For better or worse, Obama’s health plan will start to roll out this fall. While it’s hard to predict many factors about how this will ultimately work out in practice, the details that are now emerging confirm the warning Socialist Alternative gave back in 2009. We said then how this Obama Affordable Care Act (ACA) will disappoint most workers and young people as a solution to the horrible health care crisis facing workers in the U.S.
Corporate Interests Favored
The main flaw in Obama’s plan is his reliance on corporate America and market forces, with a nudge from the federal government, to deliver quality affordable health care for all. Having first signed up the giant insurance companies, hospitals, and drug companies into his plan, the Obama administration is once again bowing to corporate concerns.
Obama delayed the requirement that corporations provide a package of health care plans to their workers or suffer fines for one year, until January 2015 or later. He also delayed the requirement that insurance companies accept a cap on the total co-payment that workers need to make. These allow employers and insurance companies to continue to gouge workers and patients.
This is in sharp contrast to his refusal to take into account the concerns of labor unions that tens of millions of workers covered by union-negotiated multi-employer plans will be discriminated against under his health care act.
Health Care at the Workplace Under Threat
Obama’s plan relies on employers to “do right by their employees” and continue to provide existing health care plans to workers. The refusal of employers to offer affordable health care to their employees can result in a really insignificant fine of $2,000 per employee. (It is enforcement of this fine that has been delayed till 2015 or later.)
This policy is fraught with problems. First, employers can simply drop their employees or refuse to offer “affordable” health care and take the fine. Second, they can increase the cost of their plan, making it too costly for employees, and yet still fall under definition of “affordable” under Obama’s plan, forcing workers to drop out. Third, they can trim down existing plans to comply with the barebones of what is acceptable under the law. Finally, since the penalties under the act only apply to employees working 30 hours a week or more, we can expect employers to start cutting employees’ workweeks to less than 30 hours to avoid having to comply with the act.
Attacks on Quality Union-Based Plans
Unscrupulous employers have essentially been given the green light to start to dismantle the quality health care plans won over decades of struggle by labor unions. There is no requirement that employers maintain the quality of exiting plans. Obama’s plan declared that employers who provide 60% of the health cost of employee’s health care plans are in compliance with the act. Considering that most union-backed plans force employers to pay closer to 80%, this will give a massive incentive to employers to demand that unions also adopt this lower threshold.
Despite repeated protests by labor unions such as UFCW, UNITE, and the Teamsters, Obama has already decided that 20 million workers covered by multi-employer health care funds affecting part-timers, retirees, and workers between jobs, in the construction trades, trucking, hotels, and grocery stores, do not comply with this plan. This is because the act allows employers with fewer than 50 employees and with employees working under 30 hours a week to pull out of these plans and send their workers to the “exchanges.” This will result in these plans starting to unravel. In a joint statement from union leaders to Democratic congressional leaders, they stated: “Taken together these restrictions will make non-profit plans like ours unsustainable.”
High Cost of Health Care for Workers
Under the pretense of cutting costs, the law has provisions that would tax employers 40% of the amount that so-called Cadillac plans exceed spending limits (that is, a quality plan that costs over $10,200 for an individual and $27,500 for families), starting in the year 2018. But employers are already starting to slash those plans. Yet these same corporations have told the Obama administration they couldn’t provide necessary cost information by 2014 in order to comply with the act, thus winning a delay until 2015. Many industry analysts foresee employers starting to cancel existing plans once union contracts elapse.
But employers in the non-union workforce only began providing health care to their employees to prevent union organizing drives attracting their employees. So, as corporate pressure mounts to trim union-backed plans, then non-union employers will feel free to trim theirs.
High Cost of Exchanges
Those unable to get affordable health care at work are expected to sign up for insurance “exchange” health programs to be rolled out by insurance companies. To comply with the law, these “exchange” programs will have to cover 10 broad categories of health care.
While these plans have not appeared yet, they will not be cheap. To comply with the law, the premiums cannot exceed 9.5% of a worker’s income. Those making less than 400% of the poverty level will receive government subsidies but would still pay 9.5% of the cost. But who has an extra 9.5% of their income lying around to pay for health care? Even worse, there are no limits on premiums for health care polices for families.
There is a limit on out-of-pocket expenses (deductibles and co-pays) of $6,350 for an individual and $12,700 for a family. For most workers, especially low-paid workers, paying this amount is inconceivable. In return for providing these “exchange” plans, insurance companies cannot impose caps on annual or lifetime benefits; neither can they continue their outrageous policy of discrimination based on pre-existing conditions or gender.
Workers are being hit from all sides. For example, an employee who cannot afford a so-called “affordable” health care plan which their employers offer will not be able to qualify for tax credits in the “exchange” system, since they have rejected their employer’s “affordable” plan Yet if they fail to sign up for an “exchange” plan, they will get fined, since the individual mandate comes into effect in 2014.
Step Up the Fight for a Real Universal Health Care System
The biggest failure of the act is that fails to guarantee a really affordable price for heath care. Obama is relying on market forces and competition between insurance companies to set a price that workers can afford. However, it’s not like there are lots of small insurance companies competing with each other. Instead, there are monolithic insurance companies that dominate the market and can be expected to act in a monopolistic pricing fashion to guarantee their profits.
As this reality starts to become known, many workers will be scratching their heads wondering what happened to the promises of Obama and the Democrats. A number of labor unions have recently come out in sharp opposition to Obama’s plan. The electrical workers (IBEW) passed a resolution in favor of “single-payer” at their most recent convention, as did the San Francisco building trades. Further details will emerge as this process unfolds over the next few years, but what is clear is that the task to fight for a “single payer” universal health care system needs to be stepped up to provide an alternative to even more free-market, right-wing alternatives to Obama’s Affordable Care Act.