Tags: obamacare | tax | waiver | unions

WSJ Editorial: Unions May Get Obamacare Tax Waiver

Monday, 18 Nov 2013 12:41 PM

By Dan Weil

The administration is apparently considering a move to free up unions from a tax that provides money for an Obamacare reinsurance fund, according to a Wall Street Journal editorial.

The fund, which will reimburse insurers on the exchanges if their costs are higher than expected, is financed by every U.S. citizen with a private health plan. The fee is expected to be $63 per person next year, the editorial explains.

"The unions hate this reinsurance transfer because it takes from their members in the form of higher premiums and gives to people on the exchanges," the editorial says.

"But then most consumers are hurt in the same way, and the unions have little ground for complaint given that Obamacare would not have passed in 2010 without the fervent support of the AFL-CIO, the Teamsters and the rest."

The Journal said the unions should consider the tax part of their civic responsibility since it's designed to help working people.

"Instead, they've spent most of the last year demanding that the White House give them subsidies and carve-outs unavailable to anyone else," the Journal noted.

"But don't expect Obamacare favors unless you helped to re-elect the President."

The suggestion that the unions might be granted a tax waiver was dropped in Federal Register document filed by the administration earlier this month. "We also intend to propose in future rulemaking to exempt certain self-insured, self-administered plans from the requirement to make reinsurance contributions for the 2015 and 2016 benefit years," the document read.

"Self-insured" means a business pays directly for its workers' healthcare costs and hires an insurer as a third-party administrator to process claims and manage care, the editorial said, adding that such a waiver would mostly include unions and big corporations.

"But the kicker here is 'self-administered,'" the Journal noted. That includes self-insured plans that don't contract with health insurance companies and instead act as their own in-house benefits manager.

"Almost no business in the real world still follows this old-fashioned practice," the editorial says. "The major exception is a certain type of collectively bargained insurance trust known as Taft-Hartley plans. Such insurance covers about 20 million union members, and four out of five Taft-Hartley trusts are self-administered."

Exempting unions from the tax is all about politics, and "like so many other Obamacare waivers, this labor dispensation will probably turn out to be illegal," the Journal observed.

Of course, the editorial continued, taxpayers will have to make up for the money unions don't contribute to reinsurance fund.

Under the president's signature healthcare reform law, "some people get taxed but others don't, some people get subsidies but others don't, and some have to pay more so Mr. Obama can deliver favors to his political constituents," the newspaper concluded.

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