How Healthcare Reform is Affecting Labor Negotiations, Costs: 5 Things to Know

With tens of thousands of labor contracts set to expire during the next few years, new costs associated with the Patient Protection and Affordable Care Act have become a point of conflict for unions and employers, according to a report from The Wall Street Journal.

Here are five key things to know about PPACA costs for employers and how they're affecting labor talks across the country.

1. The PPACA directly and indirectly increases the cost of employer-based health insurance through various provisions, according to a report from the American Health Policy Institute, a nonpartisan think tank. These provisions include the Patient Centered Outcomes Research Institute fee, temporary reinsurance fee, excise tax on high-cost health plans and the mandate to cover adult children as dependents until age 26, among others.

2. Overall, during the next decade, the PPACA is expected to cost large U.S. employers (those with 10,000 or more workers) an estimated $4,800 to $5,900 per employee, according to the American Health Policy Institute report. The total cost of the PPACA to all large employers during the next 10 years is projected to be $151 billion to $186 billion.

3. Labor talks nationwide are stalling as employers and unions debate how much employees should contribute to cover health plan cost increases, according to the Journal. In Philadelphia, for instance, negotiations between the region's transit system and its main union concerning a contract that expired in March have reached an impasse over PPACA-related costs. Meanwhile, in Las Vegas, thousands of casino workers have voted to go on strike this month if they don't reach agreements on issues including higher costs under the healthcare reform law, according to the report.

4. Union officials feel the PPACA penalizes multiemployer health insurance plans, an issue that has been the subject of heated debate for some time. These union-sponsored plans are not considered qualified health plans under the PPACA, and therefore, their members do not qualify for tax credits or premium subsidies to help people buy health insurance through the exchanges. Unions have called on federal officials to address this issue of "fundamental fairness" and allow members of non-profit multiemployer plans access to the premium subsidies currently only available to exchange plan enrollees. This past September, the American Federation of Labor and Congress of Industrial Organization delegates included it in a resolution outlining issues with the PPACA. However, it seems unlikely that unions will be able to change the PPACA policy concerning premium subsidies. An Obama administration official told the Journal that although the federal government had worked to give multiemployer plans flexibility where possible, the administration lawyers have determined enrollees in those plans cannot be granted eligibility for premium subsidies.

5. Uncertainty surrounding PPACA costs in future years also seems to be holding up labor talks. The tax on high-cost health plans — which will involve a 40 percent tax on employer-covered premiums above $10,200 for individual coverage and $27,500 for family coverage — won't be implemented until 2018. Still, companies like Septa, the Philadelphia regional transit system, are considering how it will increase their costs. Septa estimates the tax will lead to a $15 million, or 12.5 percent, increase in its annual healthcare costs, according to the Journal. Septa's biggest union, Transport Workers Union Local 234, has rejected a proposal under which workers would contribute an additional 1 percent of their pay to compensate for the higher costs; Willie Brown, president of the union, said he doesn't trust Septa's estimates, according to the report.

More Articles on the PPACA:
PPACA Remains Unpopular: 5 Statistics
10 Statistics on Physician Practices and the PPACA  
IRS: Employers Face Penalties for Sending Workers to PPACA Exchanges With Tax-Free Sum 


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