The Obama administration’s Department of Health and Human Services released a raft of new Obamacare regulations last Wednesday, and buried on page 65,051 of the Federal Register to which they were added, there’s a bit of important news. Kaiser Health News reported yesterday that the rules propose exempting from one of the taxes levied by Obamacare a certain type of health-care plans that are typically used by labor unions, which have complained quite loudly about the Affordable Care Act since its passage (which they supported). The key line from the new regulations: “We also intend to propose in future rulemaking to exempt certain self-insured, self-administered plans from the requirement to make reinsurance contributions for the 2015 and 2016 benefit years.”
So this isn’t set in stone yet: The rule is still in its very early stages (it has to be written, comments will be solicited, etc.), but what it would mean is exempting a fairly narrow type of health-care plan from a per-capita tax leveled by the ACA, the “transitional reinsurance fee,” in 2015 and 2016. The tax is only going to be leveled for three years: It amounts to $63 per insured person in 2014, $42 in 2015, and $26 in 2016 — the less costly years are the ones where exemptions will be granted. It’s supposed to raise $25 billion over the three years, to subsidize reinsurance programs run by the federal government for insurance companies on the exchanges, helping them deal with the influx of older and sicker customers.
The rule in theory could be even more narrowly tailored — to unions, or something else — than is suggested above, but if it amounts to exempting self-insured, self-administered plans from the reinsurance tax, it seems it would very disproportionately benefit unions. But it still wouldn’t help many unions, and isn’t a huge giveaway (in 2015, the tax amounts to maybe 1 percent of the cost of an average plan). Unions want a lot more than that — they’ve asked for the tax to be delayed or eliminated, they want exchange-like tax credits for their Taft-Hartley plans (because itinerant workers will leave union plans to get cheaper, subsidized insurance on the exchanges and, again, unions don’t want to shrink their bureaucracy), they want the Cadillac tax on expensive health plans repealed or delayed (since collective bargaining has usually meant unions have especially generous plans), etc.
They’re not getting most of their Obamacare wishlist — the administration said, for instance, they see “no legal way” to offer subsidies for union plans — but they might be getting a little gift here.
If the delay had meant that the exchange’s reinsurance program the tax is supposed to pay for didn’t happen at all, then this would actually be a better deal, and a good one for the unions – it would end a subsidy paid for by all people who have private health insurance and given to people and insurers on the exchanges (unions would like to make exchange insurance more expensive). But that isn’t what was going to happen: The reinsurance program would have gone ahead, funded by deficit spending or some other source or revenue, and everyone would just get a slightly cheaper plan, since they wouldn’t have the pay the fee. So it’s not entirely clear why unions chose to push this, then, except that, as Avik Roy pointed out to me at the time, it’s a tax opposed by a broad range of interest groups, so even though they didn’t get a particular benefit, perhaps unions just saw a winnable concession.