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May
2014
29

Once a Bargaining Chip, Health Care Now Handcuffing Unions at the Negotiating Table Under ACA

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The Affordable Care Act has become a progressive pillar of President Obama’s tenure in the White House, but not everyone, even on the traditionally Democratic side of the political spectrum, is wholly thrilled with its implementation. As the Wall Street Journal explains, the Affordable Care Act has had a negative impact on labor negotiations across the country.  For many unions, costs are rising and negotiations are murky as a result of the law:

In Philadelphia, disagreement over how much workers should contribute to such health-plan cost increases has stalled talks between the region’s transit system and its main union representing 5,000 workers as they try to renegotiate a contract that expired in March.

Roughly 2,000 housekeepers, waiters and others at nine of 10 downtown Las Vegas casinos voted this month to go on strike June 1 if they don’t reach agreements on a series of issues, the thorniest of which involve new ACA-related cost increases, according to the union.

Flight attendants at Alaska Airlines voted down a tentative contract agreement with management in February, in part because it didn’t provide enough protection against a possible surge in ACA-related costs, union members said. They are still without a new contract.

Labor unions were among the ACA’s early supporters, but some are now finding it nearly impossible to provide the same level of benefits that had been a staple of union membership for decades. In the aforementioned case of the Philadelphia transit workers, members will likely be asked to contribute more to offset the skyrocketing costs.  

Many unions have repeatedly petitioned the Obama administration to exempt their health plans from the so-called “Cadillac Tax,” but were unsuccessful.  Now, these same unions are seeing their once incredible health plans being used against them at the negotiating table, according to WSJ:

One of the biggest looming unknowns is the so-called Cadillac tax on high-cost health plans scheduled to take effect in 2018. The provision imposes a 40% tax on the annual cost of health care above $10,200 for individual coverage and $27,500 for family coverage.

The regional transit system in Philadelphia, Septa, estimates the tax will boost its health-care costs by $15 million a year, or 12.5% of the $120 million it currently spends each year on health coverage. The transit system is already incurring several million dollars in added costs from other provisions, said Richard Burnfield, Septa’s chief financial officer.

“How do you deal with that?” he said. “The options you have are you just suck it up and pay for it, or you look at plan design. Do you increase employee contributions?”

Transport Workers Union Local 234, Septa’s biggest union, has rejected a proposal that its members contribute an additional 1% of pay to help cover new ACA-related costs, said Willie Brown, president of the union, which represents 5,000 bus drivers, train operators and others. “They’re asking us to negotiate in the dark,” said Mr. Brown. He said he didn’t trust Septa’s estimates.

Read the entire WSJ piece here.

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