Why Are Unions Mad About Obamacare?

The AFL-CIO has been one of President Obama’s biggest supporters, so why are they mad about parts of his signature achievement?

Yesterday, at the AFL-CIO quadrennial convention in Los Angeles, the union approved a resolution that, while reaffirming general support for the Affordable Care Act (or “Obamacare”), criticized several specific provisions and called for administrative and legislative fixes. Specifically, some union leaders believe that the structure of the health care law might increase premiums for their members and incentivize employers to drop health care altogether and instead encourage their employees to get health care on the new exchanges, or online marketplaces, created under Obamacare. As a result, unions are seeking “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.”

Along similar lines, unions have criticized the so-called “Cadillac” tax in the law, which Ezra Klein of the Washington Post‘s “Wonkblog” calls “the largest [tax] increase [in the Affordable Care Act] — and certainly the most important one for the future of the health-care system.” A “Cadillac” plan is “a high-cost policy” that “often [has] low deductibles and excellent benefits that cover even the most expensive treatments.” Unions have sometimes negotiated for such plans “even at the expense of wages.” As Klein explains, the administration hopes that “additional tax revenue will be generated less by so-called ‘Cadillac’ plans subject to the excise tax than by employers delivering more of their workers’ compensation in the form of taxable wages and less in the form of expensive health-care benefits.” This gets to the heart of one of President Obama’s major objectives for health care reform: bending the “cost curve” of health care.

Yet, while some view “Cadillac” health insurance plans as culprits in the inflation of health care costs, unions tend to think of them in an entirely different way: as hard-fought benefits for their members earned at the negotiating table. As the resolution states, “workers should not be penalized for negotiating good health care benefits by having them subjected to special taxation—particularly so long as the tax system as a whole is tilted so severely in the direction of the very rich.” The AFL-CIO is particularly upset because they believe that “unless changes are made, the ACA will effectively use taxpayer dollars to subsidize employers that refuse to take responsibility for providing their employees health care.”

Both the White House and AFL-CIO leaders say that they are working together to reach a resolution to this problem. And not all unions have been criticizing Obamacare lately: on the same day that the AFL-CIO resolution passed, the SEIU, which is not in the AFL-CIO, “announced that it will partner with advocacy groups, including Enroll America and Families USA, to help the Department of Health and Human Services promote Obamacare in 30 cities in coming weeks.”

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