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ACA adds level of uncertainty to pact bargaining, experts say
YOUNGSTOWN
Union health benefits have long been a pivotal aspect of contract negotiations, but now the federal government’s new health care reform law adds another element of uncertainty to the process, according to labor experts and union officials.
The law, known as the Affordable Care Act, was signed by President Barack Obama in March 2010. Most notably, it will require nearly all Americans to purchase health insurance or pay a fine beginning in 2014. The so-called individual mandate is expected to provide coverage to 30 million uninsured people nationwide, or 9 in 10 eligible Americans.
The reform law will rely heavily on insurance markets, or exchanges, that are intended to drive down costs and provide more affordable health care for individuals and small businesses.
Although most employers are not technically required to provide coverage to employees or their dependents, if employees purchase subsidized coverage in the exchanges, aimed at making policies more affordable, then employers could potentially be subject to a penalty of $3,000 or more beginning in 2014.
In some instances, such a stipulation could force tough decisions during contract negotiations. Furthermore, the thousands of pages included in the law pose an entirely new set of policies that negotiators and employers will have to consider.
“There’s potentially a number of changes in the wind,” said Stanley Guzell, chief negotiator for Youngstown State University’s faculty union. “We have about three years on the current contract, which has really just begun, but there are a number of considerations being discussed.”
The law will extend Medicaid, a joint federal and state health care program for the poor, to those earning less than 133 percent of the federal poverty level, which is $14,860 for individuals and $30,660 for a family of four.
For individuals earning less than $44,680 and families of four earning less than $92,200, the law will provide for subsidies if employers fail to provide affordable coverage.
Coverage is considered unaffordable if an employer requires a contribution of more than 9.5 percent of income. But the law applies only to the cost of individual coverage, not family coverage, which on average costs about 14 percent of household income.
Under current regulations, if individual coverage costs less than 9.5 percent and an employer offers dependent coverage, then both employees and their family members are ineligible for subsidies regardless of whether family coverage is affordable.
According to the University of California-Berkeley Labor Center, union negotiators should consider that an offer of family coverage could prevent dependents access to subsidized coverage in an exchange.
“It’s not relevant to most union contracts, but there’s a limited number of low-wage workers that might want to bargain for higher wages and take subsidies through the exchanges rather than accept health care benefits,” said Laurel Lucia, a policy analyst at the UC Berkeley Labor Center. “We anticipate that premiums will also continue to grow, which will remain a concern for most employees as well.”
In fact, the government’s definition of affordable care and its bearing on who qualifies for subsidies could, in rare instances, force some unions to forgo health benefits altogether and instead negotiate for higher wages.
Companies might also find it cheaper to pay the penalties rather than bring more employees onto their health care plans.
“The vast majority of union members probably will not be affected,” Lucia said. “Their broad-based coverage won’t change much. The law has very specific requirements, and a lot of union plans meet those already.”
Still, Lucia said businesses with more than 200 employees will be required to automatically enroll current and new employees in one of their health-benefit plans, a costly mandate that could mean union concessions during future negotiations. However, the government has not set a compliance date for this part of the law.
“The biggest impact will be on the 50-plus employers,” said Ray Kashmiry, president of R. Kashmiry and Associates Inc. in Boardman, which designs benefit-plans for both employees and businesses. “But everyone is waiting to see what’s going to happen with the election — it’s a big mess — no one’s waiting around for 2014. It’s still business as usual here, and premiums continue to rise because insurers are gearing up to provide more coverage.”
Kashmiry added that many larger unions may not be entirely affected by the new law because their plans are self-insured.
Unlike fully insured plans, where the insurance company assumes the risk for the claims incurred in exchange for a premium, self-insured plans mean an employer or union is at risk for the claims incurred by members.
Self-insured plans are not completely regulated by the Affordable Care Act, which has made them more appealing to even small businesses, despite the cost and risk associated with them.
At YSU, those in the Human Resources Department charged with labor relations between the administration and the university’s four unions are also unsure of how the reform law will affect future negotiations.
“I’m not aware yet of any ramifications we may have to deal with down the road,” said Martin Bramlett, director of labor relations at YSU. “We are working with our health care consultant to become more aware of provisions that may impact the university.”