The SEIU remains supportive of the law, but the AFL-CIO has expressed disenchantment. Unions and Obamacare: 5 questions

Key parts of organized labor have a case of buyer’s remorse over Obamacare and they’re letting everyone know about it.

The AFL-CIO at its convention this week passed a resolution calling President Barack Obama’s health law “highly disruptive” to some union insurance plans, “substantially changing the coverage available for millions of covered employees and their families.” The labor federation did back the sweeping goals of Obamacare — covering people and restraining costs —but that wasn’t the part of the message that resonated politically.


“It’s encouraging to see those who strongly endorsed the health care law finally recognize its fundamental problems,” the GOP-led House Education and Workforce Committee said in a statement Thursday.

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The SEIU remains very supportive of Obamacare. It even announced this week that it was pitching in for outreach and enrollment efforts across the country. But that was eclipsed by the disenchantment of the AFL-CIO, the biggest labor federation in the country.

Here are five questions about the brewing conflict between labor and Obamacare.

What are “multiemployer” plans and who is in them?

About 20 million people get insurance through multiemployer or Taft-Hartley plans.

Instead of contracting directly with private insurers, these health benefit plans are collectively bargained between unions and multiple employers often in the same industry, like food service or construction.

The government treats the plans like other employer-sponsored insurance, providing the same generous tax breaks on employer and employee contributions.

Often, industries that use these multiemployer plans don’t employ a long-term, full-time workforce. But the plans are portable — workers can often take their insurance from job to job among participating employers. A roofer, for instance, can go from job to job, without any interruption in coverage. With a traditional health plan, he’d change insurance each time he changes jobs — if he even got insurance.

Why do unions feel these plans are threatened?

That’s easy. Smaller employers who now pay into these multiemployer plans may look at the deal their employees can get on the new Obamacare health insurance exchanges and decide they would be better off there. The unions are also worried about rising costs.

“The threat is that employers and in particular small employers are going to say, ‘I basically have low-income employee[s] who would be better off in the exchange than they would be with my contribution to a Taft-Hartley plan, so I’m going to walk away,” said Tim Jost, a professor at Washington and Lee University and expert on the Affordable Care Act. “That then undermines the Taft-Hartley plans because fewer employers contribute to them, and fewer employees will want them. It’s going to undermine the ability of the unions to have a benefit they can offer their members.”

Tim Schlittner, spokesman for the United Food and Commercial Workers International Union, said, “That’s a pressure that’s been created by this law and one of the unintended consequence. I don’t think anyone could have imagined that the ideal outcome of the law would be to cover millions of people by disrupting the good insurance that millions of people already have.”

Some of the other labor complaints are the same ones that conservative critics lodge — Obamacare is chock full of taxes and fees that will make insurance more expensive. They also worry about a “Cadillac tax” — a tax on the most generous insurance plans starting in 2018 that may affect some unions’ health coverage. The idea is to encourage smarter utilization of health care, but the unions fear it will just erode benefits.

What do the unions want?

Premiums subsidies, that’s what.

They want the workers enrolled in multiemployer plans to be eligible for the tax credits that the law provides to low- and moderate-income people buying their own insurance on the exchanges.

That would make those plans doubly attractive to employers and employees because they would benefit not only from the tax breaks given to regular employer insurance — but also government subsidies to employees.

They say the White House has bent other rules — like when it pushed off until 2015 the requirement that large employers provide insurance or pay a penalty.

But the union plans are just a poor fit for the structure of Obamacare, which in general tries to preserve the existing large-employer market, which the labor plans are part of. The health law focuses on the individual market for people who don’t get covered through a job, and on small businesses.

“It’s one thing to bend the rules, and it’s another thing to completely restructure the statute,” Jost said. “And I don’t see they can do that administratively.” In other words — Jost’s view is that Congress would have to step in and change the rules and give more money to subsidize union members in health plans that are already getting tax breaks. And that’s not a very likely scenario.

The unions also don’t like that Obamacare imposes penalties on larger employers that don’t provide health benefits to employees who work more than 30 hours a week, because that puts pressure on businesses to cut hours.

Schlittner said they support the Part-Time Worker Bill of Rights that would keep pressure on all employers to provide insurance by pro-rating the penalties for part-time employees.

The unions also don’t want to pay various taxes and fees that all insurers must pay to fund Obamacare.

What does the Obama administration say?

At this point, not a whole lot, other than to say that multiemployer plans have not been singled out for some special torment in Obamacare. They also say officials are working on smoothing out problem issues where possible.

“There is nothing in the Affordable Care Act that changes the law for multiemployer (Taft-Hartley) plans,” an administration official told POLITICO in an email. “We are committed to making the law work to make health care more effective and affordable for all Americans, including those covered by multiemployer plans.”

News reports said the administration tried to get the AFL-CIO to stop or soften the resolution passed in Los Angeles on Wednesday night. That failed — although the unions didn’t go so far as to call for repeal.

What do Republicans say?

That one’s easy too. They don’t want “special treatment” for unions — but they like watching the traditionally bedrock Democratic constituency gripe about the president’s crowning domestic achievement.

As the complaints began a few months ago, Sen. Orrin Hatch (R-Utah) and other Republicans beseeched unions to find common cause in the Obamacare repeal effort — but with a few exceptions, the unions have chosen not to go that route.

And even if the administration isn’t signaling that it’s going to respond to union demands — Republicans are moving to preempt any such accommodation.

Sen. John Thune (R-S.D.) has introduced the Union Bailout Prevention Act and filed it as an amendment to the energy bill the Senate is debating. By Thursday, he had 10 co-sponsors.

“The Republicans are perfectly happy to crow about how the unions hate the law too, but hell will freeze over before they agree to do” anything legislatively to address their concerns, Jost said.