Obama disappoints union leaders on health care subsidies

The White House announced Friday that low-income workers on union health plans will not be eligible for the same federal subsidies available to those who buy insurance in the new state health care marketplaces under “Obamacare.”

However, top labor leaders left the White House after a meeting with President Barack Obama, still hoping to address concerns that Obamacare -- officially called the Patient Protection and Affordable Care Act -- will hurt their members’ health care plans.

The Obama administration’s announcement Friday is a major disappointment for labor unions. For months labor leaders have argued that without the subsidies, Obamacare would drive up the cost of some union plans.

They said this would cause employers to drop health care coverage, and would jeopardize coverage for millions of union members.

The White House is citing a Treasury Department letter saying there is no legal way for union members in multi-employer group health plans to receive subsidies.

In a statement, the White House said it will work with unions and encourage them to offer their multi-employer plans "through the marketplace, on an equal footing," and create "new, high-quality affordable options for all Americans."

But the unions would have to turn their private plans into public competitive plans open to all workers, not just union members.

The dispute with unions -- traditional allies of Democrats -- as the Obama administration begins to roll out Obama's signature health care reforms is providing political ammunition for Republicans who want to defund or repeal the law.

"We're continuing to work on problem-solving," said Richard Trumka, president of the AFL-CIO, the umbrella organization for 57 member unions representing more than 13 million workers.

Trumka said he hoped future discussions would yield solutions "in the next week," but he declined further comment.

Unions say the law is unfair because lower-income members who belong to multi-employer health care plans -- common in the retail, construction and service industries -- will not be eligible for subsidies that other low-earning workers will qualify for when buying health insurance on state exchanges beginning Oct. 1.

The conflict between unions and the administration plays into the political fight. On Friday, the Senate Republican Conference sent an email to reporters trumpeting a dozen links to articles about unions' Obamacare complaints.

"You want to have all the allies you can," said Henry Aaron, a health care expert at the Brookings Institution think tank, who is also on the executive board of the health care exchange for the District of Columbia.

"Not having the unions with you is not good news, from that standpoint," Aaron said.

Al Jazeera and wire services