Department of Uh-Oh

Labor unions enthusiastically backed the Obama administration’s health-care overhaul when it was up for debate. Now that the law is rolling out, some are turning sour.

Union leaders say many of the law’s requirements will drive up the costs for their health-care plans and make unionized workers less competitive. Among other things, the law eliminates the caps on medical benefits and prescription drugs used as cost-containment measures in many health-care plans. It also allows children to stay on their parents’ plans until they turn 26.

To offset that, the nation’s largest labor groups want their lower-paid members to be able to get federal insurance subsidies while remaining on their plans. In the law, these subsidies were designed only for low-income workers without employer coverage as a way to help them buy private insurance.

…Contacted for this article, Obama administration officials said the issue is subject to regulations still being written…

Top officers at the International Brotherhood of Teamsters, the AFL-CIO and other large labor groups plan to keep pressing the Obama administration to expand the federal subsidies to these jointly run plans, warning that unionized employers may otherwise drop coverage. A handful of unions say they already have examined whether it makes sense to shift workers off their current plans and onto private coverage subsidized by the government. But dropping insurance altogether would undermine a central point of joining a union, labor leaders say.

…The Teamsters’ Mr. Hall said his union has no plans to eliminate workers’ insurance. Instead, he worries employers will have an incentive to drop coverage in collective bargaining if they can’t tap the subsidies.

All of a sudden, people are figuring this out.  The article is here, and for the pointer I thank Craig Garthwaite.


Why are private sector unions so left-wing? Someone with Pat Buchanan's politics would do a far better job; he'd be pro-union on almost every single issue. Instead, they end up with these left-wing lackeys. Granted, the GOP is hostile to all unions, but it certainly doesn't help having socialists at the top. Had unions opposed Obamacare, it would have died. So these guys were simply used to advance a political agenda, and now they will get the total shaft, because there's no money for this.

This is an interesting point.

A worthwhile thought experiment: what would the endgame have been if the unions opposed Obamacare?

It may be that the unions need the Democratic party more than it needs them. If the union leadership broke with the Democrats on a major issue, they would probably lose quid pro quo support for the things they want. But the Democrats probably wouldn't lose many rank-and-file voters, because I doubt their voting is much based on the actions of the leadership. The Democrats could probably realign their coalition to make up for the loss of some union members. However, unions' traditional industries are in decline, and public sector unions are under fire due to budget issues. They could lose significant influence without favorable legislation and the monolithic support of liberals.

Unions supply LOTS of money and organizing, which are things that the union leadership can probably effectively marshall. But that's not the sort of thing where you can effectively break on one issue. Its all or nothing.

Unions are not stupid. Which side, left or right, holds more power? Which side has won nearly every long-term political battle of the 20th century? Who has more connections in DC, Pat Buchanan or Al Gore? Who sways more influence Harvard or Oral Roberts? New York Times or Fox News? The Brookings Institute or The John Birch Society?

Every major self-interested power group in this country is as left-wing as the left-wing will let it be. The only groups that aren't left are those that are completely rejected by the progressive core. Evangelical Christians, energy companies, the military, etc.

Unions are playing the right game, cozying up to those that actually hold power. For their part the left is more than happy to accept the union's patronage, and sometimes even throw them a bone or two in return. Union alliances make Democratic politicians look the like the party of the everyday man, and Republicans as elitist plutocrats. This nicely fits in with the common narrative that progressives try to project.

It would be hard for unions to get large numbers of non-union voters to vote for their policies. There just aren't enough union families. So they must align. At the same time, unions collect a lot of money and have organizational power. They spend lots of this money building up their allies. Why left-wing vs. right-wing? probably goes back to the 1920s, or even earlier.
Of all the supporters of the Democratic Party, unions are by far the most important.

Unions are solidly democrat. They are hardly left-wing.

Not so much solidly Democrat as solidly anti-Republican. Which mirrors the fact that the GOP has been solidly anti-union since the dawn of organized labor in America while the Democratic Party hasn't been uniformly supportive of unions.

So yeah, Pat Buchanan seems great for the myopic subset of union members and leadership who worry about immigrants and free trade, but as with the GOP of the last century-plus he opposes collective bargaining so it's a non-starter.

