Will ObamaCare Undermine Union Membership?


One little-discussed side effect of ObamaCare is that it could undermine union membership by reducing the incentives for some unions to offer health benefits.

The issue here is how the law deals with multiemployer health plans, which cover as many as 26 million Americans, and are especially popular with unions whose members frequently work irregular hours for multiple customers. ObamaCare  requires these plans to comply with a number of regulations that are likely to drive up costs, but it doesn't allow employers who provide benefits through multiemployer plans access to subsidies or tax credits. The only way for many of those union members currently covered by multiemployer plans to get subsidies would be for the unions to stop offering those plans.

So as the law stands now, a lot of unions that rely on multiemployer plans will end up having big incentives to drop health benefits and instead let members buy subsidized insurance through the law's exchanges. The potential cost savings aren't trivial: Last year, a representative from a multiemployer plan organization told a labor issues news site that the difference could easily be as much as $5,000 per employee annually. With savings like that on the table, it's going to be very hard to justify continuing to pay for health benefits if union members can get health insurance elsewhere. 

But here's the thing: Labor unions don't want to drop health benefits for their workers, in no small part because providing health benefits is a big part of what they exist to do. If they don't offer benefits, it's harder to attract and retain union members.

It's not surprising, then, to find that many union leaders aren't pleased with this situation. And while they haven't made much of a public fuss up until now, they are starting to complain a little more loudly. As Janet Adamy and Melanie Trottman report in The Wall Street Journal…

Some 20 million Americans are covered by the health-care plans at issue in labor's push for subsidies. The plans are jointly managed by unions and employers and used mostly by small companies. They are popular in industries such as construction or trucking or hotels, where workers' hours fluctuate. By contrast, unionized workers at big employers such as Goodyear Tire & Rubber Co.GT -0.22% tend to have a more traditional insurance arrangement run through only one employer.

Top officers at the International Brotherhood of Teamsters, the AFL-CIO and other large labor groups plan to keep pressing the Obama administration to expand the federal subsidies to these jointly run plans, warning that unionized employers may otherwise drop coverage. A handful of unions say they already have examined whether it makes sense to shift workers off their current plans and onto private coverage subsidized by the government. But dropping insurance altogether would undermine a central point of joining a union, labor leaders say.

"We are going back to the administration to say that this is not acceptable," said Ken Hall, general secretary-treasurer for the Teamsters, which has 1.6 million members and dependents in health-care plans. Other unions involved in the push include the United Food and Commercial Workers International Union and Unite Here, which represents service and other workers.

The Obama administration isn't quite giving the unions an outright no at this point. But it's not saying yes either. As Adamy and Trottman note, acceding to union demands here would not only result in the law costing more due to the increased availability of the subsidies, it would make it harder for the administration to say no to other groups who might expect similar treatment. Going forward, the politics of this particular subissue will be interesting to watch, because the Obama administration will have to decide between helping an ally and trying to hold down costs.

Like most groups aligned with Democrats, big labor unions were generally supportive of ObamaCare during the fight for passage. But now it looks like the health law could end up causing a lot of unions big headaches over time.