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A simmering conflict between organized labor and the Obama administration over the 2010 health care law could drive a wedge between the White House and one of its most reliable backers. Congressional Republicans, on the other hand, are eager to expose the divide and warn the administration they will firmly oppose any attempt to acquiesce to labor’s concerns.
At issue is an oversight in the 2010 law (PL 111-148, PL 111-152) that leaves uncertain the future of the unique health care funds that employers have been negotiating with the unions representing their workers for more than 60 years.
Unions say that without a fix, the health care law could lead to millions of union members losing the relatively generous health care plans they have earned through negotiations with employers. As a result, they say, there would be millions more people eligible for tax credits to buy insurance through the health exchanges set up by the 2010 law, draining the federal budget.
“On behalf of the millions of working men and women we represent and the families they support, we can no longer stand silent in the face of elements of the Affordable Care Act that will destroy the very health and well being of our members along with millions of other hardworking Americans,” the heads of three unions wrote in a joint letter to Democratic congressional leaders in July.
The health plans — known as multiemployer or Taft-Hartley plans after the law that regulated them — make it possible for unionized workers to get coverage even when the nature of their work requires them to frequently change employers. According to union officials, these funds cover roughly 20 million people, many of whom work for small businesses.
Under such plans, the unions and employers within an industry agree to set up a jointly managed health care fund that would cover workers even as they move from employer to employer. That means a construction worker who changes jobs or who spends a few weeks out of work would not lose insurance.
Unions say the funds are financed by worker contributions. Workers agree to take a share of the wages they would otherwise receive and direct it to the fund. For tax purposes, however, that money is considered an employer contribution, and employers receive tax write-offs. In some cases, the funds cover all medical expenses, completely shutting out insurance companies.
“The health care funds are just pools of workers’ money dedicated to their exclusive benefit,” said James Ray, benefits counsel to the Laborers’ International Union of North America.
It’s a unique arrangement, one the health care law does not address. How to treat these Taft-Hartley plans therefore depends on one’s interpretation of the law.