I was looking for one quote in particular but there are several here that are appropriate:

But look on the bright side: Romney isn't president!

If they're unhappy now just wait until they start including the insurance benefits as taxable income.

And yes lets have the government subsidize everyone's insurance because that's sure to contain costs, just like it did to housing prices and higher education. The government is great a containing costs.

We have been subsidizing the purchase of health insurance since at least WW2. Containing the subsidy was not working very well before ACA, either. Can we get over the sniping and discuss how to make the system work better and/or evolve toward a better system


I don't think anyone, even those who passed it, saw ACA as the final solution. Why are we surprised when it's breaking? It was always a step towards a direction, that would definitely require more steps.

"Why are we surprised when it’s breaking?"

Because it's not even fully in effect and it's already breaking.

Because it was clearly a steaming pile and yet it's defenders still defend it to the hilt.

Because it's worse than the status quo.

Any of those will do.

In what alternate universe were unions uniformly and enthusiastically supportive of Obamacare? Here's one of not a few articles expressing what unions were enthusiastically opposed to - ... the fact is that unions, like insurers, providers, etc were one of many stakeholders that agreed to the compromise that is Obamacare. Like all other stakeholders who aren't idiots, unions are now trying to have their make their case when it comes to executive-branch decisions in how Obamacare's implemented (waivers, regulations, etc).

So, I don't get "people are figuring this out" ... who imagined this would turn out any other way?

Nancy Pelosi for one. I thought that the more we figured this out, the more we were supposed to like it.

Huh? Nancy Pelosi imagined that Obamacare would be implemented without stakeholders making their case to the executive branch's regulatory discretion? Because that's all that's described here.

I have to assume mostly the same dumdum Obama voters who were shocked by tax increases in January. I just didn't think unions were also in the 85 IQ wheelhouse that is the DNC base.


Ignorance doesn't seem to be a worse insult than what you are implying.

Oh, so unions knew Obamacare would increase costs and cause them to drop coverage, they just decided not to say anything about it for a while. Well that's so much better!

The article I linked describes unions (and others) doing (and saying) something about it at the time. There are hundreds of articles like it from 2009/2010. There was a huge debate over the "Cadillac tax" as a funding/cost-control mechanism in the bill and whether it would erode union support for Obamacare. While I can't read the whole thing (pay wall), Tyler's article seems to be inventing some sort of 2010-vintage universal union support for Obamacare and also reading current union activities as sour grapes rather than run-of-the-mill influence peddling... I guess to try to drive a wedge between unions and Democrats, but it's a pretty lazy attempt.

I don't see this as a case of schadenfreude, but as a part of the natural development of the system. Because of the refusal of Republicans to participate in the design, the system that should have been aiming at increased coverage AND reduction in costs, came up short on cost controls. Now that has to be done, probably not as well, by regulation. The long term evolution will be toward less employer “provision” and more people getting directly subsidized.

Right, right. It all could have worked if it just would have been designed a little differently!

Sorry, but watching this all unfold has been like watching a slow-mo trainwreck. Anyone who has seen government medicine in other countries firsthand understands full well where this will all end up, and how we will get there. It doesn't matter who The Planners are. The Plan is the always same.

Be careful of the hyper-partisanship in your answer. I'm pretty sure that the issues at risk here are fundamental to the overall design of O-care. Maybe things would have been better if the mandate had been limited to catastrophic care only, however, my reading of the left is they would probably have found this unacceptable.

A telling counter to your accusation of "blame the Republicans"-- now that we're here, are there any obvious policy tweaks? We're still very early in implementation, nothing is set in stone yet. If not, then this is probably a structural problem with the whole approach.

Of course it would be unacceptable. You can't shift costs from sicker people to healthier people if the healthy people are allowed to only purchase minimal coverage.

The unions were smart to support health care reform. They were looking at the long run. If health care costs were to keep increasing unimpeded, even unions were not going to secure coverage for all their members--too expensive. Very few groups fully supported every single provision of the ACA. Remember the tax on "cadillac" health plans? Unions weren't hot on that, but they understood that it could be a tradeoff that ultimately leads to increases in member wages.

