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About Northwest labor press. (Portland , Ore.) 1987-current | View Entire Issue (April 6, 2012)
How Affordable Care Act impacts union health benefits Union health and welfare trusts press to take part in exchanges Two year’s after the passage of Pa- tient Protection and Affordable Care Act (PPACA), unions are still coming to terms with what the law means for members. Politically, the AFL-CIO is defend- ing the law, touting its first-stage re- sults, like the estimated 2.5 million young adults who now have coverage on their parents’ insurance, and the 54 million insured Americans who’ve re- ceived preventive services at no cost. But there are also worries on the hori- zon — that the law may undermine in- centives for employers to provide health coverage, and give a competitive advantage to nonunion employers. Most union members obtain health insurance through their employers. Benefits are negotiated as part of their collective bargaining agreements. In some cases, large employers sponsor the insurance by themselves. In other cases, multiple employers band to- gether in union-affiliated health and welfare trusts, often referred to as Taft- Hartley plans. The larger self-insured plans — and union employers like AT&T and Veri- zon — benefited from PPACA’s tempo- rary Early Retiree Reinsurance Pro- gram. For retirees 55 or older who weren’t yet eligible for Medicare, once they incurred $15,000 in health care claims in a plan year, the program reim- bursed employers and trusts for 80 per- cent of health care claims beyond that, up to $90,000. The program began June 1, 2011, and was supposed to last two years, but the $5 billion appropriation was entirely committed by late fall 2011. The Taft-Hartley union health and welfare plans were otherwise largely left out of PPACA. Union health-and-welfare trusts were providing health insurance decades before the government insur- ance programs Medicare and Medicaid came along. Today, as many as 20 mil- lion union workers, retirees, and de- pendents get health insurance through union-affiliated multi-employer trusts, says Randy DeFrehn, executive direc- tor of the National Coordinating Com- mittee for Multiemployer Plans (NC- CMP). When the state health insurance ex- changes start in 2014, small employers will get tax credits for paying their em- ployees’ premiums. But small employ- ers that provide insurance through union health and welfare trusts won’t be able to get those tax credits. That’s be- cause the tax credits are only for insur- ance purchased on the exchanges. And for insurance to be sold on the ex- changes, it must be open to everyone. The trusts don’t fit into that system be- cause they’re neither insurers nor em- ployers, strictly speaking; the trusts are more like jointly-run purchasing pools that self-insure or purchase group in- surance plans. “The way the exchange subsidy sys- tem works, the employers who’ve been doing the right thing for decades are now going to be at a competitive disad- vantage,” DeFrehn says. DeFrehn’s group has been pushing the Obama Administration to interpret the law in such a way that the trusts could take part in the exchange — so that participating small employers could also receive the tax credit. In August 2011, NCCMP submitted legal argu- ments showing how the Health and Hu- man Services Department could do that. But DeFrehn said there’s been no movement. DeFrehn explains what’s at stake. Union employers may pay upwards of $1,200 a month per employee for fam- ily health coverage. If they see that their employees can get comparable cover- age on the exchange for $400 a month, because of the subsidies, then terminat- ing the health and welfare trust — and redirecting that $1,200 — will start to make a lot of sense. That money could be used to raise wages, shore up pen- sion plans, or make the employer more competitive. Administration officials may be skeptical that unions and union employ- ers will terminate the plans, DeFrehn said. “They think these plans mean too much to the employees, and in fact, they do. But when you’re talking about a dif- ference of $5,000 per employee, it’s a pretty clear economic decision.” Without the ability to benefit from the exchange, DeFrehn predicts many health and welfare trusts will be termi- nated, particularly in grocery, service, ...’Obamacare’ turns 2 (From Page 1) wise-uninsured individuals purchase private health insurance or else pay a tax penalty. The constitutionality of the individual mandate is one of the ques- tions the Supreme Court will rule on, likely in the next two months. But the 2,400-page law has many other pieces. Some highlights: INSURANCE REFORMS • Insurers have to spend at least 80 percent of premium dollars on health care. In other words, no more than 20 percent can be spent on administration, advertising, CEO salaries, profits, and so on. For group policies, the figure is 85 percent. • Insurers can no longer drop people from coverage when they get sick; nor can they refuse to insure children under 20 years old because of pre-existing conditions (or adults, starting in 2014); nor can they impose annual or lifetime claim limits. • Insurers must allow children up to age 26 to be included on their parents’ family coverage plans. • All policies must pay for preven- tive medical services, such as immu- nizations, mammograms, and colono- scopies, with no co-payments, co- insurance, or deductibles. MEDICAID EXPANSION In 2014, Medicaid — the govern- ment health insurance program for the APRIL 6, 2012 NORTHWEST LABOR PRESS and less-skilled construction trades, where wages are low enough that em- ployees will get substantial subsidy in the exchanges. In Portland, union leaders are al- ready having that conversation. Cement Masons Local 555 Business Manager Brett Hinsley, a trustee on his union’s health and welfare trust, says his em- ployers pay $6.75 an hour for health in- surance, and costs have been going up 10 percent a year. “Here’s what we’re afraid of,” Hins- ley explains. “If you don’t let us buy into the exchange, our employers are going to say our people could actually get a better product if they go into the exchange as individuals. It’s gotta be all or nothing. If we’re going to have this system, we ought to be able to partici- pate in the exchange.” poor — will expand to cover all those earning up to 133 percent of the federal poverty line. [That computes to about $15,000 a year for an individual, or $25,000 for a family of three.] EMPLOYER INCENTIVES AND PENALTIES Small employers that provide health insurance — particularly low-wage em- ployers — get a tax credit reimbursing them for up to one-third or half of what they pay. Large employers that don’t provide health insurance, starting in 2014, will pay an annual penalty of somewhat less than $2,000 per employee. INSURANCE EXCHANGE Starting in 2014, individuals who don’t otherwise have health insurance will be required to buy it on state-based insurance exchanges, or face a tax penalty that starts at 1 percent of in- come and rises to 2.5 percent by 2016. Individuals will get access to subsi- dies through the exchange, and those earning up to four times the poverty level will get some amount of subsidy. The subsidies cap the premium as a per- centage of income and also help with co-pays and deductibles. For example, a family of four with an income of $66,000 would pay a maximum pre- mium of 9.5 percent of their income — $524 a month — and would get up to $1,500 in help paying for co-pays and deductibles. PAGE 11
