May 27, 2014 - 3:15pm

Here’s Why Obamacare Has Been a Huge Let Down for Many Labor Unions

Senior Editor, Digital Content

Many labor unions continue to have Obamacare buyers’ remorse, because it’s not taming rising health care costs as the law promised. As a result, labor contract negotiations have become more difficult in Philadelphia, Las Vegas, and elsewhere, the Wall Street Journal reports:

Disputes between unions and employers over paying for new costs associated with the Affordable Care Act are roiling labor talks nationwide.

Unions and employers are tussling over who will pick up the tab for new mandates, such as coverage for dependent children to age 26, as well as future costs, such as a tax on premium health plans starting in 2018. The question is poised to become a significant point of tension as tens of thousands of labor contracts covering millions of workers expire in the next several years, with ACA-related cost increases ranging from 5% to 12.5% in current talks.

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.

Jim Ray, a lawyer representing the Laborers International Union of North America, told the newspaper, "When we first supported the calls for health-care reform, we thought it was going to bring costs down," he said. Instead, the story reports that construction-industry health plans’ have seen 5% - 10% cost increases that have “already resulted in lower wages for some laborers.”  

The cost increases have been due to the health care law’s mandates and rules that have affected union-run health plans. For example:

One pressure point is the higher costs of new mandates, especially the requirement that health plans expand coverage for dependents. For Unite Here, adding that coverage for 14,000 dependents raised costs in the health-care fund run by the union's Las Vegas local by $26 million since 2011, said union spokeswoman Bethany Khan.

Fears over Obamacare have simmered among union leaders for years:  

The continued disappointment with the health care law is an opportunity to advance real health care reforms.  The U.S. Chamber’s Health Care Solutions Council released a report last year that builds off of what employers are doing to achieve innovative, sustainable, high-value care for all Americans. It certainly a better option than unpopular Obamacare’s mandates and taxes.

UPDATE: Avik Roy at ties this story into a survey of chief human resource officers of large employers by the American Health Policy Institute. [h/t memeorandum]

Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.

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About the Author

Sean Hackbarth
Senior Editor, Digital Content

Sean writes about public policies affecting businesses including energy, health care, and regulations. When not battling those making it harder for free enterprise to succeed, he raves about all things Wisconsin (his home state) and religiously follows the Green Bay Packers.