Zach Noble
May 27, 2014
It’s a prime example of unintended consequences: the Affordable Care Act, pitched to the American public as a boon for the working class, is stalling out labor negotiations around the country.
Unions and employers are tussling over who will pick up the tab for new mandates, such as coverage for dependent children to age 26, as well as future costs, such as a tax on premium health plans starting in 2018. The question is poised to become a significant point of tension as tens of thousands of labor contracts covering millions of workers expire in the next several years, with ACA-related cost increases ranging from 5% to 12.5% in current talks.
Unions representing all kinds of workers, from Las Vegas casino employees to flight attendants, are being forced to negotiate new deals with management in order to bring health care coverage into ACA compliance, but are finding those negotiations stymied by the magnitude of health care cost hikes.
Besides the known increases in premiums and other costs, the relatively unknown future costs that will come as more provisions, such as the “Cadillac tax” on high-end coverage, are phased in.
Septa, Philadelphia’s regional transit system, estimates the Cadillac tax will bump up its healthcare costs by $15 million, or 12.5 percent, the Journal reported, and asked workers to contribute 1 percent of their pay to help cover that new cost.
The union rejected the proposal.
“They’re asking us to negotiate in the dark,” said the president of Transport Workers Union Local 234, the biggest union representing Septa workers.
Jim Ray, a lawyer who represents the Laborers International Union of North America in benefits negotiations, said these provisions have increased construction-industry health plans’ costs by 5 percent to 10 percent, and already resulted in lower wages for some laborers. He said employers are frequently seeking contract language to cap their own liability for future cost increases from the law.
More than a few labor representatives expressed disappointment and even a touch of surprise as they discussed the thwarted negotiations and rising healthcare costs brought on by Obamacare.
“When we first supported the calls for health-care reform,” Ray acknowledged, “we thought it was going to bring costs down.”
This isn’t the first time labor leaders have recognized the economic dangers posed by Obamacare.
Last summer, a group of union leaders wrote a letter to Democrats in Congress begging for ACA changes.
“The unintended consequences of the ACA are severe,” the letter warned. “Perverse incentives are already creating nightmare scenarios.”
Without a fix, the union heads wrote, “the ACA will shatter not only our hard-earned health benefits, but destroy the foundation of the 40-hour work week that is the backbone of the American middle class.”
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