Health Care Bill's Hidden Pitfalls
updated March 22
The version of health insurance legislation that passed the House of Representatives Sunday will affect workers in ways both obvious and not so obvious.
It’s clear the legislation not only reinforces the idea that health care is a commodity but also directly affects workers’ access to decent care.
- The proposal establishes that only if health insurance premiums exceed 9.5 percent of a worker’s salary will the worker get a tax credit to help buy insurance. (No mention of co-pays and deductibles.) In a not-so-subtle nod to where employers have been trying to drag us for the last decade, the bill thus establishes an expectation of what workers should pay out of pocket for health insurance. Once this benchmark is established, we can expect employers to demand it at the bargaining table.
- The proposal allows companies to cancel workers’ health insurance if the company pays a penalty ($2,000 per worker in the reconciled version of the bill). The UE has calculated that in an average shop of 100 workers with a decent but not extravagant health plan, an employer could save $395,000 by canceling insurance and paying the penalty instead. In a shop of 2,000 workers the employer would reap $6.37 million.
- The “individual mandate” means that if you don't buy private health insurance, the feds would penalize you $695 each year, or 2.5 percent of your earnings, whichever is greater. The penalty would kick in fully in 2016.
- And, of course, the proposals slap an excise tax on quality plans beginning sometime in the near future, thereby pushing employers to impose or demand cheap plans that make workers pay high deductibles and co-pays. The Obama plan in particular encourages the growth of high-deductible plans with Health Savings Accounts. These encourage workers who need health care to pay the first thousands of dollars of coverage before any insurance payments even begin.
In contrast, studies by Physicians for a National Health Program and others show that combining 3-5 percent of our pay with 6-8 percent from the employer would fully fund an improved Medicare-for-all single payer system.
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The reason for this perverse incentive is allegedly to “penalize” employers who don’t now provide health insurance by making them pay into the system--but it still doesn’t provide coverage for the affected workers and, as far as I can tell, there is nothing to stop an employer from canceling health insurance and paying the penalty.
Unions need to avoid the “FMLA trap.” When the Family and Medical Leave Act came into effect in 1993, it was not specific in many areas, so employers interpreted it to their advantage and many workplaces and unions were caught off guard. For instance: many companies forced workers to use their vacation or paid sick leave as part of their FMLA leave, although that was not written into the law.
We don't know enough details of how the health insurance changes made in D.C. will affect union and non-union workers. We should demand briefings from Congress and their staff so we can ask them.
Peter Knowlton is president of the United Electrical Workers’ Northeast Region. At the Labor Notes Conference April 23-25 he will talk about how to bargain over health care in the new situation.