Unions To White House On Obamacare, Taft-Hartley Plans: 'You Made The Problem, You Fix It'

08/21/2013 02:26 pm ET | Updated Aug 22, 2013

WASHINGTON -- Signaling a growing rift between some unions and the White House over the Affordable Care Act, the Nevada State AFL-CIO passed a stinging resolution Wednesday that criticized the administration for its handling of their concerns with the health care reform law. The resolution claims the law could end up "destroying" the unions' multi-employer health plans if the administration doesn't come up with a regulatory fix.

"[O]ur union members and their families originally offered strong political and moral support for the promise of the Affordable Care Act because it would expand health care coverage for more Americans," the resolution read. But when it came to dealing with the unions' concerns, "the Administration has postured on proposals to address the problem, but no proposal to date will actually solve the problem. Our health plans only get worse."

Several unions -- UNITE HERE, the United Food and Commercial Workers and the Teamsters -- have already voiced their worries that the law will undermine their multi-employer health care plans, known as Taft-Hartley plans. But Wednesday's resolution formalizes a major state labor federation's grievances just ahead of the AFL-CIO's national convention next month -- and just as the White House prepares for the law's rollout amid attacks from the right.

The critique also creates some political awkwardness not only for the Obama administration but for Senate Majority Leader Harry Reid (D-Nev.). One of the unions taking the lead on the issue, the 60,000-member Culinary Workers Union Local 226, a UNITE HERE affiliate, is the largest union in Nevada and a major political force in the state.

Long used by unionized workers in the building trades and service industries, Taft-Hartley plans are nonprofit health care plans jointly administered by participating companies and unions. The plans have traditionally allowed workers in transient industries to move between employers while still maintaining the same health care. Due to unions' seat at the table, the plans tend to offer strong coverage at a low out-of-pocket cost to workers.

In an interview, UNITE HERE President D. Taylor said the union has been in talks with the White House and the Treasury Department over how Taft-Hartley plans should be interpreted under the law. According to Taylor, if workers under Taft-Hartley plans aren't eligible for subsidies, employers will see little reason to remain a part of such plans down the road, potentially forcing workers to purchase their own health care on the state-run exchanges, which are unlikely to offer so much coverage at such low rates.

The Treasury Department has signaled that it views the Taft-Hartley plans as equivalent to other employer-based plans, which aren't eligible for subsidies. Taylor said Taft-Hartley plans should be seen differently because they're nonprofit.

"We've been working for over two years with essentially all aspects of the government, including Treasury, which wants to interpret [Taft-Hartley] as an employer plan, and it's not," Taylor said. "The Affordable Care Act has clearly been devised so that it would make our nonprofit Taft-Hartley plans completely uncompetitive."

"We want to hold the president to his word that you can keep the plan you like," Taylor added.

Obamacare has been assailed by the right since the day it was signed. The House GOP has made 40 doomed efforts to repeal the law, and nearly half of states -- all with Republican governors or GOP-majority legislatures -- have refused to participate in the Medicaid expansion, a crucial component in getting health care coverage to the poor.

Unions' concern over the law's effects on their Taft-Hartley plans has added a rare bit of criticism from the left, giving fodder to the law's Republican critics. Like other progressives, organized labor widely supported the health care law when it was crafted and signed, and many of the unions that don't participate in Taft-Hartley plans have remained quiet on the issue.

Tim Schlittner, a UFCW spokesman, said it wasn't unions' duty to worry about whether or not they're giving someone political fodder by raising concerns with the law.

"Our responsibility is not to the political left or right, it's to our members," Schlittner said. "As far as this law is concerned, we think if it's not fixed, it could cause harm to our members who've bargained for health care. These are not rich people, they're workers in grocery stores."

But because of how the law was crafted, it may not leave much room for the White House to interpret Taft-Hartley plans as unions would like, according to Paul Secunda, a professor at the Marquette University School of Law who specializes in employee benefits and labor. The problem, Secunda said, is that the law states that only people who go on the open exchanges will be eligible for subsidies. Taft-Hartley plans "aren't open to all comers," he said.

"I understand where the UFCW and UNITE HERE and the Teamsters are coming from ... They're making a good point that the operation of the law will have a detrimental impact on union health plans," Secunda said, adding that about 20 million workers are on such plans. "But there's nothing in the law as it was enacted that gives the administration the ability to interpret the law how unions want it to be interpreted."

Timothy Jost, an expert on health law at Washington and Lee University School of Law, agreed that the administration may have little wiggle room.

"I think it's a problem with the legislation; it's not a regulatory problem," Jost said. "But that doesn't mean I don't sympathize with them."

The Congressional Research Service, a nonprofit legislative analysis group, published a paper saying Taft-Hartley plans likely wouldn't be eligible for subsidies based on the way the law is written.

But Taylor and Schlittner said they believe it is within the administration's power to interpret the Taft-Hartley plans as eligible for subsidies.

In a piece last month, Talking Points Memo wrote that unions were essentially asking for a "double subsidy" through their interpretation of the law: Employer contributions to Taft-Hartley plans are already tax-deductible and employee contributions are paid pre-tax, while unions also want the tax credits that go with qualified buyers on the exchanges.

Taylor argued that it wasn't appropriate for the subsidies to help only buyers in a for-profit marketplace.

"Why is it that the only people getting subsidies are for-profit?" he asked.

Citing the administration's decision to delay employer penalties under the law for a year -- as well as a regulatory tweak that will keep health care costs down for Hill staffers -- Taylor said the "only people who've gotten special treatment are the business community and Capitol Hill."

"Here's what we're saying: 'You made the problem, you fix it,'" Taylor said. "Here we have situation where you can't blame the Republicans."

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