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Why unions are turning on Obamacare

Leaders in organized labor have said that "the law as it stands will hurt millions of Americans including the members of our respective unions."
/ Source: MSNBC TV

Leaders in organized labor have said that "the law as it stands will hurt millions of Americans including the members of our respective unions."

President Barack Obama speaks at the AFL-CIO Labor Day picnic at Coney Island in Cincinnati Sept. 7, 2009. Some labor unions that initially backed Obama’s health care overhaul are now frustrated and angry about what they say are unexpected consequences of the plan that could hurt their members. (Photo by David Kohl/AP)

“Repeal and replace” is the Grand Old Party’s oft-repeated mantra regarding Obamacare, which House Republicans voted to repeal for the 40th time on Friday. But in April, an organization in the president’s base echoed the refrain.

On April 24, the United Union of Roofers, Waterproofers, and Allied Workers released a statement demanding “repeal or complete reform of the Affordable Care Act.” While no other union has yet called for an outright repeal of the health care law, a growing number of them argue that serious reform is needed.

“We continue to stand behind real health care reform, but the law as it stands will hurt millions of Americans including the members of our respective unions,” wrote the presidents of three major labor unions in a July letter to Congressional Democratic leadership. The subsequent three and a half weeks have not assuaged their fears.

“There are members of Congress who have met with us who have been somewhat responsive and concerned about the situation,” said a spokesperson for the hospitality union UNITE HERE, whose president signed the letter. “But there’s been no action addressing our concerns from the administration.”

So what has labor unions so worried about the Affordable Care Act? A few things:

The “Cadillac” tax. Obamacare includes a 40% tax on so-called “Cadillac” plans, meaning health insurance plans that cost more than $10,200 per year for individuals or $27,500 for families. Over the next few years, the price of many public employee health care plans could rise to meet that threshold, according to an article in Monday’s New York Times. The tax doesn’t kick in until 2018, but when it does, municipal governments and school districts across the country would have to foot the bill. As a result, many of them are already trying to negotiate significant employee health insurance cuts with their unions.

No subsidies for Taft-Hartley health insurance plans. About 20 million Americans are enrolled in health insurance plans known as “Taft-Hartley plans,” after the 1947 Taft-Hartley Act. These plans, which are managed by both employers and employee unions, are not eligible for Obamacare subsidies. However, they will be taxed at the same rate as other insurance plans which do receive subsidies.

“Taken together, these restrictions will make non-profit plans like ours unsustainable, and will undermine the health-care market of viable alternatives to the big health insurance companies,” wrote the presidents of UNITE HERE, the United Food and Commercial Workers union, and the Teamsters in their July letter to Democratic House Minority Leader Nancy Pelosi of California., and Democratic Senate Majority Leader Harry Reid of Nevada.

The Employer Mandate’s possible unintended consequences. The employer mandate requires that any business with 50 or more “full-time equivalent” employees—defined as those employees who work an average of 30 hours or more per week—must offer health coverage to its workers. In their July letter, union leaders said this provision “creates an incentive for employers to keep employees’ work hours below 30 hours a week.”

While the employer mandate will not be implemented until 2015, there have already been numerous reports that companies are either cutting employee hours or experimenting with a greater reliance on part-time employees, ostensibly in response to the mandate. But it’s unclear whether Obamacare is really to blame or just a convenient pretext; the evidence for the former case “is too weak for anyone with a fact-based curiosity about the matter to take seriously,” according to MSNBC’s Timothy Noah.