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Latest News - May 2014

May 27, 2014
A Labor Union Prepares To Strike, As Obamacare Ups Health Insurance Costs By 5.0-12.5%
Source: Forbes
By: Avik Roy

Labor unions have, of course, been among President Obama’s most reliable supporters. Unions’ support was critical to the passage of Obamacare in 2010. But unions are continuing to learn, to their apparent surprise, that their members will bear many of the costs of the new health law. Now we learn that some laborers are preparing to strike, if they are forced to absorb the higher health-insurance costs that the Affordable Care Act requires.

“When we first supported the calls for health-care reform, we thought it was going to bring costs down,” a lawyer for the Laborers International Union of North America, or LIUNA, told Kris Maher and Melanie Trottman of the Wall Street Journal. But that’s not what’s happening. Maher and Trottman today discuss several cases where unionized workers and their employers are being forced to absorb higher costs as a result of the law.

Large employers frustrated that Obamacare doesn’t decrease health costs

Last year, I noted the case of Delta Air Lines, which told the Obama Administration that it would be spending $100 million more on health insurance in 2014 relative to 2013, mostly driven by Obamacare. Obamacare’s “slacker mandate” requiring plans to cover adult children under 26 means higher net costs for all of their workers, an especially bad deal for the large majority without children in that age bracket. The law’s “Cadillac tax” applies a 40 percent excise tax to health plans whose value exceeds a certain threshold. Other provisions of the law, like the individual mandate, drive up costs by increasing the number of people who sign up for Delta’s health insurance packages.

Other large employers share Delta’s concern. A new survey from the American Health Policy Institute, of the chief human resource officers of 360 large employers finds that 82 percent disagree with the statement that “the ACA will help my company more effectively control health care costs,” while another 82 percent disagree with the statement that “the ACA is improving the efficiency of the health delivery system.” On the other hand, while many HR chiefs expect their costs to increase at a faster rate than the historical trend (42 percent), a plurality expects costs in 2014 to remain in-line with historical increases (48 percent).



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