Saying they plan to drop coverage and actually dropping coverage are two different things. A does not always lead to B. If a union drops health coverage, then those workers' wages will go up. What level of subsidy will those workers qualify for with their new wage levels? It depends in part on family size. I would think conservatives are quite excited about this development. As the article says, dropping coverage would undermine a central point of unions.

But Obamacare increases costs and brings nearer the day when unions will have to drop coverage. So by your logic they should have opposed it.

You're only thinking of one aspect of Obamacare. Elimination of the caps is but one tiny provision of Obamcare and the issue is only affecting a small proportion of union members. Dropping coverage will not be required of most unions nor is it a death knell for them.

Except that the nurses and doctors unions are more powerful than the other unions. We will see how this works out.

"All of a sudden, people are figuring this out." I find it hard to believe that labor union leadership is myopic. I think it's more a matter of expectations that did not pan out. Of course, figuring it out is ambiguous, but I see this as an rough equivalent to a "save more tomorrow" plan gone awry on the absence of more income. When ACA was negotiated we were supposed to now be in a better place economically. It's much easier to roll out costly benefits, which employees always pay for in the end, when they are getting raises and. Few want to have a big cut in their take home pay for a benefit that they already have or they have been making due without. But it would be noticed much less by union members if their wages were growing at a robust clip. Also maybe union leaders had expected more cost cutting or cost sharing arrangements to be in place. Lots of people have expectations that turn out to be wrong, so I think the gottcha vibe (which I am almost certainly misreading) is not fitting here.

"I find it hard to believe that labor union leadership is myopic"

Hmmm. See Detroit. Maybe the leadership isn't, they get to take their money with them, but the people who elect them maybe.

"When ACA was negotiated we were supposed to now be in a better place economically."

According to whom? How badly did prognosticators miss? How much credibility do we give to such forecasts today?

This seems to be a microcosm of a general myopia that afflicts union leadership and everyone else.

The ACA was passed in the spring of 2010. In January 2010, the central tendency of expected GDP growth in 2012 was 3.5 to 4.5 percent according to the FOMC's Summary Economic Projection. ( I did not check, but I assume that the CEA and CBO forecasts were similar. According to the BEA this week, GDP grew 1.5 percent in 2012.

No forecast is 'credible' in the sense that you should believe it to be the future truth. But you can be forward looking, planning, and aware of institutional details...and still make incorrect assumptions about key conditioning factors. If the GDP and income were chugging along at 4 percent, I suspect (but could wrong) that it would not be such a hardship to put these new programs in place. Optimism is revealed ex post, but myopia is known ex ante.

Too bad Obama blew so much political capital on the ACCA and not on pro-employment, pro-growth policies...

So, there is a large gap between were we thought we'd be and where we are, over just a couple years. But at the time, all we knew was where we thought we'd be, and it seems to me we placed a lot of reliance (credibility) on these forecasts at the time in the crafting of the ACA, and that's why the issue is coming to a head now.

And so today, we are told that increasing taxes or cutting spending would derail the economy- the economics profession speaks with close to a single voice on this point. Of course, politicians love to hear this- given their druthers, they would never raise taxes or cut spending, and so, gosh, if the experts insist that raising taxes or cutting spending would be irresponsible, well by all means, lads, we must behave responsibly. This is all ever-so-convenient for politicians, and it absolutely drives today's policy decisions.

Based on the track record, this seems like undue credibility. Either that, or politicians listening for what they want to hear and economists happily dishing it up.

When we make plans for the future, those plans are almost certainly conditioned on our views about the future. The consensus view...not just the Fed or the administration but also business forecasters...back in 2010 was that by now economic growth would have picked up. The fact that it did not does not reflect anything dubious or strategic. It's just the view that our economy always recovers, believe me the contra view is much more controversial and harder to argue.

A couple thoughts:

- This is not an article about the hidden cost of Obamacare. It is an article about a special interest group attempting to feed at the public trough.

