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Obama's Effort To Prevent The AFL-CIO From Resolving To Repeal Obamacare

Avik Roy | 09/15/2013
AP/J. Scott Applewhite

On Saturday, I wrote about the White House’s decision to reject labor unions’ demands to alter Obamacare such that certain union members with health benefits could qualify for subsidies intended for the uninsured. One of the most interesting aspects of this story is what happened behind the scenes. Some unions were agitating for the AFL-CIO to pass a resolution calling for the repeal of Obamacare. President Obama personally intervened to prevent that from happening. At the end of the week, once the AFL-CIO’s quadrennial convention was over, the Obama administration announced that it wouldn’t heed labor’s concerns. Politically speaking, the President won, and the unions lost. But if you read the resolution that the AFL-CIO passed, it’s clear that unions are far from done complaining about Obamacare.

Several labor leaders have been angered by the fact that Obamacare will likely spell the end of multi-employer health plans called Taft-Hartley plans, which are a linchpin of labor’s efforts to unionize small businesses like restaurants, construction, and retail. “I guarantee you by your next convention four years from now, you won’t meet a quarter of this room,” said Joseph Nigro, president of the Sheet Metal, Air, Rail and Transportation Union. “We won’t be here.”

Terence O’Sullivan, president of the Laborers’ International Union of North America, said, “If the Affordable Care Act is not fixed, and it destroys the health and welfare funds that we have fought for and stand for, then I believe it needs to be repealed.” It was these increasing calls for Obamacare’s repeal from Democrats’ staunchest allies that spooked the White House, on the eve of the AFL-CIO’s quadrennial convention in Los Angeles.

Kevin Bogardus of The Hill got the inside dope on the President’s maneuverings. The timing was critical. Wednesday was the last day of the AFL-CIO convention, and the President could evade a politically embarrassing debacle by simply stalling the rumored resolution. “The measure has been the subject of intense internal debate among AFL-CIO members, with many pushing for a strong rebuke of the law,” Bogardus reported.

The President’s team swung into action. “White House officials have been calling union leaders about a resolution critical of Obamacare that is set to pass on Wednesday at the AFL-CIO convention,” he reported last week. “Union leaders have been tight-lipped about the calls coming from Washington, but at least one labor official said he understands that the Obama administration has been watching the resolution’s progress and expressing a desire that it not move forward.”

Harold Schaitberger, president of the International Association of Fire Fighters, told Bogardus that the administration was promising that they would “attempt to resolve some of the issues” in the hopes that “no resolution be brought to the floor.” He added, “I know there have been phone calls to several leaders, particularly those directly involved in development of the resolution. I know there have been a number of meetings and discussions with a variety of presidents from various unions and the Secretary of Labor…If it’s good enough for Congress to point out shortcomings, it certainly ought to be good enough for the labor movement to do it without some fear of retribution.”

Ultimately, the President got his wish. The AFL-CIO resolution didn’t call for the repeal of Obamacare. But it did make a number of criticisms of the health law. “Contrary to the law’s intent,” it reads, “some workers might not be able to keep their coverage and their doctors because the federal agencies’ current implementation plans will be highly disruptive to the operation of Taft-Hartley multiemployer plans, substantially changing the coverage available for millions of covered employees and their families.”

Construction, the AFL-CIO resolution notes, is an industry that Obamacare incentivizes to drop multi-employer coverage in order to take advantage of the law’s subsidized exchanges. “In industries like construction, where 93 percent of employers are considered small under the ACA, the playing field is now even more tilted in favor of companies that shirk responsibility toward their workers” by not sponsoring health coverage.

And, the AFL-CIO claims, Obamacare’s perverse incentives are already affecting the fate of future labor contracts. “Current negotiation of collective bargaining agreements setting the terms of health insurance coverage…are already demonstrating the adverse impact of the application of the Affordable Care Act to multiemployer plans…the end result will be that millions more workers and their families will be forced onto the exchanges, increasing the costs of the exchanges to the federal government and undermining the finances of the ACA.”

