July 21, 2013

Obamacare: Now, Even The Unions Are Up In Arms.

by Hal Gershowitz

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The growing chorus of discontent over Obamacare has us scratching our heads — not because so many are complaining, but because it has taken so many, so long to see what should have been so obvious.

We have inferred many times through many essays that the Affordable Care Act (an oxymoron if ever there was one) was, as Otto Von Bismarck might have said, a lesson in sausage making; that is, something no one should suffer to see.  It is full of legislative landmines — unintended (but highly predictable) consequences for young people, healthy people, marginal full-time workers and members of both employer and union sponsored health plans.

Now, even some of the nation’s strongest unions, virtually all of which were strong supporters of the President and Obamacare (although, for the life of us we can’t figure out why) are up in arms.  It seems they’ve awakened to the reality that many of their members are having their hours cut to less than 30 hours a week (the threshold under which employers do not have to provide coverage) — that many small businesses are drawing the line at hiring more than forty-nine employees because that would make them subject to the Obamacare mandate and — that workers who are covered by employer-sponsored plans (many of which have been negotiated by unions) are not eligible for federal subsidy support.

Listen to the joint statement of James P. Hoffa, the president of the International Brotherhood of Teamsters; Joseph Hansen, international president of the United Food and Commercial Workers International Union; and Donald D. Taylor, president of UNITE-HERE, a union representing hotel, airport, food service, gaming, and textile workers.

“When you (Harry Reid and Nancy Pelosi) and the President sought our support for the Affordable Care Act, you pledged that if we liked the health plans we have now, we could keep them. Sadly, that promise is under threat…We have been strong supporters of the notion that all Americans should have access to quality, affordable health care. We have also been strong supporters of you. In campaign after campaign we have put boots on the ground, gone door-to-door to get out the vote, run phone banks and raised money to secure this vision. Now this vision has come back to haunt us.”

Wow! Another Faustian bargain seems to have unraveled…but, then again, don’t they all?

 “We have a problem,” they whined, and you (Reid and Pelosi) need to fix it.”  We wouldn’t count on it.

Picking up from our April 28th essay (Obamacare: A Mess of Unintended Consequences) the union leaders complain, “The unintended consequences of the ACA are severe…Perverse incentives are causing nightmare scenarios. First, the law creates an incentive for employers to keep employees’ work hours below 30 hours a week. Numerous employers have begun to cut workers’ hours to avoid this obligation, and many of them are doing so openly. The impact is two-fold: fewer hours means less pay while also losing our current health benefits.”

Duh! — as the kids like to say.

The union leaders’ complaints barely scratch the surface. Obamacare has the potential of really emasculating the benefits the unions fought for years to achieve, through the so-called Taft-Hartley plans, the multi-employer plans the unions established for covering particular industries, such as the restaurant industry. About 800,000 of Joseph Hansen’s 1.3 million UFCW members are covered this way. He is not happy…nor should he be.

The so-called Taft-Hartley plans are, indeed, attractive, but they are also quite costly. The mega-sized employers may continue to grin and bear it, but smaller companies, thanks to Obamacare, will have a huge incentive (once their current union agreements are up) to simply drop coverage and send their employees to the nearest Obamacare insurance exchange.

It becomes sort of a win/win, for everyone except the unions.  The employers will pay a penalty and pocket the difference between the fine (or is it a tax?) and the avoided cost of the insurance premiums, and the employee gets exchange-provided medical coverage (assuming the exchanges are up and running).  The problem for the unions, however, is that workers will have much less incentive to join a union because the so-called Taft-Hartley insurance plans really have played a major role in attracting members.

The union leaders sounded like participants at a Tea Party rally as they vented — “on behalf of the millions of working men and women…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 wellbeing of our members along with millions of other hardworking Americans.”

Actually, they have a point and a rather good one at that.  Our readers will recall President Obama’s pledge that “if you like your plan, you can keep your plan.” Of course, that was also when he promised that Obamacare wouldn’t increase the deficit by so much as a single dime. How quickly we forget.

There was no stronger proponent of Obamacare than Richard Trumka, head of the AFL-CIO.  But he’s not happy either, calling the one-year delay in enforcing the employer mandate “troubling.” Yet, it’s the employer mandate that is responsible for all of the disruptions that Trumka’s labor brothers are complaining about. “If we repealed the employer mandate we’d get rid of the incentive that restaurants and other employers have to cut the hours of part-time employees”, they complain.

