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August 01, 2014 • 10:53 am

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How ObamaCare Is Killing Labor Unions Print
By Ashton Ellis
Thursday, August 15 2013
This is either the biggest unintended consequence of policymaking in American history, or the logical end point of liberalism’s march toward greater government dependency.

As ObamaCare’s implementation draws near, the costs to unions could be fatal.

For private-sector unions, the biggest danger comes from the health law’s increased coverage requirements. New entitlements like eliminating pre-existing conditions from eligibility considerations and paying for dependents up to age 26 add enormous costs to health insurance plans.

The financial pain is particularly acute for unions that represent part-time workers in the retail, restaurant and food service industries. Operating under so-called Taft-Hartley agreements, these unions run non-profit health insurance companies paid for by their members’ employers. By administering the benefits they negotiate for, unions like the United Food and Commercial Workers (UFCW) are able to create a powerful incentive to join their ranks.

But with the price of health insurance likely to surge once ObamaCare’s mandates go into effect, many employers are planning to drop out of their Taft-Hartley agreements, and let union members get insurance on a state-based exchange.

Of course, that scenario would terminate a major reason for unions existing since workers would look to the federal government, not the union, for assistance in obtaining health insurance.

Sensing a mortal blow, UFCW and other unions offering insurance coverage to an estimated 20 million workers and their families have pleaded with the Obama administration to create an exception that allows ObamaCare subsidies to be used in Taft-Hartley plans. So far, the White House has resisted.

Life expectancy is only a little longer for public employee unions.

Due to extremely generous health benefits negotiated with barely accountable politicians, many public union members are owed far more in services than present and future taxes can afford.

The publicly funded programs are so costly they are commonly referred to as “Cadillac” plans. Many feature limited co-pays, vast doctor networks and little or no cost for prescription drugs.

That lack of cost-consciousness comes with a price. People using Cadillac plans tend to consume health services at a much higher rate than people who are more accountable for the bill. 

To address the rise in health spending that such behavior causes, ObamaCare includes within it a tax on Cadillac plans. Every premium dollar over $10,200 for an individual plan and $27,500 for a family plan will be taxed at 40 percent.

When that tax goes into effect in 2018, the Cadillac tax is expected to hit New York City alone with a $22 million bill. And, because the tax is indexed for inflation thereafter, its overall impact on Gotham’s budget will be $549 million by 2022.

Theoretically, the tax is supposed to make employers pressure employees to use less expensive means to improve their health, such as office wellness programs and diet counseling.

In practice, municipalities forecasting a huge spike in per-employee health spending are taking more drastic measures.

One strategy being considered by bankrupt and structurally insolvent cities like Detroit, Stockton, CA and Chicago would unload hundreds of millions of dollars in guaranteed benefits by writing them off as too expensive. In their place, retired union workers would receive IOUs in the form of ObamaCare subsidies after being pushed onto state-based exchanges.

But since ObamaCare’s subsidies will cover, at most, 52 percent of a premium payment, retired union members accustomed to having little or no out-of-pocket expenses likely will feel a big drop in their standard of living.

In both cases – the demise of the Taft-Hartley plans and the onrushing reduction of public employee benefits – the end result will be a severing of ties between the unions and their members.

This is either the biggest unintended consequence of policymaking in American history, or the logical end point of liberalism’s march toward greater government dependency.

If the latter, it’s not surprising. After all, what is a modern labor union, at its core, other than a dependency-creating institution controlling workers’ access to jobs and health benefits?

And what is modern liberalism, at bottom, other than a belief that government can make better decisions than individuals and groups?

With its ObamaCare implementation, the Obama administration clearly believes it can make better decisions for union members than the union bosses, and thanks to the health law’s perverse incentive structure it has the power to do it.

And to think none of this would have been possible without the support of Big Labor.

Question of the Week   
Which of the following merged to form the Bureau of Immigration and Customs Enforcement (ICE) within the Department of Homeland Security?
More Questions
Quote of the Day   
 
"Thanks to rockets rising over Gaza, jet debris falling onto Ukraine, and children wading across the Rio Grande, Americans barely have had time to focus on Obamacare. Mounting global and domestic chaos, however, cannot mask forever the deep and severe flaws in Obama’s pet program. From insurance cancellations to premium increases to gross ineptness, Obamacare likely will roar back into the news…[more]
 
 
—Deroy Murdock, Hoover Institution Media Fellow
— Deroy Murdock, Hoover Institution Media Fellow
 
Liberty Poll   

On the subject of illegal immigration generally and the current crisis specifically, which politician’s views most closely resemble your own?