Chained CPI still threatens future Social Security COLAs
By SCOTT BLAU
Unfortunately, the idea that the
‘chained CPI’ will reduce the nation’s
deficit has not gone away. The chained
CPI is a proposed tactic to decrease the
value of cost of living allowances (CO-
LAs) that are added to Social Security
checks and also to benefits for disabled
veterans and their survivors. It has been
sold as “only a small ‘technical adjust-
ment’ to the cost of living allowance
that doesn’t really amount to anything.”
That is easy for a political pitchman
to say. But COLAs, by their nature,
keep reflecting and magnifying what
has happened to them in the past. Once
the formula for a COLA reduces its
value, the original reduction is repeated
and increased as the years go by. In
plain terms, the chained CPI is a bene-
fit cut. And it is one that keeps on cut-
ting.
Those who scoff that this adjust-
ment is small have not tried to live on
the budget of an average Social Secu-
rity recipient. That average benefit is
currently around $12,000 per year. So
every dollar that comes through a
COLA increase makes a difference in
the life of a senior.
Of course, the irony of this fight
over the CPI is that Social Security
does not contribute to the nation’s
deficit. A cut to Social Security would
not decrease the deficit at all. The So-
cial Security Trust fund was set up to
be separate from our nation’s regular
budget. There has been a concentrated
political effort to merge the two in the
public’s mind. It is part of a long-term
plan to weaken support for Social Se-
curity.
There are two Oregon congres-
sional representatives who are support-
ing the chained CPI: Republican Rep.
... Labor braces for impact of Obamacare
(From Page 1)
panies selling individual coverage on
the exchanges. In the exchanges, insur-
ance companies have to take all com-
ers, and are barred from denying cover-
age based on “pre-existing condi-
tions.” To compensate them for any
losses that might cause, the government
is creating a “reinsurance” pool, funded
by $20 billion in taxes that will be
levied on all group health plans over a
three-year period. The tax will be $63
per covered individual for the first year,
and four-fifths of that amount will go
to pay for the reinsurance program.
Lastly, large businesses (more than
50 employees) that don’t provide insur-
ance will face a tax penalty of a little
under $2,000 a year per full-time
worker. But they face no penalty for not
providing insurance to part-time work-
ers. That gives large employers a pow-
erful incentive to reduce hours to less
than 30 a week — particularly if their
employees are low-wage, and thus
would qualify for subsidized coverage
on the exchange.
But again, that won’t be the case
with large unionized employers — if
they’re locked into multi-year collective
bargaining agreements under which
they provide health benefits to part-time
workers.
United Food and Commercial Work-
ers spokesperson Tim Schlittner said
those union employers are going to feel
increased competitive pressure to drop
coverage for part-timers. If that hap-
pens, those workers will be able to get
coverage on the exchanges, but benefits
won’t be nearly as good.
“Now, that will obviously be subject
JUNE 21, 2013
to the negotiations at the bargaining
table,” Schlittner said, “and we’re going
to work to ensure we get the best health
care possible for our members. But we
want a level playing field, and we want
to get rid of this incentive that’s driving
companies to drop coverage.”
For some union employers, there’s
more to come. Starting in 2018, the
government will levy a 40 percent ex-
cise tax on so-called “Cadillac” health
plans: Any employer or health insurer
that offers a plan that costs more than
$10,200 a year for an individual or
$27,500 for a family would pay the tax
on any amount exceeding that thresh-
old. The expectation is not that the tax
would actually be collected. Rather,
any employer faced with throwing
away 40 cents on the dollar would take
whatever measures needed to lower
premiums. They would do that by low-
ering benefits.
With labor locked out of Oba-
macare’s benefits, and forced to pay its
costs, some labor leaders are getting vo-
cal.
On April 24, Roofers Union Presi-
dent Kinsey Robinson called for repeal,
or complete reform, of the law. Con-
cerns expressed by his union about cer-
tain provisions of the ACA have been
totally ignored, Robinson said in a
press statement: “These provisions
jeopardize our multi-employer health
plans, have the potential to cause a loss
of work for our members, create an un-
fair bidding advantage for those con-
tractors who do not provide health cov-
erage to their workers, and in the worst
case, may cause our members and their
families to lose the benefits they cur-
rently enjoy as participants in multi-
employer health plans.”
Premiums for family coverage pro-
vided by union health trusts averages
about $16,000 a year, said Randy De-
Frehn, executive director of the Na-
tional Coordinating Committee for
Multiemployer Plans (NCCMP) — a
trade association for the union trusts.
That works out to over $7 an hour for a
full-time employee, DeFrehn said, and
it’s a labor cost that has to be covered
when an employer contributing to these
plans is head to head in a competitive
bidding situation.
President Obama’s promise to labor
— if you like the health plan you’ve got
now, you can keep it — “is simply not
true for millions of workers,” said
UFCW President Joseph Hansen,
who’s also chair of the Change to Win
labor federation, in a May 20 op-ed in
The Hill newspaper.
“All we want is equality — where
our plans are treated the same as for-
profit insurers,” Hansen wrote. “We’d
be open to a legislative fix, but ulti-
mately this is the administration’s re-
sponsibility. They are leading the regu-
latory process. It’s their signature law.”
As many as 20 million people —
union workers, retirees and dependents
— get health insurance through union-
affiliated multi-employer trusts, says
NCCMP’s DeFrehn. For two years,
DeFrehn’s group pushed the Obama
administration to interpret the law in
such a way that the union health trusts
could be deemed “qualified health
plans” in the exchange — so that par-
ticipating small employers could re-
ceive the tax credit. But DeFrehn told
the Labor Press his group has given up
on that approach, having gotten
NORTHWEST LABOR PRESS
nowhere.
Instead, NCCMP is now readying a
proposal to let union health plans rede-
fine eligibility — dropping lower-in-
come individuals from coverage — so
that they would be eligible for the sub-
Greg Walden and Democratic Rep.
Kurt Schrader. Walden is in lock-step
with the House leadership on this is-
sue. No big surprise there. And
Schrader is still attempting to bridge
the political divide in Washington,
D.C., by putting the chained CPI out
there in order to make a deal.
The Oregon Alliance for Retired
Americans would like to demonstrate
our opposition to the chained CPI in
coordination with a planned action by
the national
On Tuesday, July 2, the Alliance for
Retired Americans is mobilizing peo-
ple in 40 cities across the country to
form “Human Chains Against the
Chained CPI.”
In Portland, the Oregon ARA will
rally at Terry Schrunk Plaza across
from City Hall starting at 11:30 a.m.
The national day of action will
showcase the broad base of Americans
who support protecting and enhancing
retirement security, not dismantling So-
cial Security inch by inch, ARA said.
(Editor’s Note: Scott Blau is presi-
dent of the Oregon Alliance for Retired
Americans. This article appeared in
the Alliance’s June newsletter.)
sidized coverage on the exchange. Em-
ployers could still contribute to pay for
the employee share of the premium
purchased on the exchange, just not
through the trust. DeFrehn said that
proposal is still under consideration, but
time is running out.
The exchanges open in just over 100
days.
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