UNITE HERE’s Harshly Critical Report About Obamacare

Jack Goldsmith

Jack Goldsmith is the Learned Hand Professor of Law at Harvard Law School, where he teaches and writes about national security law, international law, internet law, and, recently, labor history.  Before coming to Harvard, Professor Goldsmith served as Assistant Attorney General, Office of Legal Counsel from 2003-2004, and Special Counsel to the Department of Defense from 2002-2003.

Late yesterday, UNITE HERE confirmed to the On Labor staff that the union authored a report, The Irony of ObamaCare: Making Inequality Worse, that has been circulating on mainly conservative news sites recently. The report has gained attention because it is one of the broadest and harshest attacks yet on the Affordable Care Act by the labor movement.

The report argues that Obamacare will transfer billions in wealth to private health insurance companies, cause employers to cut hours for workers, raise health care costs for union members, and effectively cut the pay of low-wage workers. Specifically, UNITE HERE criticizes the Administration’s rejection of unions’ requests for waivers or flexibility in the face of some Affordable Care Act provisions:

For decades, unions and their employers have provided affordable comprehensive benefits to employees through “Taft-Hartley” plans. Named for the anti-union law passed in 1947, these benefit funds are governed by a separate regulatory scheme from commercial insurers, and have been a non-profit market counterweight to the for-profit companies. Their joint union-management governance structure gives patients a voice in plan governance.

These plans face extinction because the Obama Administration’s regulators have saddled them with the regulatory burdens but none of the benefits of health reform.

UNITE HERE has argued that the Administration’s unwillingness to provide flexibility to non-profit, Taft-Hartley plans is a double standard when compared to the delays the Administration has granted large employers from complying with Obamacare requirements. Donald “D” Taylor, President of UNITE HERE, recently highlighted the legal reasoning the Department of the Treasury provided to the New York Times regarding the Administration’s authority to delay employer mandates:

J. Mark Iwry, deputy assistant Treasury secretary for health policy, said the administration had broad “authority to grant transition relief” under a section of the Internal Revenue Code that directs the Treasury secretary to “prescribe all needful rules and regulations for the enforcement” of tax obligations. This authority has often been used to postpone the application of new laws that would cause “unreasonable administrative burdens or costs” to taxpayers, Mr. Iwry said.

Taylor argued that this reasoning seems broad enough to include the union plans, and unions are being unfairly excluded from administrative fixes.

In additional to the complaints about non-profit, Taft-Hartley plans, the UNITE HERE report includes three other major criticisms of fundamental elements or effects of Obamacare that are particularly striking in light of the labor movement’s strong support for the bill as it moved through Congress:

• Transferring A Trillion Dollars in Wealth: Most of the ACA’s $965 billion in subsidies will go directly to commercial insurance companies, one of the largest transfers ever of public wealth to private hands. Since the ACA passed, the average stock price of the big for-profit health insurers doubled, their top executives were paid more than a half billion dollars in cash and stock options, and in the past 2 years, the top 10 insurers have spent $25 billion on mergers and acquisitions. . . .

• Moving to Part Time Work: The Administration’s experts say employers won’t follow the incentives and drop coverage. But they also told the nation that employers would not cut workers’ hours to get below the 30-hour per week threshold for “full time” work, even as 388 employers announced hours cuts since early 2012.

• Cutting People’s Pay: If employers follow the incentives in the law, they will push families onto the exchanges to buy coverage. This will force low-wage service industry employees to spend $2.00, $3.00 or even $5.00 an hour of their pay to buy similar coverage.

UNITE HERE is not alone in the labor movement in expressing displeasure with the Administration regarding Obamacare. As we have previously noted, in September the AFL-CIO passed a resolution at its quadrennial convention criticizing Obamacare for its potential to increase premiums for union members and incentivize employers to drop health care altogether and instead encourage employees to get health care on the new exchanges, or online marketplaces. As a result, unions sought ”rule changes that would make their low-income workers eligible for the same types of federal subsidies they could get in the exchanges” or “rules that would treat their multi-employer plans as qualified exchange plans under the new law.” Additionally, in July, the UFCW and the Teamsters joined UNITE HERE in writing a letter to congressional Democratic leaders arguing that, “unless you and the Obama Administration enact an equitable fix, the ACA will shatter not only our hard-earned health benefits, but destroy the foundation of the 40 hour work week that is the backbone of the American middle class.”

As we have also previously noted, the Administration specifically “rejected several unions’ request for tax credits for multiemployer healthcare plans under the Affordable Care Act,” and a “senior administration official told Ezra Klein that the administration ‘does not see a legal way for individuals in multiemployer group health plans to receive individual market tax credits as well as the favorable tax treatment associated with employer-provided health insurance at the same time.’”

UNITE HERE’s report comes at the same time that the union is threatening a major strike in Las Vegas over Obamacare, a strike which could involve nearly 10,000 workers. Taylor, the UNITE HERE president, told Buzzfeed that “[t]he biggest hurdle to reaching settlements in Vegas is the new costs imposed on our health plan by Obamacare . . . [e]ven though the president and Congress promised we could keep our health plan, the reality is, unless the law is fixed, that won’t be true.” If the dispute is not resolved, workers will vote on March 20 on “whether or not they would want to walk off the job at several hotels, including the Stratosphere, the Riviera, and the Plaza.”

UPDATE: Megan McArdle has an economic and political analysis of the UNITE HERE report.

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