CA unions split over new Obamacare penalties

June 25, 2013

By John Hrabe

The new federal health care law has yet to take effect and already state legislatures are looking to change the rules for employers.

The Affordable Care Act, more commonly known as Obamacare, offered employers a choice: provide health coverage to your workers, or pay a fine. But before nonprofits and businesses can even consider their options, many states are looking to add a new state-level employer penalty.

In California, Assemblyman Jimmy Gomez, D-East Los Angeles, has introduced Assembly Bill 880. It would impose a new fine on businesses with 500 or more employees that fail to provide health coverage to their full and part-time workers. The proposed penalty, which is pegged at 110 percent of the average cost of health care coverage, is designed to help states avoid the major financial burden created by a wave of part-time employees that are expected to enroll in state-level health programs, such as Medi-Cal.

“The national healthcare plan is still undergoing a lot of changes and yet we have an assemblyman that is guessing how businesses need to operate their health care plans,” Manuel Cunha Jr., president of the Nisei Farmers League, told the Fresno Bee last month. “There’s no way our farmers can afford this.”

The penalties are expected to range from $6,000 to $15,000 per employee.  With such large fines, it’s understandable why the state’s leading non-profit organizations, large employers and business associations are opposed to the bill, which the California Chamber of Commerce has identified as one of its “job-killer” bills.

Unions

And even some of the country’s labor unions are beginning to speak out against new state-level employer penalties, fearing that the fine would hurt workers’ pay and hours.

“In this treacherous economy, higher wages is the number one priority for workers,” wrote Mark Espinosa, president of the United Food and Commercial Workers Union, Local 919 to the Speaker of the Assembly on May 3. “We feel if this plan were to go forward, it would be counterintuitive to that goal.”

If California Assembly Speaker John Perez, D-Los Angeles, doesn’t remember getting the letter (reproduced below), that’s because Espinosa represents food and commercial workers in Connecticut. His letter was addressed to the Constitution State’s Assembly.

The UFCW Local 919’s letter of opposition was in response to H.B. 6614, Connecticut’s version of AB 880. The bill, which imposes similar employer penalties, would apply to employers with 250 or more employees and is designed to offset the influx of enrollees in HUSKY, Connecticut’s version of Medi-Cal.

In the one-page letter, Espinosa warns that “financially penalizing the companies that choose HUSKY will in-turn hamper their ability to provide low cost insurance or have discretionary dollars that could be given to employees in wage increases.” According to its website, “HUSKY Health is the State of Connecticut’s public health coverage program for eligible children, parents, relative caregivers, senior citizens, individuals with disabilities, adults without children, and pregnant women.”

California’s largest and most powerful union leaders remain ignorant to the concerns of their New England counterparts. As reported by CalWatchdog.com’s Katy Grimes, the California Labor Federation and the United Food and Commercial Workers are co-sponsors of AB 880.

Supermajority

The bill, which requires two-thirds support to pass in the Legislature, hinges on the votes of newly-elected Democrats that represent the state’s few swing districts. The split within the United Food and Commercial Union over the employer penalty could provide an easy excuse for swing Democratic members of the Assembly to abstain on the controversial bill. Assemblywoman Sharon Quirk-Silva of Fullerton and Al Muratsuchi of Torrance, Democrats who were both elected last November and are expected to face tough re-elections next year, told CalWatchdog.com they have yet to take a position on AB 880.

“At this point, we are unsure that the bill, in its current form, will be the bill that is taken up on the Floor,” Reichel Everhart, chief of staff to Quirk-Silva, told CalWatchdog.com. “Therefore, until the bill is presented in its final form, it would be premature for the Assemblywoman to weigh in on it.”

The Assembly is under pressure to move quickly on the bill. Assembly Democrats will lose a member during the legislature’s summer recess, which begins on July 3. On July 1, according to the Sacramento Bee, Assemblyman Bob Blumenfield, D-Los Angeles, must resign his Assembly seat to be sworn in on the Los Angeles City Council. If legislative leaders cannot move the bill before the summer recess, the Blumefield vacancy would put Democrats one vote shy of two-thirds.

The Assembly could take up AB 880 as early as today.