This application obtained by The Associated Press shows the short form for the new federal Affordable Care Act. (AP Photo/J. David Ake)
WASHINGTON (AP) — Critics of the new health care law are claiming some labor unions could get a break from fees imposed on everyone covered by health insurance.
The Obama administration's plan to exempt "certain self-insured, self-administered plans" from paying fees in 2015 and 2016 is not sitting well with Republicans, who say the move smacks of favoritism for a powerful White House ally. Labor officials say many unions won't be affected.
The issue surfaced last week after the administration included the language in another set of health care rules issued by the Department of Health and Human Services. While the language does not specifically mention unions, health care experts believe it would exempt some collectively bargained plans that are jointly administered by unions and smaller employers.
What remains unclear is how many union plans would benefit.
Labor officials on Wednesday claimed most of their multiemployer plans would not be covered by the exemption because they are run by outside administrators, not in-house. And they said the language doesn't really address broader concerns they have about other expenses driving up costs and jeopardizing the survival of their unique health plans.
Both unions and businesses have complained about so-called reinsurance fees being imposed under the new law. They start next year at $63 per person for everyone who has coverage, then drop to about $40 a person in 2015 and less in 2016. Those fees are collected in cumulative charges to insurers.
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 The AFL-CIO passed a resolution at its convention this year calling for the fee to be repealed.
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."
The Department of Health and Human Services offered little clarification about the plan, other than to confirm that it intended to propose the exemption in the future and would consider comments from interested parties before deciding whether to give it final approval. A White House spokeswoman did not respond to a request for comment.
Union officials suggested most of their multiemployer 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, senior Republican 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.
Labor unions have spent months lobbying for changes that would ease the burden of new costs on their plans. In September, the White House rejected a broader request that union members in multiemployer plans be eligible for federal subsidies.
In a conference call with reporters Wednesday, AFL-CIO President Richard Trumka pointed out that the language does not single out union plans for special treatment.
"It applies to self-administered funds," whether they are union-covered plans 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.
Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.