My father is a trustee of one of the New York State Laborer's union funds, and he pointed out something about multiemployer funds that I hadn't known--they're uniquely vulnerable to the proposed excise tax on health plans that cost more than $8,000 for an individual, or $13,000 for a family.
I don't know what percentage of the population is covered by multiemployer plans, but it's significant; they're quite common in the construction and manufacturing sectors. They enable union workers, in particular, to shift between employers while keeping their benefits intact.
The way they work, at least in the construction unions, is that you earn benefits every hour you work. The interesting wrinkle is that--at least in some cases--you earn those benefits whether you're single or married. You're giving up the same portion of your wages as a young single man as you would if you were 45 and had six kids.
Say everyone in your MEP is paying $20,000 a year in foregone wages. The single guys will all get hit by the excise tax, while the married guys won't.
This is important if you expect the excise tax to "bend the curve", because in this case, there's not much incentive to try to control costs--at least, as long as you have enough single workers to drag your average down below $21,000 a year, where the family plan excise tax kicks in.
Only a minority of your workers will be paying the tax, after all, and there's no realistic hope of getting your plan's average cost down below $8,000 a year, unless you either fire all the guys with families, or cut the policy to the barest bones. And the difference between $8,000 and the average cost of a family plan in your region is likely to be much greater than the difference between the average cost of a family plan in your region, and the cost of the benefits package you'd like to offer. That is, you would save some money by reducing your cost from say, $16,000 to $13,500. But that pisses off a lot of your membership, and it still leaves you paying a sizeable excise tax on every member who is single.
You can see a lot of ways to "fix" this problem, including dissolving the multi-employer plan, changing the way benefits are accrued, or telling your single members to buy their insurance on the open market. Or maybe the single members are helping you keep the average cost of the married folks down below $21,000, and so you're perfectly happy to get away with just paying the excise tax on their benefits. At any rate, few of these solutions involve bending the cost curve.
Copyright © 2010 by The Atlantic Monthly Group. All rights reserved.
I'm sure they've thought all this through.
Everyone has been paid to think it through in a certain way.
According to Senator Reid, they have 34 hours to read the entire 2,074-page Senate health care bill.
That works out to just about 1 page minute (non-stop, no sleeping, gotta keep reading even while you poop, etc) to understand the bill.
Best DAMN government in the World!
This bill may be an abomination but the vote on Saturday is a procedural vote to start debate. In any rational system of governance 51/100 members should be able to at least get their legislation introduced for debate.
Welcome to world your side wrought.
What side do you think I'm on? I was going for intentionally ambiguous.
"In any rational system of governance 51/100 members should be able to at least get their legislation introduced for debate."
You weren't for such a rational system of government when Democrats were holding up Republican legislation by threatening filibuster.
Sauce for the goose. We're not about to change the rules at this point in the game. Quit whining just because you're losing the country.
We like to be fair when it's in our favor.
Honestly, I yearn for the days when it took 66 (67?)senators to do anything.
As a minarchist, the less the gov't can do the better.
I'm not sure that there ever was such a time where filibusters were common and cloture required 2/3, other than maybe the 1960s. (And I'm guessing that you probably don't want a return to the 60s.)
This article from AEI suggests that the current (and bipartisan) abuse of the filibuster (and holds) is pretty much out of line with how the senate historically worked.
http://www.american.com/archive/2008/march-april-magazine-contents/our-broken-senate
This is poetic:
As so often happens, the unintended consequences of a well-intentioned move took over; instead of expediting business, the change in practice meant an increase in filibusters because it became so much easier to raise the bar to 60 or more, with no 12- or 24-hour marathon speeches required.
Of course, in the really old days Congress did a lot less and met for some ridiculous amount of time like three weeks. And you might be challenged to a duel.
In any rational system of governance, anyone who proposed this mess would never have gotten elected in the first place.
Politics is not rational. It is insane.
And that is why 51 out of a hundred senators can't get their bill even debated without jumping through hoops.
You mean the old Republican canard, a straight up-or-down vote? Haven't heard much about that lately.
"I don't know what percentage of the population is covered by multiemployer plans,"
I'd guess that it is 10 million based on p. 104 of this:
http://www.pbgc.gov/docs/2008databook.pdf
I'm not sure if everyone that has healthcare in a multiemployer setting also gets a defined benefit pension, but I'd guess it is fairly safe to assume that they are very, very highly correlated.
I would also wonder how retiree health care works. Your example seems to assume every worker pays in and gets out, but I have to imagine there is some provision for retiree health in many of these plans.
The health care plan is opposed by the Dean of the Harvard School of Medicine. How can Barack Obama - who is not a doctor - sign this legislation when so many smarter people in medicine who have actually studied the bill oppose it.
In the Wall Street Journal editorial, Dean Jeffrey S. Flier said he opposes the health reform bill in the Congress.
