Obamacare Opens For Business, Shuts Out Labor
When the Obama administration announced July 2 that it would give a breather to employers affected by the Affordable Care Act (ACA), angry unionists noticed a pattern.
Even before this delay, “every corporate interest that’s asked for regulatory relief has gotten it,” said Mark Dudzic, chair of the Labor Campaign for Single Payer, “but the concerns of union plans have been overridden.”
The requirement that employers provide health insurance or pay a fine will be postponed till January 2015 or later.
“Looks like ordinary workers will be forced to pay for health insurance on the original schedule [starting January 2014], while big business is off the hook for at least a year,” said Chris Townsend, political director of the United Electrical Workers (UE).
Justifying the delay, the Obama administration cited employers’ difficulties in reporting employee hours worked, pay, and their insurance offerings—all information needed to calculate whether a fine is due for not offering adequate insurance.
The delay won’t be cheap. It means the government will forego $10 billion in employer payments for 2014, according to the Congressional Budget Office.
ROUND AND ROUND
Meanwhile, unions have been asking for adjustments that would protect multi-employer health care funds, but getting nowhere.
As a result, even supportive unions such as the Food and Commercial Workers have started to freak out about the law.
UFCW, UNITE HERE, and the Teamsters have gone round and round with the administration about their multi-employer “Taft-Hartley” plans, which provide insurance to 20 million workers, including part-timers, retirees, and workers between jobs, in the construction trades, trucking, hotels, and grocery.
In a strongly worded letter to Democratic congressional leaders, the presidents of the three unions let fly: “Time is running out: Congress wrote this law; we voted for you. We have a problem; you need to fix it,” they wrote. “Our persuasive arguments have been disregarded and met with a stone wall by the White House and the pertinent agencies.
“Even though non-profit plans like ours won’t receive the same subsidies as for-profit plans, they’ll be taxed to pay for those subsidies,” the union leaders wrote. “Taken together, these restrictions will make non-profit plans like ours unsustainable.”
Under Obamacare, small employers could save money by pulling out of their Taft-Hartley plans and sending workers to the new “exchanges” to get a subsidy, said James McGee, director of the Transit Employees Health & Welfare Fund in Washington, D.C. As it stands, “employers will have every incentive to get out of the funds when union contracts expire.” Employers with under 50 workers, which include 93 percent of construction employers, don’t have to pay a penalty for not providing coverage.
(See more on Taft-Hartley plans in accompanying box.)
Part of the reasoning behind Obamacare was to lower overall medical costs by forcing people to pay more for their care—causing them to visit the doctor less often.
“The consumer should continue to expect that their plan is going to be more expensive, and they will have less benefits,” said a consultant quoted in the New York Times.
That part is working. Employers are now seeing the ACA standards as a floor, and trimming back their plans to match the minimum.
The school system in Old Rochester, Massachusetts, went even further. The board demanded that the non-teaching staff such as cafeteria workers, represented by the UE, pay 50 percent of their premiums. Family coverage would have cost 80 percent of their income.
The now-delayed ACA provision says insurance premiums may cost no more than 9.5 percent of a worker’s income. That’s for an individual, though; there’s no limit on the cost of family coverage.
Many workers will face a Catch-22: insurance they can’t afford, but no access to Obamacare’s subsidies because their employer offers health insurance that the law deems affordable.
Because of union pressure, Old Rochester management backed off, but workers will still be left paying 30 percent of their premiums by 2016.
The Wendy’s hamburger chain
Popeye’s and Chipotle have made similar calculations.
In 2014, workers who opt out of such employer-offered insurance, and have no other insurance, will be hit with a fine of $95 annually and increasing in subsequent years.
Many employers will figure it’s cheaper to stop offering insurance, anyway. The annual fine to the employer per worker will be just $2,000—assuming the fines eventually kick in.
Workers so stranded by their employers can buy insurance on the soon-to-be launched insurance “exchanges,” now officially called “Health Insurance Marketplaces.”
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There, on a state-run website (or one run by the feds if your state opts out), private plans that meet ACA standards will be listed, with out-of-pocket limits (deductibles and co-pays) of $6,350 for an individual and $12,700 for a family.
These approved plans may impose no caps on annual or lifetime benefits. Pre-existing conditions and gender can’t be considered, but premium prices may vary (within limits) based on smoking, age, the size of your family, and the area you live in.
Anyone can buy insurance from a company on the exchange. For workers whose jobs don’t provide “affordable” insurance, the government will subsidize the cost of buying private insurance for individuals or families making less than 400 percent of the poverty level—$45,960 for an individual and $94,200 for a four-person family in 2013. The subsidies are intended to keep a family’s insurance premiums from growing beyond 9.5 percent of its income.
Some employers are blaming Obamacare for cuts they wanted to implement anyway.
One favorite area of blame is the so-called Cadillac tax, which doesn’t kick in until 2018. The tax is scheduled to hit plans that have premiums above $10,200 a year for individuals or $27,500 for families—employers would be taxed 40 percent of any amount over those limits.
While employers complained they couldn’t get ready to report on their insurance plans by 2014—and thus got a delay—they’re four-and-a-half years ahead of the game in planning for the Cadillac tax (see box below article).
Their solution is to dump more costs onto workers by offering lower-premium, higher-deductible plans. More than a third of covered U.S. workers are now in plans with deductibles of $1,000 or more, and 14 percent have deductibles above $2,000.
At Cummins, an engine manufacturer based in Indiana, deductibles reach as high as $6,000.
The lower premiums comply with the Obamacare requirement that less than 9.5 percent of your income go to premiums. But the law doesn’t take into account how much you spend on deductibles and co-pays in employer-provided insurance, creating pressure to get less care.
Of course, that incentive inverts what all experts say is the healthier—and cheaper—way to structure medical care. That is to encourage lots of preventive visits, to maintain health and avoid emergencies.
When people neglect routine care because the co-pay is unaffordable—or because the insurance company pays nothing at all till the giant deductible is reached—small problems become big ones, costing more in the end.
To cope with high-deductible plans, AFSCME members in Vermont have negotiated “choice cards,” funded by their employers, which pay their deductibles and co-pays out of an employer fund, said Traven Leyshon, secretary-treasurer of the Vermont AFL-CIO.
Another Obamacare rule that lowers the floor is that employer plans must pay at least 60 percent of the cost of covered benefits, a figure that would make most union negotiators nauseous. But that’s still called “affordable” insurance. This spring, the administration ruled that employers would have to obey the same annual out-of-pocket maximums as the exchanges, $6,350 for an individual and $12,700 for a family.
Advocates of Medicare for All say the faults of the ACA can make the case for a system that’s truly “everybody in, nobody out.” The Electrical Workers (IBEW) passed a resolution for “single-payer” at their last convention, and the San Francisco building trades now support single-payer. “I’ve never heard so many building trades folks talk about single payer,” said the UE’s Peter Knowlton.
The paperwork and headaches required to set up Obamacare leave some yearning for a simpler solution, like the set percentage deducted from our paychecks every pay period for Medicare. Increase that, and start Medicare at age zero, say advocates—as the Rube Goldberg system developed by the ACA clunks and lurches forward.
In Vermont, where the legislature passed a bill guaranteeing health care as a human right in 2011, advocates are trying to steer the committees designing the program away from involving private insurance, and toward a purely public system like those used in so many countries.
Under Obamacare, though, they can’t get a waiver to institute any new system until 2017.