Some labor unions could get break from ObamaCare fees

FILE: UNDATED: AFL-CIO President Richard Trumka (3rd L) marches with Jack Ahern, President of the NYC Central Labor Council (3rd R) and other leaders at a rally in New York, N.Y. (AP)

WASHINGTON – The Obama administration appears ready to give some labor unions a break from costly fees under the new health care law, a move that drew criticism from Republicans who say it unfairly favors a key White House ally.

In regulations published last week, the administration said it intends to propose rules that would exempt "certain self-insured, self-administered plans" from the requirement to pay the fees in 2015 and 2016.

Health care experts say that could apply to some union-sponsored health plans, though it's unclear how many. Labor officials downplayed any impact as miniscule, saying the language would not include most of their plans and doesn't address the wider changes they have requested.

Labor unions have spent months complaining the new law will drive up the costs of certain health plans that are jointly administered by unions and smaller employers. The White House has rejected a broader request that union members in those plans be eligible for federal subsidies.

Unions and many businesses groups also have been complaining about the so-called reinsurance fees, which start next year at $63 per person for everyone who has coverage. The fee drops to about $40 a person in 2015 and even less the following year.

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 Department of Health and Human Services said in a statement that once the rule is proposed the agency would consider comments from interested parties before moving forward. A White House spokeswoman did not respond to a request for comment.

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."

But union officials said most of their plans would not be eligible for the exemption because they also use third-parties to process claims.

"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, ranking member 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.

In a conference call with reporters, AFL-CIO President Richard Trumka said the language does not single out the so-called union Taft-Hartley plans for special treatment.

"It applies to self-administered funds, whether they are Taft-Hartley 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.