"In discussions with dozens of health-care leaders and economists, I find near unanimity of opinion that, whatever its shape, the final legislation that will emerge from Congress will markedly accelerate national health-care spending rather than restrain it," Flier wrote.
"Likewise, nearly all agree that the legislation would do little or nothing to improve quality or change health-care's dysfunctional delivery system. The system we have now promotes fragmented care and makes it more difficult than it should be to assess outcomes and patient satisfaction. The true costs of health care are disguised, competition based on price and quality are almost impossible, and patients lose their ability to be the ultimate judges of value."
Health experts agree that this health reform bill is DOA and should not be enacted into law.
You're basing your remark on the views of one individual. The medical community as a whole, feels otherwise. The AMA supported the House bill, and the nation's doctors support health insurance reform along the lines of the bills making their way through Congress:
http://healthcarereform.nejm.org/?p=1790&query=home
Put that in your pipe and smoke it, movertyperguy!
I'm basing my remarks on the Dean of the Harvard School of Medicine, who knows a lot more about it than a lobbying group that has been bribed by Obama payoffs.
AMA endorsement sparks internal outrage among doctors:
http://www.foxnews.com/politics/2009/11/06/amas-endorsement-house-health-care-sparks-internal-uprising/
Reading that stuff is dangerous to your health.
You may want to grab your crack pipe, back. The AMA is not the doctors. This was an executive committee decision and has stirred up quite a bit of dissension within rank and file.
http://www.politico.com/livepulse/1109/AMA_endorsement_has_group_split.html
Doctors have left the AMA over this and we have this, too:
" In fact, the American Association of Neurological Surgeons and the Congress of Neurological Surgeons announced their opposition to the House bill today.
“Sadly, in the ongoing health care reform debate, the more things change, the more they stay the same. We could not support H.R. 3200, the ‘America’s Affordable Health Choices Act of 2009,’ which was introduced in the House last July and unfortunately, we must now oppose this new House bill too. It contains no significant changes or improvements when it comes to the issues we believe are vital for true health care reform in this country,” said AANS president Troy Tippett."
Enjoy your smoke.
Rick
Wonder how many heads they had to knock together to come up with that executive committee statement?
I think even the experts agree that there are some lifesigns in that bill.
Re: How can Barack Obama - who is not a doctor - sign this legislation
Because he is President and the Constitution gives him the role of signing or vetoing legislation. Moreover this bill is not about medicine as such, it's about healthcare financing. I would trust a doctor to treat my asthma but never to do my taxes. Doctors are notorious bad at the economic aspects of their career.
Since this bill is still touted as cutting the costs to be financed, I would think the people working in the industry would be relevant.
Trusting Congress to deal with even a purely financing issue seems dangerous. I'm not sure doctors would do worse, or that their input somehow worsens the debate.
Doctors are getting a payoff. It's commonly called "the doctor fix."
I think the doctors thought that but the suspension of those cuts makes the bill's CBO score even worse, which is why Reid had to try to sneak it through on it's own. IIRC Pelosi says it's gonna happen after Obama-Pelosi-ReidCare is enacted. I assume that most doctors are giving that all the serious consideration they would if I offered to sell them a bridge between two islands in the western North Atlantic.
Including the suspension of pending cuts to Medicare reimbursement in the same bill that promises further cuts in Medicare reimbursement should cause some people to experience serious cognative dissonance. But liberals (especially those in Congress) are right up there with the Red Queen in their ability to believe multiple contradictory things before most any meal.
I have read that only a fairly small minority of doctors belong to the AMA and polls indicate that a majority of doctors oppose the plans. I have also read that the "price" of the AMA support was to increase medicare payments to treating doctors--a quarter of a trillion for the next ten years--but this is NOT included in the plans (because it would make them too costly) but is being enacted separately). If there is convincing evidence that the AMA does represent the views of most doctors and that it is being altruistic in its views, only then I would give a great deal of credence to its views.
More substantively, it's an interesting point that MM brings up. I must be missing some of the details, but it seems like a plan that charges everyone identically, regardless of spouse/dependents is monstrously inefficient already. Why don't these MEPs work like most other employer-provided plans where single plans are less than family plans?
Because you qualify for benefits by accumulating hours, not by a fee from your wages. You can see why it would be hard to charge family men more--do they have to work fifty more hours than single men for each extra family member? (that's an example--I don't know what the actual hour number is).
It seems archaic, and maybe there's a better system. But this deals with the problem that union work is sporadic. You don't want a guy to be able to qualify for insurance benefits all month by working a single hour, so you need the threshhold.
