Administration slams door on labor’s demand for Obamacare fix

In an apparent slap at big labor, the Obama administration on Friday denied a demand from labor unions that their healthcare plans receive tax subsidies under Obamacare.

Big labor has been a vigorous supporter of President Obama and his administration as well as fervent supporters of the president’s health care plan. However, as the date for implementation draws ever nearer, union officials are now raising concerns that under the law employers could choose to drop many of the premium healthcare plans that union members have enjoyed over the years, choosing instead to leave employees to join the health care exchanges set up by the government which frequently offer fewer benefits.

Union officials were demanding that the president fix the problem and were calling for him to grant tax subsidies for union members who chose to remain in these plans.

However, a White House official said the Treasury Department has determined that the healthcare plans used by many union members, which are known as multi-employer or Taft-Hartley plans, will not be eligible for subsidies.

“The Treasury Department issued a letter today making clear that it does not see a legal way for individuals in multi-employer group health plans to receive individual market tax credits as well as the favorable tax treatment associated with employer-provided health insurance at the same time,” the official said.

The rejection came following a meeting by Obama and Vice President Biden with labor leaders.

While the relationship between big labor and the administration has been a cozy one so far, signs of a rift are beginning to emerge. Labor officials including AFL-CIO Pres. Richard Trumka have insisted that the administration find a fix for Obamacare and have said if they cannot do so then the law needs to be repealed.

At this year’s annual AFL-CIO convention officials adopted a resolution that was harshly critical of the healthcare law, however they were under the impression that the White House did not want to move forward on the resolution.

The president finds himself between a rock and a hard place on this issue. On the one hand he is facing pressure from some of his biggest supporters, who have the ability to strongly mobilize their resources next year during the 2014 midterm elections to help elect Democratic candidates, while on the other hand he is facing scrutiny from everyday Americans as well as members of Congress who would perceive any type of tax subsidy for union as essentially being a kickback.