The Obama administration on Monday released a new regulation setting rules for who can keep their current health insurance plans under the law. The regulation gave special consideration to plans negotiated by unions, quickly drawing criticism from conservatives and others, who argue the rules will put small businesses at a competitive disadvantage.
But the new rule is only one of numerous ways the health-care law boosts unions. And since vast portions of the law remain undefined – until bureaucrats fill in the details – further breaks for organized labor are widely expected.
For the rule regarding whether people can keep their health plans – known as “grandfathering” in bureacratise – the Department of Health and Human Services ruled that for union-negotiated health plans, companies can change insurance providers but keep their essential plan details intact, or grandfathered. For non-union-negotiated plans, companies can’t change providers – they must stay with their same insurance provider.
Without the ability to choose another company, small businesses would have little leverage to negotiate their rates, probably leading to higher costs, critics say. The alternative is to get a new plan which meets the strict new regulations of the Obama health-care law, which will probably cost more, too.
It also hits at a core pledge President Obama made repeatedly in pushing for the law – that people happy with their current health plans could keep them. In fact, the Obama administration now estimates that as many as 51 percent of businesses (and 66 percent of small businesses) will need new health-care plans by 2013 because of the law.
A second way Obama’s health-care law helps unions is in the so-called “Cadillac” tax that applies to more expensive health-care plans.
For most of America, that tax begins when an employee’s health-care plan costs at least $10,200. After that, the plan will be taxed at 40 percent. For union-negotiated plans, the tax starts at $27,500 instead. Some estimates say this will save union members $60 billion over 10 years.
Organized labor has argued that workers who negotiated better health-care plans in exchange for lower pay could be hurt – plus they negotiated the plans without knowing the tax could hit them later.
A third way the law boosts unions is with a $5 billion subsidy for health insurance for early retirees. The health-care law’s critics note that the vast majority of employers who have early retiree programs are unionized employers, especially in the public sector.
Under the program, HHS will reimburse certain claims between $15,000 and $90,000.
A fourth way the law benefits unions is that it gives union members entry into the health insurance exchange markets earlier than everyone else.
A fifth way the law benefits unions is that certain very large group plans are exempt from many of the regulations in the health-care law. This category of large group plans is not limited to unions – for instance, large employers such as Wal-Mart may be eligible – but it will also benefit key union-negotiated plans.
Because the health-care law is so vast and complicated – and since many of its details are yet to be determined – this list is not exhaustive.
Notably, organized labor, far from pleased with Obama, is instead involved in a bitter feud with the White House.
Recently, labor (and environmentalists and other liberal factions within the Democratic party) threw millions of dollars into a Democratic primary race in Arkansas in their attempt to defeat Sen. Blanche Lincoln. Lincoln has posed a key impediment both to the union-backed Employee Free Choice Act as well as a range of environmentalist priorities.
Following Lincoln’s win, a senior White House aide remarked to Politico that the unions had “flushed” $10 million down the toilet in trying to defeat Lincoln. A top labor official responded that unions are not a “arm of the Democratic party.”