Some Unions Grow Wary of Health Law They Backed
By JANET ADAMY and MELANIE TROTTMAN - WSJ.com
January 30, 2013, 10:32 p.m. ET
Labor unions enthusiastically backed the Obama administration's health-care overhaul when it was up for debate. Now that the law is rolling out, some are turning sour.
Union leaders say many of the law's requirements will drive up the costs for their health-care plans and make unionized workers less competitive. Among other things, the law eliminates the caps on medical benefits and prescription drugs used as cost-containment measures in many health-care plans. It also allows children to stay on their parents' plans until they turn 26.
To offset that, the nation's largest labor groups want their lower-paid members to be able to get federal insurance subsidies while remaining on their plans. In the law, these subsidies were designed only for low-income workers without employer coverage as a way to help them buy private insurance.
In early talks, the Obama administration dismissed the idea of applying the subsidies to people in union-sponsored plans, according to officials from the trade group, the National Coordinating Committee for Multiemployer Plans, that represents these insurance plans. Contacted for this article, Obama administration officials said the issue is subject to regulations still being written.
Some 20 million Americans are covered by the health-care plans at issue in labor's push for subsidies. The plans are jointly managed by unions and employers and used mostly by small companies. They are popular in industries such as construction or trucking or hotels, where workers' hours fluctuate. By contrast, unionized workers at big employers such as Goodyear Tire & Rubber Co. GT -0.72% tend to have a more traditional insurance arrangement run through only one employer.
Top officers at the International Brotherhood of Teamsters, the AFL-CIO and other large labor groups plan to keep pressing the Obama administration to expand the federal subsidies to these jointly run plans, warning that unionized employers may otherwise drop coverage. A handful of unions say they already have examined whether it makes sense to shift workers off their current plans and onto private coverage subsidized by the government. But dropping insurance altogether would undermine a central point of joining a union, labor leaders say.
"We are going back to the administration to say that this is not acceptable," said Ken Hall, general secretary-treasurer for the Teamsters, which has 1.6 million members and dependents in health-care plans. Other unions involved in the push include the United Food and Commercial Workers International Union and Unite Here, which represents service and other workers.
Employers and consumers across the country will see big changes under the health law, which goes into full effect next year. Insurers will no longer be able to deny coverage to people with pre-existing conditions. Most individuals will be taxed if they don't carry insurance, and employers with at least 50 workers will face a fine if they don't provide it. About 30 million Americans are expected to gain insurance under the law.
John Wilhelm, chairman of Unite Here Health, the insurance plan for 260,000 union workers at places including hotels, casinos and airports, recalls standing next to Barack Obama at a rally in Nevada when he was a 2008 presidential candidate.
"I heard him say, 'If you like your health plan, you can keep it,' " Mr. Wilhelm recalled. Mr. Wilhelm said he expects the administration will craft a solution so that employer health-care plans won't be hurt. "If I'm wrong, and the president does not intend to keep his word, I would have severe second thoughts about the law."
If unions don't win the subsidy argument, they say that companies with unionized workers would become less competitive, especially compared with rivals too small to face the law's new requirements.
For the Obama administration, holding firm against union demands for subsidies risks alienating a key ally. Giving unions a break, however, would not only increase the cost of the law but likely open the door to nonunion employers in a similar situation who would demand the same perk.
The 2010 Affordable Care Act generally excludes workers with low incomes from tapping subsidies if they already have insurance from an employer that is affordable and meets the law's minimum standards. Another exception is if they have access to government plans such as Medicare or Medicaid.
Obama administration officials declined to answer questions about whether union-employer plans could qualify for subsidies under the law...