What unions are upset about isn’t a flaw with Obamacare

I know Austin highlighted this post by Avik Roy already, but I want to do the same:

The issue at hand is the way Obamacare affects multi-employer health plans, also known as Taft-Hartley plans. These plans consist of employer-sponsored health insurance that is arranged between a labor union in a particular industry, such as restaurants, and small employers in that sector. Approximately 20 million workers in the United States are covered under such arrangements, including 800,000 of the 1.3 million members of the United Food and Commercial Workers International Union, whose leader, Joseph Hansen, signed the letter I described above.

Workers with employer-sponsored coverage don’t qualify for subsidized coverage on Obamacare’s insurance exchanges. Those subsidies are designed for low-income people who aren’t offered coverage from their employers, and have to shop for insurance on their own. But the labor union leaders want those subsidies to also apply to their members with employer-sponsored coverage, even though they already get those benefits tax-free due to the employer tax exclusion for health insurance.

There’s nothing in this that I don’t agree with. Period. Taft-Hartley plans get the employer-sponsored health insurance tax deduction. That’s their “subsidy”. The ACA was not designed in order to give such plans another tax break/credit. Avik’s right.

Not that the unions don’t have a concern:

“The unions think it will be cheaper for employers to drop out of the Taft-Hartley plans and go on the health exchange,” said Paul Secunda, a labor law professor at Marquette University School of Law. “This puts pressure on the unions who want to keep workers satisfied and make sure they have a reason to belong to the union.”

Here’s why the unions think that could happen. DeFrehn says 90 percent of the employers in these plans have fewer than 50 workers. While larger employers will face penalties if they don’t offer health insurance, these smaller employers would not. At the end of a union contract, they would be perfectly free under the law to drop coverage and encourage workers to buy through an exchange.

The exchanges could be an attractive option for another reason. In an exchange, workers with family incomes as high as 400 percent of federal poverty level would be eligible for a subsidy from the federal government.

I understand this is a worry for the unions. But giving their plans subsidies as well as the tax breaks seems an awful lot like pandering. I’m open to arguments as to why I’m wrong, as always, but in this case I’m not seeing why this was a “flaw” in Obamacare. The crappy status quo of health insurance can’t be used as a tool to keep unions going. As I’ve said before, tons of wonks favor decoupling insurance from employment entirely, which I’m sure the unions would hate as well.

By the way, I expect the unions to go crazy about the excise tax in the future, too. I’ll be consistent there, as well.


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