject to caps on medical benefits. Many of these individuals have plans that are jointly managed by unions and employers at small companies. Union leaders have recently told the Obama administration that the new mandates are not acceptable for union members.

• If subsidies are not awarded to low-income union members, unions say that companies with union workers would become less competitive with companies small enough to be excluded from the health care mandate.
• The Obama administration has held firm thus far, likely in fear that subsidies to unions would raise the cost of implementing the ACA and also create an argument for others to clamor for the subsidies.
• The subsidies will be administered as tax credits for households earning up to 400 percent of the poverty level, which equated to $92,200 for a family of four last year.

While a decision hangs in the balance, unions are bracing for the impact of the new mandate. Sheet Metal Workers Local 85 in Atlanta, for example, estimates the law's requirements will add between 50 cents and $1 an hour to the cost of members' compensation packages. Other unions echo similar figures.

Source: Janet Adamy, "Some Unions Grow Wary of Health Law They Backed," Wall Street Journal, January 20, 2013.