- The mandates cited - uncapped coverage, coverage for children under 26 - are attempts to bring actual medical costs into the insurance system, the theory being that once they are insured, they can be controlled more easily than a cost born by thousands of individuals with no power to negotiate separately.

- Any costs that aren't covered by insurance are passed through to the individual union members, on a totally randomized basis.

- If the unions fail in this attempt and the health costs are truly onerous, they will negotiate cheaper health insurance.


Really? I thought it was an article about how even unions are now admitting that Obamacare WILL increase costs AND also about the unions rent-seeking for special quid pro quo favors.

Costs are going to be controlled by subsidizing them and removing the recipient of the services from the equation?

Obamacare was never sold as a cost reduction initiative. It was sold as a universal coverage initiative, with some secondary effort at cost containment.

The "go-to game" seems to be to skip the universal part and only critique the costs part. Well, feel free to volunteer better and cheaper universal plans. Probably ever single one of the Obamacare boosters will be on board with you.

Oh, really, so if everyone knew it would increase costs why did Obama send out nasty letters to the insurers telling them they would go to jail if they claimed Obamacare was increasing their rates?

How about a much better and cheaper universal plan: universal catastrophic health insurance. No one would have to worry about being bankrupted by a medical emergency beyond their control, everyone would have to budget for routine medical care, wasteful medical spending would plummet, costs would plummet. That's just not a big giveaway though, I guess.

So ... you aren't volunteering better universal systems?

Cliff, isn't catastrophic care like the FAA not requiring routine safety checks, but instead mandating that every passenger on an airplane gets a parachute?

You might save on day-to-day costs, but the airlines (read people) saving costs tend to have more disastrous, expensive outcomes in the end.

You have trouble differentiating between systemwide costs and individual plan costs.

There are many ways to negotiate lower prices. One way is to have individuals negotiate a lower rate, which you seem to advocate.

Another way is to bring individuals together to negotiate a lower group price than any one could have bartered alone. That is what health insurers do.

There are pros and cons to each. I would suggest negotiating as a group is better for health insurance.

My wife broke her elbow a couple months ago, and I have the hospital bill in front of me. The hospital billed her $44,000. But because she's insured, the cost was knocked down 95%, to $2,000. The hospital-insurer relationship involves payments I'm not privy to, but given the disparity above I would suggest the hospital did a better job of negotiating than I could have done on my own.

And of course, that was just one vendor. We were billed by seven different providers. So my wife and I would have spent a lot of time negotiating.

Usually when you comparison shop, you educate yourself about the product and get quotes from three or more vendors. So my wife and I would have had to educate ourselves on a particular sort of injury, then find 20+ providers of all the services she would be receiving, then negotiate with each one.

Once we'd selected our favorite seven, we would have to go back to each one and make sure they would be willing to work with the other six.

Again, I think the insurer did better, negotiating for the group.

Here's an NYT blogger on how hospitals get paid:

Glance through that and let me know how an individual would fare negotiating his own rate.


The article is wrong when it says that the "subsidies were designed only for low-income workers without employer coverage as a way to help them buy private insurance." Employees whose employer-sponsored insurance (ESI) is "unaffordable" may receive credits to buy insurance. Indeed, the most controversial aspect of the newly released regulations is the decision to determine affordability of ESI by relying on the cost of self-only coverage and not the cost of family coverage for employees with dependents. Essentially, employees with dependents may be considered to have "affordable" ESI under the law even when the ESI policy that would cover them and their dependents would be unaffordable. These employees would be ineligible for credits to buy insurance because they have affordable ESI.

Nobody's figuring anything out. Just take a look at the comments here. The whole country is in denial. If we don't repeal this monstrosity ASAP we will go the way of Canada's health care system.

And yes, the most foolish among you see this as good thing. It's just sad after a while.

"If we don’t repeal this monstrosity ASAP we will go the way of Canada’s health care system."

Cutting health expenditures hugely and improving health outcomes for almost everyone in the country. What a disaster that would be?

The coming massive reductions in supply, price controls, and replacement of individual care with so-called "cost effectiveness research" and "evidence-based care."

Very interesting piece.