The resolution complains that Obamacare is driving up the cost of insurance. “Federal agencies…have unnecessarily imposed an interpretation of the Affordable Care Act which imposes additional costs and fees for which plan participants receive no benefit, unnecessarily driving coverage costs higher.”

Later, it notes that “the ACA Excise Tax, Reinsurance Fee and other fees will drive the costs of collectively bargained, union administered plans, and other plans that cover unionized workers to unsupportable levels, resulting in pressure to shift costs to workers, cut wages, and to agree to unacceptable high deductible plans.”

The AFL-CIO’s concerns echo those raised by Delta Air Lines. In June, Delta’s vice president for global human resource services and labor relations, Robert Kight, wrote a letter to the Obama administrationgrousing that Obamacare’s reinsurance fee alone would cost the airline $10 million a year, for no additional benefit, and that overall, the airline faced $100 million in additional health-care costs next year.

Notably, these complaints revolve not around individually-purchased health insurance—the focus of much of the debate about “rate shock”—but around health insurance sponsored by small and large employers, plans that President Obama repeatedly promised would be unaffected by the law.

On Friday, the President broke the news to labor leaders—in the White House—that he would not be offering them access to subsidies meant for the uninsured. “It’s black and white,” a senior administration official told Politico. “The President expressed in the meeting that he wakes up every day thinking about how to help working Americans and build the middle class.”

Among the attendees of the White House meeting were: Richard Trumka, president of the AFL-CIO; Donald “D.” Taylor, president of UNITE-HERE, a union representing hotel, airport, food service, gaming, and textile workers; Ken Hall, secretary of the Teamsters; Bill Hite, president of the Plumbers and Pipefitters Union; Ed Hill, president of the Electrical Workers union; Joseph Hansen, president of the United Food and Commercial Workers International Union; and Brent Booker, secretary-treasurer of the Building and Construction Trades union.

Hansen, Taylor, and Teamsters president James Hoffa were co-signers of a remarkably blunt July letter claiming that Obamacare would “shatter” the health benefits of their members, causing “nightmare scenarios.”

“Union officials emerged from the meeting in no mood to talk to reporters after more than an hour of closed-door consultations with the president and administration officials,” wrote Byron Tau and Jennifer Haberkorn of Politico. “It was a good meeting,” said Trumka. “We’re continuing to work on problem solving. You’ve got the only quote you’re going to get.”

Trumka told reporters that he still hoped “a solution” was possible, but “repeatedly refused to answer questions about what labor officials asked for,” according to The Hill. “When a reporter inquired about Trumka’s No. 1 ask, he quipped, ‘for you guys to stop following me,’ then left the White House grounds.”

Republicans who had questioned the savoriness of union demands expressed satisfaction. “There has been far too much special treatment for politically-favored friends of Obamacare,” wrote Sen. Orrin Hatch (R., Utah) and Rep. Dave Camp (R., Mich.) in a joint statement. “But when it comes to employers and taxpayers picking up the health care tab for labor unions—it appears that is a price that is simply too high. Perhaps even this Administration recognizes that there are limits to them stretching the law to reward their friends.”

It’s important to note that labor leaders have no intention of switching their allegiances to Republicans over this row. The same AFL-CIO resolution with its litany of complaints about Obamacare also “reaffirmed the labor movement’s commitment to health care for all, ultimately through a single-payer system.”

And the President has done many, many favors for Big Labor over the years, including offering hundreds of Obamacare waivers to labor unions that weren’t available to other individuals or businesses.

But labor leaders, having been instrumental in the fight to pass and entrench the President’s health law, now find themselves in the difficult position of having advocated a law that will, in their own words, disrupt the health coverage of millions of their members. They clearly thought that they could fix what they didn’t like, either by railroading the President, or by lobbying Congress. Neither tactic has worked thus far.

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