Conflict of Interest

By the way, there is a reason for this choice (from an article on why unions are worried about the PPACA)

The second problem is that the 40 percent excise tax on especially expensive plans — the so-called Cadillac tax — is going to hit union plans especially hard. Unlike most people negotiating compensation, union negotiators make an explicit trade-off between wages and other benefits, and the benefit that they seem most attached to is generous health plans. Union plans are made more expensive still because union membership is heavily skewed toward older workers. They are thus very likely to get hit by the Cadillac tax, which takes effect in 2018.

The preference for health benefits over cash compensation makes some sense for tax reasons (as it shifts taxable income to nontaxable income).  And at some level it is typical of union thinking, which is often driven by seniority and by benefits for older workers over younger workers.  But there is another reason for this that is almost never stated -- the unions themselves run many of these health plans.  And because it is priced as a monopoly, the unions often earn monopoly rents on these plans, and use management of large health plans to justify much higher compensation levels for union leaders.  In Wisconsin, ending public union strangleholds on health plan management immediately saved the state and various local school districts millions of dollars when they were allowed to competitively bid these functions for the first time.

  • smurfy

    "The preference for health benefits over cash compensation makes some sense for tax reasons"
    PR reasons too. It just doesn't look good when the local Transit Authority is getting 6% in years like 2007 where many others are getting pink slips.

  • Me too

    The cadilac tax will never hit them. Another exception to the rule will be made.

  • herdgadfly

    In December, Obama used weasel-words to exempt "self-funded" and "self-administered" healthcare funds from punishing reinsurance fees. It just so happens that Taft-Hartley funds are self-funded and self-administered - but no one can find that kind of wording embedded in the PPACA law. Prior to that, Prez Zero had temporarily exempted at least 1,300 union funds from ACA provisions which includes the Cadillac fund penalty. The Boss takes care of his own.

  • http://devilish-details.blogspot.com/ mesaeconoguy

    As others have noted, Oblunder will do whatever he wants to change the law to suit his needs and his politically favored patrons needs.

    This is the danger of arbitrary application of law, which the executive branch is supposed to prevent.

    I do not see how this country can recover from such foundational damage.

  • Gdn

    1) "Unlike most people negotiating compensation, union negotiators make an explicit trade-off between wages and other benefits,"

    Huh? I think most people do this.

    2) a lot of union plans are exempt, because they are not only self-insured, but self administrated. Pretty much only unions run those types of plans, and the is language in the PPACA which exempts groups that have self-insured, self-administrated plans from the Cadillac tax, as well as from being outlawed if they change the plan because of the "10" coverage requirements...they are grandfathered even if they change their plan to meet those requirements.