"Contacted for this article, Obama administration officials said the issue is subject to regulations still being written."
Isn't it great that a law can be enacted the details of which are yet to be determined by unelected bureaucrats, industry figures and lobbyists? When San Fran Nan said, "We have to pass the bill so we can see what's in it." she was wrong. What she should have said was "We have to pass the bill so the bureaucratic regulators can tinker around with the health care and income choices of over 300 million people and come up with something that won't inspire actual rebellion."

" But dropping insurance altogether would undermine a central point of joining a union, labor leaders say."
Of course it would. A key benefit of union membership and the ability to organize has always been health benefits that the non-union work force doesn't have. It's always been a complete mystery why labor would advocate for universal health coverage when it undercuts their own position. Their response, or at least that of Thomas Patchell, one time big shot with the plumbers and pipefitters, is that with a national health plan employers could increase wages. It is to laugh.

"I heard him say, 'If you like your health plan, you can keep it,' " Mr. Wilhelm recalled.
Everybody heard that. But then again, we've still got troops in Afghanistan and Guantanamo Bay prison is still operating.

"The 2010 Affordable Care Act generally excludes workers with low incomes from tapping subsidies if they already have insurance from an employer that is affordable and meets the law's minimum standards."
The word "affordable" keeps popping up in these discussions. The subjectivity of the term when used in this context is mind-boggling. If the government can determine if something is "affordable" for a group or individual then the game truly is up.

"These matters are the subject of pending regulations. We will continue to work with employers, workers, consumers and businesses to implement the health-care law."
I haven't heard from anybody. How about you?

"If we're not offering our members insurance and pension, why would you want to be union?" he asked.
Good point. What about the 40 hour week (In reality, they all want to work overtime, but that's another story.), job safety, working conditions, seniority, grievances, etc? The feds have taken that burden over already.

"Former congressman Earl Pomeroy, a Democrat who represented North Dakota in the House...Mr. Pomeroy said the issue can be fixed through federal rule-making. A supporter of the law, Mr. Pomeroy is now a senior counsel at law firm Alston & Bird in Washington and a registered lobbyist who advised the National Coordinating Committee for Multiemployer Plans on its effort to secure subsidies."
Now we see why candidates campaign so aggressively for seats in congress.

"Central Blacktop Co., a Hodgkins, Ill., road builder that employs members of operating engineers Local 150, provides health benefits by paying $13.45 per hour that each member works, said Joseph Benson, the company's chief financial officer. That averages nearly $19,000 a year per worker.
"Ultimately any increase in expense to the fund is going to come from us down the line," he said."
And it's going to get more expensive.

"Isn’t it great that a law can be enacted the details of which are yet to be determined by unelected bureaucrats, industry figures and lobbyists?"

Perhaps you'd prefer it another way, but this is true of basically every regulatory law ever written. And, for that matter, almost every law dealing with spending money and/or collecting revenue. Executive discretion is unavoidable and, as in this case, affected parties are smart to have their say as much as possible, which is all that this article is describing as far as I can see.

It was always clear that one of the benefits of the ACA was going to be to move people away from employer-provided plans. which were always a bad idea. The only real question was and is how quickly that will happen. Quick or slow, if unions can't provide any value to their members above access to health insurance, then that is just one more reason why they will continue to lose importance. I think there are other I areas where they can be helpful, but I guess we will see if workers agree.

Loving the revisionism. "Oh, everyone knew it would send costs spiraling out of control and drive everyone onto the subsidized plans. That was the whole point" Yeah, okay.

In fact, it was sold as the opposite of a stepping stone to single-payer. And if your goal was to phase out employer-anchored healthcare than phase out the (insert f word)ing tax treatment.

Apparently, the cost curve admits of bending in a variety of directions.

All of a sudden, people are figuring this out.

Well no one read the thing before it was passed, so...understandable.

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Everyone wants free shit and assumes they'll be the ones getting it.

And then they find out that they'll be the ones paying for it instead.

No, I think you're analysis is wrong.

30% wanted free or heavily subsidized shit.

30% didn't think they'd have to pay for it, so why not go along because it's the 'right thing to do'

40% got screwed.

Will problems with ObamaCare eventually lead to THE quid pro quo?

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