Low-income workers on union health plans are not eligible for the same federal subsidies available to those who buy insurance in the new state healthcare marketplaces, the White House said Friday.
The decision is a disappointment for labor unions, coming shortly after top union officials met for more than an hour with President Barack Obama to press their case that subsidies could be extended to union-sponsored plans.
Labor leaders have complained for months that without the subsidies, the Affordable Care Act would drive up the cost of some union plans, leading employers to drop coverage and jeopardizing health coverage for millions of union members.
The White House cited a Treasury Department letter saying there is no legal way for union members in multiemployer group health plans to receive subsidies. In a statement, the White House said it would work with unions and encourage them to offer their multiemployer plans "through the marketplace, on an equal footing, to create new, high-quality, affordable options for all Americans."
That alternative is not ideal for unions. They would have to turn their private plans into public, competitive plans that are open to all workers, not just union members. And they would have to meet a host of complex new requirements under federal and state laws. It would take months to work out the details, and the plans would have to be approved by federal and state regulators before being deemed qualified health plans that could offer health insurance to the public.
The AFL-CIO declined to comment on the White House decision.
Earlier Friday, shortly after meeting with Obama, AFL-CIO President Richard Trumka told reporters outside the White House that he hoped the administration would act soon to address labor's concerns over the new healthcare law. He called the meeting a "problem-solving session."
"We'll try to get it done in the next week," Trumka said. "It may take a little longer to enact everything."
Congressional Republicans were working to stop the administration from giving organized labor preferential treatment on Obamacare, while the House House tries to quell widespread opposition to the healthcare law from its early supporters.
"Despite championing Obamacare's passage in 2010, union leaders are now waking up to the ugly reality of Obamacare that most Americans have predicted all along, including higher healthcare costs," said Sen. John Thune of South Dakota, the chairman of the Senate Republican Conference.
On Tuesday, Thune introduced the Union Bailout Prevention Act, which would stop the White House from granting subsidies to offset premium costs for the multiemployer plans held by many union members.
In addition, the House of Representatives voted on Thursday to stop all subsidies until the administration launched a system to verify recipients are eligible.
"Now that the full consequences of the Democrats' law are nearing, these same union leaders are seeking a special backroom deal from the White House," Thune said in a statement. "Rather than take hard-earned money from taxpayers to subsidize union healthcare plans, the Obama administration should give all Americans a break by permanently delaying this train wreck."
Unions were among the most ardent supporters of the health law when it passed in 2010. Union officials say they still support the law's goal of reducing health costs and providing coverage to millions of uninsured Americans.
But some union leaders have complained for months that it is not being implemented fairly. Those concerns spilled out this week at the AFL-CIO convention in Los Angeles as the labor federation passed a resolution calling the impact of the law "highly disruptive" to union healthcare plans.
Unions claim the new law will increase costs for health plans that are jointly administered by unions and smaller employers in the construction, retail, and transportation industries.
That could encourage employers to hire fewer union workers or abandon the health plans altogether, forcing union members to seek lower-quality coverage on the new health exchanges.
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