Obama’s Labor Pains: Unions Rage Against the Affordable Care Act

Unions were among the biggest backers of Obama’s new health-care law. Now they say they were betrayed. Patricia Murphy on the simmering brawl.

Jonathan Newton/The Washington Post via Getty

Labor unions were among the strongest supporters of the Affordable Care Act when it passed in 2010. They spent millions of dollars in ad buys supporting the bill, pressured wavering Democrats in Congress to pass it, and followed up with support for those Democrats in the November elections.

Three years later, union leaders say the bill they fought to pass now threatens to hurt their own members. At issue are the collectively bargained, multi-employer insurance plans that more than 15 million unionized workers access under the Taft-Hartley Act. Those plans currently allow workers like builders and electricians to change jobs among participating employers and stay in the same health-insurance plan. Because many of the jobs involve manual labor, the plans usually account for injuries and repetitive stresses, benefits that unions say their workers sought instead of higher wages.

But this could change. Under the Affordable Care Act, small companies could choose to stop covering workers through the union agreements and send their workers to the state-based exchanges instead. Through these exchanges, workers would pay lower premiums, thanks to federal government subsidies. But labor leaders fear that the workers who retain union plans will end up paying higher premiums, since there will be fewer people in the plans, and coverage could be less generous. No one knows for sure that this is how it will play out—companies could very well decide to continue in the union plans and keep the status quo—but unions are predicting the worst.

Republicans are saying “I told you so.” Democrats are saying that while they never meant to hurt their allies in organized labor, their hands are now tied by the House GOP. In a decision last week, the Obama administration said it can’t make the changes union leaders are looking for, either. Unions now are left in the middle of the roiling family feud that all agree has no easy answers.

The first public signs of trouble came in July, when union leaders including Teamsters’ president James Hoffa wrote a blistering letter to Democratic leaders Nancy Pelosi and Harry Reid warning of "nightmare scenarios" for millions of workers if the Affordable Care Act is not changed to accommodate labor health plans.

“Congress wrote this law; we voted for you,” they wrote. “We have a problem; you need to fix it.”

Rep. Joe Courtney (D-Conn.) worked for months in 2010 to scale back the effects of the 40 percent excise tax in the bill for union members, but he said the chances of the Republican House addressing unions’ worries now “are close to zero” because of the partisan dysfunction plaguing Congress right now.

“My frustration is that there are really things that need to be fixed in this bill, but we have this religious war that makes it impossible to go through it and make changes,” Courtney says. “I think people are going to have to figure out how to ride it out for the next couple of years and hope that there will be a more friendly Congress after 2014."

Just how unfriendly are Republicans to the idea of changing the law for unions now? Sen. John Thune (R-S.D.) introduced a bill last week specifically barring the White House from making any changes to the bill for organized labor, a move that he said would amount to a “backroom deal.”

“Union leaders are now awaking to the ugly reality of ObamaCare that most Americans have predicted all along, including higher health care costs,” Thune said.

Those higher costs aren’t certain for union workers, but are a strong possibility, say experts. Because low-income union workers would be eligible for state-based exchanges and the tax subsidies they offer, their employers may be tempted to drop their coverage.

The concern is that employers will be less willing to collectively bargain with unions through Taft Hartley if the employers believe their employees would be as well of or perhaps better off in the exchanges with the premium tax credits,” says Timothy Jost, a professor at Washington and Lee University who has studied the Affordable Care Act.

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Jost says the way the law is written makes it impossible for the White House to give unions what they want—more favorable tax treatment for their existing plans and subsidies for their workers who have access to private insurance through union contracts.

“You're either insured through your employer or you're not and if you're not and your income is low enough then you're eligible for the tax credit,” Joust says. “But you can't get both and I think that's the fundamental problem.”

Courtney says he began hearing from union leaders and members years ago about their serious concerns over the bill. “This thing has been simmering for a long time, and it was at the convention that it burst into public view."

That was the AFL-CIO’s annual convention last week, which President Obama skipped as the Syrian crisis escalated. In his absence, union members passed a rare resolution blasting the Affordable Care Act for its possible effects on union members. “It needs to be changed and fixed now,” LIUNA president Terry O'Sullivan told the convention.

Two days later, Congress had already recessed for the weekend and the administration formally announced it could not make the changes unions want without Congress acting first. All agree Congress acting isn’t likely.

“We knew from the beginning this would be a problem,” a senior Democratic aide tells The Daily Beast. But with Republicans controlling the House, the aide said, the changes the unions want “just aren’t going to happen. There's only so much to do within the context of the law, but Republicans are only interested in sabotaging the law.”

As for a possible solution outside of Congress, Courtney said that he believes the door remains open for the Obama administration to step in somehow, particularly after a meeting last week between the president and top labor leaders.

“After the meeting,” Courtney said, White House officials “were given their marching orders to go and try to come up with ideas about how the Department of Labor can cushion the blow in terms of the problem that I think is now becoming increasingly apparent.”

After months of public warnings and complaints, union leaders have been silent since that meeting, a signal that a deal could be in the works and a sign of just how important changing the law is for unions and for one of the key benefits they offer current and prospective members.

Overall, Jost says, many Democrats in Washington concede that if the health-care exchanges are successful, it is possible that the health coverage low-income union members receive through the exchanges could be as good and as affordable as what they have now. But their incentive to work through their unions to get that coverage could change drastically.

“I think the kind of people who are members of unions will benefit from the Affordable Care Act,” Jost says. “Whether the unions themselves will benefit, I don't know.”