Obama's scheme: from one many

Union Contract Can Exempt Health Plan From ObamaCare

By DAVID HOGBERG AND SEAN HIGGINS, INVESTOR'S BUSINESS DAILY Posted 06/14/2010 07:11 PM ET

Under new rules, your employer can't change insurers without losing your health plan's exemptions from ObamaCare regulations.

That is, unless a union negotiated your coverage. The administration has granted a special exception to those — and apparently only those — health care plans.

A health plan is deemed "grandfathered" if it was purchased before March 23, 2010, and no major changes are made later. Such plans are exempt from most ObamaCare requirements.

But new rules, officially announced Monday, make it hard to keep that status. IBD previously reported that the Obama administration estimates that 51% of all employers — 66% of small firms — would have to relinquish their current coverage by Jan. 1, 2014.

Hail The Collective

But the rules that limit grandfathering are less stringent for unions. Under the regulations, if "an employer or employee organization enters into a new policy, certificate, or contract of insurance after March 23, 2010 ... then that policy, certificate, or contract of insurance is not a grandfathered health plan."

However, that rule does not apply to health care plans that are part of collective bargaining agreements negotiated by unions and set up by March 23, 2010. As long as the collective bargaining agreement is in force, the health plan retains its grandfathered status even if the employers and unions agree to change insurance carriers.

The regulations include an example of a union-negotiated plan that enters into a new group policy "with Issuer Y for the plan year starting on January 1, 2011." In this case, "the group health plan, and the group health insurance policy provided by Y, remains a grandfathered health plan."

Thus, unions could switch to another carrier that offered similar benefits at cheaper prices without losing grandfathered status. Non-union employers that changed insurers would face benefit mandates, caps on out-of-pocket expenses and limits on age-based premiums.

Gerry Shea, health policy analyst and special assistant to AFL-CIO President Richard Trumka, downplayed the language's import, characterizing it as "boiler plate stuff."

"This is not something that we particularly lobbied on but we did say that, like other changes, there should be a collective bargaining transition period," Shea told IBD. "This is typical for any major change in federal law that affects employee benefits. Not just health care, but other ones too."

According to analysis accompanying the rules, up to 69% of employer plans — 80% for small firms — would forfeit grandfather rights in the worst-case scenario.

Rep. Phil Gingrey, R-Ga., said, "This is an egregious example of the lengths the Obama administration will go to shelter unions from any negative consequences from ObamaCare, while putting the cost and burden on everyday, hard-working Americans."

Gingrey, who is also co-chair of the GOP Doctors Caucus, added: "While up to 80% of workers in small businesses will be forced off of their current plan, unions are given 'special status' to negotiate better rates for their members."

Working Hard For Big Labor

This is hardly the first time that President Obama has gone to bat for Big Labor, which backed his candidacy in 2008. He guaranteed the UAW pension funds during Chrysler's bankruptcy and crafted a deal where the union got a 55% stake in the company.

Obama appointed union ally Hilda Solis as Labor Secretary and used a recess appointment to put Craig Becker, a former lawyer with the Service Employees International Union, on the National Labor Relations Board.

During the health care debate, legislation included a 40% excise tax on high-cost "Cadillac" coverage starting in 2013. Unions initially won a deal with the White House and Congress to exempt collective bargaining deals until 2018. The final health law delays the excise tax until 2018 for all.