Obamacare Facts: Why the Unions Feel Betrayed

A prominent labor union has put out a report saying that the Affordable Care Act (ACA) will hurt its members economically and make income inequality worse.

It's the latest in a string of Obamacare facts that illustrate growing discontent with the healthcare law, even among U.S. President Barack Obama's closest allies.

Obamacare factsThe report, entitled "The Irony of Obamacare: Making Inequality Worse" was released Friday by Unite Here, a hospitality industry union with 300,000 members in the United States and Canada.

Unite Here, like many other unions that have supported President Obama, is unhappy with provisions in the healthcare law that increase costs for members while preventing them access to subsidies available to those using the health insurance exchanges.

"Ironically, the Administration's own signature healthcare victory poses one of the most immediate challenges to redressing inequality," the report says. "Yes, the Affordable Care Act will help many more Americans gain some health insurance coverage, a significant step forward for equality. At the same time, without smart fixes, the ACA threatens the middle class with higher premiums, loss of hours, and a shift to part-time work and less comprehensive coverage."

The report is referring to President Obama's emphasis on the need to raise the federal minimum wage to $10.10 in his State of the Union address in January, and the intent of Democratic strategists to make income inequality a central issue in the fall mid-term elections.

But what's really startling about the Union Here report is how closely it echoes Republican criticism of Obamacare since before the law was even passed. Much of it reads as if it were written by a conservative think tank like the Heritage Foundation.

And the Union Here report is just the latest example of blowback from big labor over these Obamacare facts. As it has become clear that the ACA is a bad deal for them, the protests have gotten louder and louder.

Here's why the unions are so unhappy...

Obamacare Facts Sure to Anger Just About Every Union

The unions have several beefs with Obamacare, though non-union members may not be terribly sympathetic to their plight.

Health insurance coverage through unions is typically very good, and in many cases the workers don't have to pay any part of the premium.

But Obamacare works by transferring money from younger and healthier people to the old, the poor, and the sick. Many people with employer-sponsored health insurance are going to pay more under Obamacare thanks to the new taxes and fees.

That includes union-based health plans. But the companies that employ union workers aren't happy about eating those new costs - and they're looking for ways to save money either by cutting back on worker hours or passing on some of those expenses.

Some employers may stop offering health insurance altogether and send their workers to the Obamacare exchanges, where they'd have to buy their own coverage. That would undermine a key reason people join unions - for the excellent health benefits.

Plus, because of the high quality of union health plans, many of them will be subject to the 40% "Cadillac tax" that kicks in starting in 2016 - adding still more expense.

Unions Shocked at Lack of Obamacare Exemptions

Adding to the union anger and frustration is that the Obama administration has rebuffed requests to soften the blow by granting them various exemptions based on their different structure.

Known as Taft-Hartley, union plans differ from other employment-based insurance in that they are run by the unions rather than a health insurer. Union plans cover about 20 million Americans.

Whether that is enough to qualify them for exemptions is the sticking point.

For example, the unions wanted Taft-Hartley plans exempted from a three-year reinsurance fee. That fee is intended to raise $25 billion as a backstop for the health insurance companies having to pay out more money to cover the greater number of older and sicker patients in their risk pools.

But just last week the Department of Health and Human Services said the fee would stand for 2014, though it did grant an exemption to Taft-Hartley plans for 2015 and 2016.

Of greater concern to the unions is that their members are not eligible for the same subsidies as people signing up for individual plans on the exchanges. That's because no one who gets health insurance through their employer, including unionized employers, is eligible for the subsidies.

The unions say that the policy is unfair to lower-wage workers who otherwise would qualify for the subsidies.

"The promise of Obamacare was the right one and the hope for extending healthcare coverage to the un- and under-insured a step in the right direction," the report says. "Yet the unintended consequences will hit the average, hard-working American where it hurts: in the wallet."

Though true, one of the inescapable Obamacare facts is that most Americans will pay more to cover the costs of the not previously insured - the poor and the very sick, who otherwise could not afford coverage.

The unions seem to agree with that idea, but thought they'd somehow be excused from the consequences.

"We take seriously the promise that 'if you like your health plan, you can keep it. Period,'" the United Here report concludes. "United Here members like their health plans."

Maybe they should have thought of that before they campaigned for President Obama (twice) and helped get Obamacare passed into law.

Are the unions being treated unfairly by President Obama, or are they just trying to squirm out of the financial burdens that Obamacare imposes on most other Americans? Sound off on Twitter @moneymorning or Facebook.

Last week President Obama announced further delays to the mandates for Obamacare. Now insurers can keep offering plans that do not comply with the healthcare law's requirements for two more years. White House officials said the move was intended to "smooth the transition," but here's the real reason for the delay...

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About the Author

David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.

Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.

Dave has a BA in English and Mass Communications from Loyola University Maryland.

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