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Critics: Some unions could get break from fees

Posted on Tuesday, November 19, 2013 at 8:36 am

SAM HANANEL, Associated Press

Critics of the new health care law are claiming some labor

unions could get a break from fees imposed on everyone covered by health


The Obama administration’s plan to exempt “certain self-insured,

self-administered plans” from paying fees in 2015 and 2016 is not sitting

well with Republicans, who say the move smacks of favoritism for a powerful

White House ally. Labor officials say many unions won’t be affected.

The issue surfaced last week after the administration included the language

in another set of health care rules issued by the Department of Health and

Human Services. While the language does not specifically mention unions,

health care experts believe it would exempt some collectively bargained

plans that are jointly administered by unions and smaller employers.

What remains unclear is how many union plans would benefit.

Labor officials on Wednesday claimed most of their multiemployer plans would

not be covered by the exemption because they are run by outside

administrators, not in-house. And they said the language doesn’t really

address broader concerns they have about other expenses driving up costs and

jeopardizing the survival of their unique health plans.

Both unions and businesses have complained about so-called reinsurance fees

being imposed under the new law. They start next year at $63 per person for

everyone who has coverage, then drop to about $40 a person in 2015 and less

in 2016. Those fees are collected in cumulative charges to insurers.

The temporary fee is designed to raise $25 billion over the next three

years. The money collected is intended to provide a cushion for insurers

from the initial hard-to-predict costs of covering previously uninsured

people with medical problems. But unions and large employers argue that they

shouldn’t have to pay the fee because they won’t benefit from the fund. The

AFL-CIO passed a resolution at its convention this year calling for the fee

to be repealed.

Ed Fensholt, an attorney specializing in health insurance compliance, said

unions might benefit most from plans for an exemption since some of their

multiemployer plans are processed in-house, though he was not certain of how

many. By contrast, he said, virtually all other employers contract with a

third party to administer their insurance plans.

“We were really scratching our heads about who actually benefits from this,”

he said. “It certainly isn’t aimed at employers because employers don’t

really self-administer their plans.”

The Department of Health and Human Services offered little clarification

about the plan, other than to confirm that it intended to propose the

exemption in the future and would consider comments from interested parties

before deciding whether to give it final approval. A White House spokeswoman

did not respond to a request for comment.

Union officials suggested most of their multiemployer plans would not be

eligible for the exemption because they also use third parties to process


“Our understanding is that it’s not going to apply to us because of the

third-party administration,” said Jay Lederer, spokesman for the

International Union of Operating Engineers. “If they are leaving out

everybody who uses a third-party administrator to manage their health funds,

it’s our belief that leaves out the vast majority of plans.”

David Mallino, legislative director of the Laborers union, also said the

“vast majority” of his union’s health plans use third-party administrators.

“As the new regulations offer no substantive relief for our health care

plans, LIUNA will continue to look for opportunities to fix this egregious

tax on our members and their families,” Mallino said.

But Utah Republican Sen. Orrin Hatch, senior Republican on the Senate

Finance Committee, said he is suspicious of the administration’s motives.

“It certainly looks like the Obama administration is looking at a special

deal for unions, which is deeply concerning given the problems that all

Americans are facing due to Obamacare,” Hatch said.

Labor unions have spent months lobbying for changes that would ease the

burden of new costs on their plans. In September, the White House rejected a

broader request that union members in multiemployer plans be eligible for

federal subsidies.

In a conference call with reporters Wednesday, AFL-CIO President Richard

Trumka pointed out that the language does not single out union plans for

special treatment.

“It applies to self-administered funds,” whether they are union-covered

plans or not, Trumka said. “We are still reviewing all of that, and we

continue to try to make positive changes to the act.”

Gretchen Young, senior vice president for health policy at the ERISA

Industry Committee, a group that represents large employers on benefits

issues, said it would be “very unfair” to single out one group of employers

who are contributing money and not let everybody out of it.

“All self-funded plans are in the same position of having to pay this

three-year fee but getting no direct benefit in return,” Young said.

She said hardly any employers in her group, which includes the nation’s

largest corporations, would benefit under the administration’s language.