Big Head Press

L. Neil Smith's
Number 723, June 2, 2013

I have sworn upon the altar of god,
eternal hostility against every form
of tyranny over the mind of man

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Obama, Union Buster?
by Wendy McElroy

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Special to L. Neil Smith's The Libertarian Enterprise

Organized labor has been a bedrock of President Obama's political power. How far will he go to preserve support from this key Democratic constituency?

On April 16, the United Union of Roofers, Waterproofers and Allied Workers (UURWAW) became the first union to officially call for the repeal of Obama's signature legislation—the Affordable Care Act, also known as Obamacare. In an official statement, President Kinsey M. Robinson noted that the union's 22,000 members could no longer support Obama's sweeping health care act because it has "unintended consequences that are inconsistent with the promise that those who were satisfied with their employer sponsored coverage could keep it."

Robinson explained that Obamacare jeopardizes the union members' "multi-employer health plans," and he argued that it has "the potential to cause a loss of work for our members, create an unfair bidding advantage for those contractors who do not provide health coverage ... [and] may cause our members and their families to lose the benefits they currently enjoy."

He concluded, "I refuse to remain silent, or idly watch as the ACA destroys" the health and welfare protections currently extended to union members. Instead, he explicitly called for the "repeal or complete reform" of Obamacare.

The UURWAW is expressing an increasingly popular view within organized labor, especially within unions that rely on multiemployer health plans. Such plans are the result of collective bargaining, and they are jointly managed by unions and employers. Multiemployer plans are common in industries such as construction and trucking. This has turned two of the most powerful unions in America—the International Brotherhood of Teamsters and the AFL-CIO (American Federation of Labor and Congress of Industrial Organizations)—into open critics of Obamacare.

Labor unions collectively endorsed the new health care law when it was under debate, and they spent millions to ensure its passage in 2010. But their endorsements have gradually muted as the practical impacts of Obamacare have become evident.

One major impact that concerns the unions is that Obamacare drives up the cost of union health care plans precipitously. For example, it removes the caps on medical benefits and prescription drugs that many health care plans traditionally used as a check on runaway expenditures. Moreover, children will now be permitted to remain on their parents' plans until the age of 26. And then there is the $63 annual fee per insured person as a "contribution" to a high-risk fund. Such costs make union workers less competitive. Unionized employees will become especially less attractive to those employers who are small enough to escape the requirements of Obamacare.

A January 30 article entitled "Some Unions Grow Wary of Health Law They Backed" in the Wall Street Journal examined the main health care reform that some unions are now demanding: a federal insurance subsidy for low-income members who are on union health care plans. Obamacare currently provides such subsidies only to workers without employer coverage, in order to help them buy insurance privately.

Will Obama cave to union demands?

Union spokespeople are mincing no words. John Wilhelm is the chairman of the labor-management trust fund Unite Here Health, which provides health insurance to 260,000 union workers at workplaces like hotels, casinos, and airports. Wilhelm wants to hold the president to his promise that employer health care plans will not be harmed by Obamacare. Wilhelm recently stated "If ... the president does not intend to keep his word, I would have severe second thoughts about the law."

In a cynical move to retain political support for Democrats, Obama is likely to pander to organized labor. It would be far from the first time. A 2012 Daily Caller article reported on documents released by the White House on one late Friday afternoon; such timing usually indicates material that politicians hope will go unnoticed. The documents revealed that "labor unions continued to receive the overwhelming majority of waivers from the president's Health Care reform law since the Obama administration tightened application rules last summer." Over half a million union workers were granted temporary exemptions from the law for which they pushed so strenuously. (There are approximately 14 million unionized workers in America.) By contrast, only 69,813 nonunion workers were covered by waivers.

Interestingly, the Daily Caller article suggested one reason why unions are now becoming more vocal in criticizing Obamacare: most of the Obamacare waivers the unions have had thus far will expire in 2013. Perhaps these unions are finally confronting the harsh realities already foisted upon so many private employers.

Predictably, the January 30 Wall Street Journal article addressed the possibility of federal insurance subsidies to union workers. Nevertheless, the Obama administration needs to step carefully because of the backlash that could accompany a grant of such privileges to political cronies.

Perhaps Obama will handle the union demand for federal insurance subsidies in a manner similar to how he handled the so-called "Cadillac tax." This Obamacare provision called for a 40 percent excise tax on "Cadillac," or high-premium, health care plans. Many unions cried out in protest because they have deluxe benefit packages for their members. Indeed, this is one of the strong selling points for union membership. In a privilege-soaked deal, unions received an exemption until 2018, while non-union workers faced the tax almost immediately. The ensuing hue and cry caused Democrats to exempt everyone until 2018.

Unions are already pushing for an exemption beyond 2018. The Weekly Standard (March 25) emphasized what is at stake for them. The excise tax "is poised to wreak havoc at the state level. In Pennsylvania, teachers in 168 of the state's 500 school districts are working without contracts, and by the fall a majority of districts could be without contracts. Most of the negotiations in the state reportedly hinge on reining in health care benefits, rather than salaries." Singling out another state, the article explained "the tax is particularly punishing for middle-income public employees in Massachusetts. From 2018 to 2028, a police officer on a typical family plan will be subject to an extra $53,907 in new taxes. A teacher on an individual plan will owe an extra $20,807."

For most public-sector unions, of course, both the benefits and the taxes on them are paid, not by the employee, but by ordinary taxpayers. The Weekly Standard concluded, "the Cadillac tax is going to cause turmoil across the country between public employees who have become accustomed to gold-plated health packages and taxpayers who are increasingly unable to pay for them." Thousands of public-sector jobs could be axed by states that cannot increase revenue enough to cover the tax.

After embracing Obamacare so wholeheartedly, organized labor now finds itself deeply disenchanted.

If Obama follows the same course for federal insurance subsidies as he did with the Cadillac tax, then all low-income workers will suddenly become eligible, regardless of whether they are covered by employer insurance. Of course, this would dramatically raise the cost of Obamacare and require more tax revenue.

Or the Obama administration may be wagering that no one will notice yet another privilege handed out only to political allies. Certainly the mainstream media seems to be oblivious to the rather remarkable reversal of opinion expressed by the UURWAW. On April 22, the Newsbusters website declared, "It's no surprise that the liberal media are ignoring poll after poll showing widespread discontent, even among Democrats, with Obamacare. But what's utterly inexcusable is the man-bites-dog story coming out of a labor union this week, which is now calling for Obamacare's repeal." A Google search (April 30) reveals minimal coverage of the news item; most of it issues from alternative media sources such as Newsbusters and the economic opinion site Zero Hedge.

Meanwhile, one by one, unions are dropping their enthusiasm for Obamacare. Some push for the new subsidies. Others bristle over the excise tax. Many protest the impact of health care cutbacks by employers who cannot afford to fully implement Obamacare. For example, in August 2011, the Communications Workers of America and the International Brotherhood of Electrical Workers called a strike against Verizon because of its health care cutbacks. Pessimistic labor voices have predicted Obamacare will be a death knell for unions.

Who knew? One of the hats Obama may be wearing soon is that of "union buster."

Reprinted from The Future of Freedom Foundation's website at Wendy McElroy is an author for The Future of Freedom Foundation, a fellow of the Independent Institute, and the author of The Reasonable Woman: A Guide to Intellectual Survival (Prometheus Books, 1998).

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