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State Senators & Labor Union Officials Square Off Regarding Healthcare Subsidies

Top union officials, who initially campaigned fervently for universal healthcare during the presidential debates, are now urging the administration to allow additional subsidies for union members under the healthcare law. Apparently, union heads did not previously realize that there were potential additional costs associated with the implementation of the new healthcare regulations. Union leaders argue that without the subsidies, they could be forced to reduce the incentive to offer health benefits to union members, which they fear would have the effect of reducing union membership. Without offering such benefits, it becomes much harder to attract and retain union membership.

Last month, Senators Johnny Isakson (R-GA) and Saxby Chambliss (R-GA), both signed their names along with 29 other state senators to a letter urging President Obama not to give labor unions special treatment through subsidies. The letter urges that with other groups, such as small businesses looking at increased costs as early as 2014 under the new plan, preferential treatment should not be given to organized labor groups who already receive often lower negotiated health rates.

The crux of the dilemma is multi-employer health plans, which cover most unions. Under ObamaCare, these plans are required to implement and comply with a number of regulations that could potentially drive costs up for companies. Further, the law forbids access to subsidies and tax credits for multi-employer plans, which could potentially offset the increased cost. Accordingly, unions are requesting a revision in the law to permit such subsidies and credits. The letter recently signed by Isakson and Chambliss argues that,

“Rather than considering diversion of subsidies not remotely contemplated in the statute, perhaps the concerns being raised by union plans should be cause to revisit the taxes, fees and other policies that drive premium costs.”

The Obama administration has been silent on both sides of the debate, perhaps recognizing that although unions were instrumental to the passage of the bill, providing subsidies to the labor unions would mean higher costs to implement the law due to the increased subsidies and also make it pretty tough to deny subsidies to other groups, such as small business that face increased cost under the plan.

It will definitely be an interesting political debate to watch unfold.