Complaints from labor have been steadily mounting.  Kinsey Robinson, president of the United Union of Roofers, Waterproofers and Allied Workers, said back in April that their concerns “have not been addressed, or in some instances, totally ignored,” and that “in the rush to achieve its passage, many of the act’s provisions were not fully conceived, resulting in unintended consequences that are inconsistent with the promise that those who were satisfied with their employer-sponsored coverage could keep it.”

Almost nothing the President promised when selling Obamacare has turned out as he assured us it would. Remember when the President said that Obamacare would create millions of jobs and be a boon to small business?  That never made sense to us and we’ve devoted a lot of space in these essays saying so.

Now a recent Gallup study seems to confirm what seemed so obvious to us. Gallup found that because of Obamacare, 41 percent of small businesses have instituted a hiring freeze, 19 percent have shrunk their workforces, and 18 percent have “reduced the hours of employees to part-time.” Nearly four in 10 small businesses — 38 percent — told pollsters they “have pulled back on their plans to grow their business” in anticipation of the law’s implementation.

Gallup found that 48 percent of small-business owners think the law will hurt them, while just nine percent think it will help them. (Another 39 percent expected “no impact.”) Fifty-five percent of owners believe the law will make healthcare more costly, while a mere five percent think it will cut costs. And 52 percent think Obamacare will reduce the quality of care, as opposed to 13 percent who expect an improvement

And, make no mistake about it; this isn’t just about private business cutting back because of Obamacare. State and local governments are doing the same thing.  We’ve canvassed coverage of government pullbacks specifically attributed to Obamacare.  Following are just a few examples of what we found:

Arizona: Maricopa Community Colleges announced plans to cut hours for 700 adjunct faculty and another 600 part-time workers.

Phillipsburg, Kan.: “School administrators here say they are alarmed and confounded by the looming new costs they face with the implementation of the Affordable Care Act,” according to the Kaiser Health Institute News Service Chris Hipp, director of a Kansas special education cooperative, warned that Obamacare’s costs “could put us all out of business or change significantly how we do business,” adding that “we are not built to pay full health benefits for noncertified folks who work a little more than 1,000 hours a year.”

Dearborn, Mich.: “If we had to provide health care and other benefits to all of our employees, the burden on the city would be tremendous,” said Mayor John O’Reilly, explaining why the city is cutting its more than 700 part-time and seasonal workers down to 28 hours a week. “The city is like any private or public employer having to adjust to changes in the law.”

Indiana: “What I’m seeing across the state is school districts, unfortunately, having to reduce the hours that they are having some of their folks work, primarily so they don’t have to worry about the (Obamacare) penalties, or they don’t have to provide them health insurance, which would be very, very costly,” said Dennis Costerison. executive director of the Indiana Association of School Business Officials. Ft. Wayne Community Schools, for example, are cutting hours for nearly three-quarters of its part-time aides.

Virginia: Law enacted limiting hourly employees, including adjunct professors at state communities and universities to 29 hours a week.  The states Alcoholic Beverage Control board began cutting hours for 600 employees back in April.

 We haven’t cherry picked, for effect, a few examples of government discontent with Obamacare.  Dissatisfaction seems endemic throughout the country.  Actually, in preparing this essay, we logged and filed away scores of similar cases throughout the United States.

It seems satisfaction with Obamacare diminishes rapidly once we look beyond the bubble at 1600 Pennsylvania Avenue and the Greek-style colossus at the other end of the Avenue known as the United States Capitol where all of our elected officials work and play.

All comments regarding these essays, whether they express agreement, disagreement, or an alternate view, are appreciated and welcome. Comments that do not pertain to the subject of the essay or which are ad hominem references to other commenters are not acceptable and will be deleted.

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3 responses to “Obamacare: Now, Even The Unions Are Up In Arms.”

  1. mark j levick says:

    Legislation that needs to be passed before it is read can’t be good legislation. The numbers are unworkable, The same number of physicians can’t treat 30 million more patients and pre-existing conditions are not insurable at standard rates. Thus our social engineers determined that the young and healthy needed to pay to cover the free lunch crowd, taxes would need to be assessed before benefits began and medical services would need to be rationed. Tort reform and which would greatly diminish costly CYA testing was omitted as was competitive drug pricing. Thus a victory for the the American Trial Lawyers, big Pharma, social engineers, lobbyists, the poor and the entitled. Big defeat for the young, the able, the taxpayers and common sense.

  2. Your essay is sadly true. We are now beginning to understand the level to which the unintended and egregious consequences of Obamacare are escalating throughout America– and will continue to do so. Is there anything we can demand our legislators do NOW to change the most damaging elements of the Affordable Care Act before the excellence and reputation of America’s health system completely unravels? Or is it too late?

  3. M Kaback, MD says:


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