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June 2012
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JILTED Union rips Obamacare as harmful to members

Of all the political allies that helped Barack Obama win two terms as president, none has worked harder or done more than organized labor. So there is irony in the fact that when it comes to the president's signature accomplishment - Obamacare - labor unions have become some of its most vocal critics.

A report recently sent to members of Unite Here, a union representing hospitality industry workers in the U.S. and Canada, offers a scathing example. The union report takes the president to task on one of his central themes of late - income inequality. The union asserts that because of its deeply flawed design the Affordable Care Act will worsen income inequality with the most damage inflicted on the lower end of the middle class.

The report cites a study by the Brookings Institution that says the ACA will provide people in the bottom two-tenths of income distribution average income gains of 5.3 to 7.2 percent by virtue of subsidized health insurance coverage. But, says Unite Here, "Families in the next lowest 20% (family income $20,000 to $38,000) would suffer significant income declines to achieve these gains. Meanwhile, the top 10 percent would give up the smallest percentage of income. Only in Washington could asking the bottom of the middle class to finance health care for the poorest families be seen as reducing inequality."

Unite Here says that in addition to higher premiums for the middle class, the ACA threatens to bring about a loss of work hours, a shift to more part-time work and less-comprehensive coverage for its members. The union rips the law as a massive wealth transfer, saying, "Most of the ACA's $965 billion in subsidies will go directly to commercial insurance companies, one of the largest transfers of public wealth to private hands ever. Since the ACA passed, the average stock price for the big for-profit health insurers doubled."

On the other hand, says Unite Here, the ACA prevents the non-profit health funds offered by unions from competing for subsidies in the Obamacare exchanges. "The unbalanced playing field will give employers of people covered by these (union) plans powerful incentives to drop coverage," the union says, and "This will force low-wage service industry employees to spend $2, $3 or even $5 an hour of their pay to buy similar coverage."

The union predicts that the death knell for policies it presently offers its workers will come in 2016-2017 when rising insurance costs driven by ACA mandates collide with the law's tax on "Cadillac plans," under which many union members will face income tax liability on 40 percent of the value of their union-sponsored plans.

It's worth noting that Unite Here, which has about 300,000 members, was the first union to endorse then-Sen. Obama when he decided to seek the presidency. Obviously they feel some buyer's remorse at this point. If one didn't know the source of the criticisms in the union's report, one might think it was the work of conservatives.

And perhaps that's the key point. The fact that such criticisms of the ACA seem to be consistent across the ideological divide only goes to underscore the fact that the law is a seriously bad piece of legislation. We continue to think the best solution would be to repeal the ACA and start over. But given Washington's inability to acknowledge and correct its mistakes we fear the more likely scenario is that - like a bad science fiction movie - the ACA will live on as a mutant to perpetually terrorize the populace.

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