Municipalities nationwide are putting the pressure on their unions to accept cheaper benefits.
Towns and cities across the United States are now placing pressure on their municipal unions to start accepting cheaper health insurance benefits ahead of an element of the implementation of one of the healthcare reform components that will place a tax on more expensive plans as of 2018.
The Affordable Care Act includes a so-called “Cadillac tax”, which was created following the advice of economists.
The economists argued that health insurance that was more expensive, in which very little of the cost was placed on the shoulders of employee’s shoulders would make people blind to the cost of care services. However, in areas of public employment, in which the benefits agreements were reached as a result of negotiations and bargaining with large unions, it may not be as easy to simply switch to less expensive plans.
There are many cities across the country that are cautioning unions regarding this health insurance issue.
The cities currently include such large urban centers as Boston and New York, but also include school districts from Westchester County (New York) all the way to Orange County (California). They are all warning their unions that if they cannot come up with a way to decrease their health insurance costs now, then they will face problems in the future when the new tax becomes effective. This could threaten other important areas such as raises, and may even cost jobs.
At the moment, virtually every municipality that currently has a generous health insurance plan is sitting down to examine this impact. However, there are some people who are experiencing frustration with this situation and are viewing the tax as a tactic that can be used against the unions when negotiation time returns.
According to the former labor secretary, Robert B. Reich, in an email that he issued, “I think it was misguided all along.” He feels that at the time of the writing of the health insurance law, he was concerned that the tax would become “a blunt instrument that could too easily become a bargaining chit for cutting back benefits of workers.”