They are a version of the German provident fund model,which in this country date back to the 1800s. Everyone pays in at all ages and for all hours worked.They are actually quite efficient because there is no opting out by the young and no last minute purchases by the need-to-be-covered. Where the trustees can get the information, they tend to manage costs very carefully,since any increases generally come out of the wages of the workforce. The coverage is never viewed as a 'free gift' from the employers,as is so often the case in mot employer-provided coverage.
So before, the single construction guy could provide healthcare to his girlfriend and her kids without paying another penny by marrying her. But now he will actually get a significant bump in income from the tax saving. Lots more married construction workers, that is a "pro-family" policy change I can believe in. Who says all unintended consequences are negative?
"...polls indicate that a majority of doctors oppose the plans."
I provided a link to a September poll showing majority support by American doctors for health insurance reform. You're asserting that I'm wrong. On what basis?
a 2,074 page bill having unintended consequences?
I'm shocked.
No kidding. But this will be like every other piece of benefit legislation that I have seen in the last 30 years: the bill is nice, but then you need lots of regulation surrounding it. Congress doesn't write those, Treasury does after public comment, etc. It can be quite a drawn out process so the nits and nats here will be a long time in getting settled.
Having worked with MEP plans in the past, this may not be that big of an issue: the plan is funded on a cents-per-hour basis, true. But that is not salary reduction off of wages, it is just the agreed upon amount that employers kick in. The insurance, however, is purchased or funded under a traditional employee, family, etc structure. So in your example, the cents-per-hour may amount to $20,000 per employee, but the insurance (and the application of the excise tax) would be $8,000/$23,000 excise tax.
I have not read the bill, but it has been standard practice for benefit legislation to apply to MEP at the end of the bargaining agreement in effect at the time the legislation went into effect. This gives a further delay for some union plans.
It depends on whether or not they self-insure, no? I'm pretty sure that some, like the Teamsters, do.
Megan, ERISA plans are my career. I think I'm pretty safe in saying your response could be stronger. It's far more than "some" Taft-Hartley plans that are self-funded. I would venture to say that MOST of them do.
It's an interesting question though: Do the excise tax allowances apply based on whether family members are covered in fact or in theory? Strangely, the answer may depend on how the union calculates its COBRA premiums. If a plan sets different COBRA rates for individuals vs. families, the excise tax may be easy enough to determine on that basis for active participants as well. Honestly though, with as much fraud as there is in these plans already, it'll be interesting to see how many non-existent dependents start showing up on plan rosters.
Insure or self-insure probably has very little to do with the issue. As autolycus mentions, there will be an underlying "employee/family" rate basis (if for no other reason than for COBRA premiums). If for some strange reason there isn't, then the MEP will adopt one (again, if for no other reason than for COBRA purposes) and the tax would apply on that.
In most union circumstances,the amount of the contribution to the health and welfare plans comes out of an overall settlement,not as an add-on beyond the wage settlement.Over the last number of years,as health care costs have skyrocketed, many workers have seen most of any increase go into the health and welfare fund,not into their wage.
The one place where it may be just an add-on is with public employers.
I suppose it would be completely crazy to imagine that the excise tax might serve as an incentive to encourage MEPs to restructure their payments to avoid fairness issues in tax distribution....
See above--they're structured that way for a reason, and it's not clear that there's a better structure that suits the problems of a population where labor is mobile and work intermittent.
If they are union plans, they will be OK regardless of whether or not a bill makes it to Obama's desk. Seriously, there was always no chance of unions being hurt by the excise tax.
Oh my god! $20K/year for health insurance?!
In Minnesota, my company and I are paying about $3500 for what I thought was a pretty good plan. I can't imagine what that would cover.
There might be a clue in the phrase "in the construction unions".
Yes and no. On the job injuries are covered by workman's comp, and regular health insurers are vigilant about getting anything which is plausibly work-related turned into a workman's comp claim. Construction workers have a somewhat more healthy lifestyle than many others, except that they smoke more than average.
Yeah, but when you need six years of therapy and a sex change, you'll wish you paid the extra.
Did you used to be TallDahlia?
Shhhh, I'm trying to keep that quiet.
Try an octave lower, and you might pass.
You are covering just yourself would be my guess. I am on COBRA right now for a national employer. The plan is middle-of-the-road ($1,000 ded, etc) and costs us $14,000 annually for a family. The most expensive plan available through them costs $17,000 annually....so there will be plans that hit the excise tax limit of $23,000 family, but it will be few to start then grow over time as the excise tax limit is indexed to something other then healthcare inflation.
There are some estimates out there that there are 35 million 'covered lives' ( workers and families) in the multiemployer plans. Retiree coverage varies; most provide for Medicare co-pays and basic part B.
These perverse incentives manifest themselves in the military with fake marriages, very poorly thought-out marriages, and things of that nature. Which in many cases crushes productivity and lowers morale, when a bunch of married 19 year olds are dealing with too much drama at home. Or when one party in the marriage isn't fully aware that they're mainly just married for the money.