Obamacare And Its Effect On Labor Union Negotiations

Obamacare And Its Effect On Labor Union Negotiations

Image courtesy of jscreationzs / freedigitalphotos.net

Recent negotiations between labor and management have reached a point where Obamacare (The Affordable Care Act) has become a serious sticking point. Most collective bargaining agreements provide health care through what is described as a welfare plan. These welfare plans are funded by company contributions into a jointly administered trust fund (equal number of union and management trustees). Though the union and management trustees, as a group, have a certain amount of skin in the game, the practical nature of the trust provides the union with a lot more responsibility and concern since the participants are union members and they vote!

The one item of negotiations which is usually not negotiable is the contribution amount, which is to be contributed by the company for each participant since that calculation is performed by a statistician who determines what that amount is based upon certain known criteria. Before Obamacare, if management wanted to provide a health plan for its employees establishing that plan through a jointly administered trust fund was the most practical of options.

Obamacare has now provided management with a new and very attractive option: Propose that contributions into the welfare fund cease and allow the employees to find their own health care on the exchanges (state or Federal). Health care contributions can range from $800.00 to $1,500 per month per employee.

Under Obamacare, companies with 50 or more employees who choose not to provide health care will of course pay a small penalty for each employee. However compared to the annual contribution amount paid for health care for each of its employees, the penalty is negligible. Now here is where the game gets interesting.

Unions have relied heavily upon welfare plans to keep their members in line and not jump the union ship. Employees know very well that companies that provide health care are becoming more and more scarce and a union shop provides that much desired health plan. Now, with Obamacare, employees need no longer have to be concerned with that issue and they can dump the union and still keep their health care which they obtained by themselves through the exchanges. Furthermore, if unions no longer have a health plan in force through multiemployer (two or more companies) jointly administered trust funds, their attractiveness to employees they are attempting to organize is severely lessened.

As we look back at the time when Obamacare was being proposed by President Obama, the Democratic Party unions were in full support. The union leadership at that time allowed their need for maintaining a viable labor organization to be superseded by their ideology. In the past, much to their credit, unions have promoted legislation which has always favored employees such as the Fair Labor Standards Act, the Fair Employment Practices Act, the Family Medical Leave Act, the Americans with Disabilities Act, etc. However, the Affordable Care Act will result in even greater losses in membership than unions are currently experiencing.