This is a rush transcript from "Journal Editorial Report," May 31, 2014. This copy may not be in its final form and may be updated.
PAUL GIGOT, FOX HOST: This week on "The Journal Editorial Report," Big Labor's big regret. They were key to ObamaCare's passage, but as insurance costs skyrockets, unions are balking at paying the tab.
Plus, it was billed as a major foreign policy address, but what was missing from President Obama's West Point speech?
And Eric Shinseki resigns amid outrage over a new report that says V.A. delays and cover-ups are happening nationwide. We'll bring you one doctor's war stories from his time in the system.
Welcome to "The Journal Editorial Report." I'm Paul Gigot.
First up this week, is big labor having big regrets about ObamaCare? Unions, of course, have been among the president's most loyal allies and were critical to the passage of his Affordable Care Act in 2010. But now some are threatening to strike if they're forced to absorb the higher costs that come with the law. The "Wall Street Journal" reported this week that unions and employers nationwide are squaring off over who will pick up the tab for new mandates, such as coverage for dependent children up to age 26 and the so-called Cadillac Tax on premium health care plans starting in 2018.
For more, I'm joined by "Wall Street Journal" columnist and deputy editor, Dan Henninger; editorial board member, Joe Rago; and assistant editorial page editor, James Freeman.
So, Joe, just how much costs are going up for union plans? And weren't they supposed to go down?
JOE RAGO, EDITORIAL BOARD MEMBER: Exactly. That's why they're going up for union plans just as much as employer plans and the individual market.
GIGOT: What kind of magnitude are we talking about?
RAGO: We're looking at about a 10 percent increase, just year over year. So pretty significant. And then that ramps up in 2017 when this Cadillac Tax goes in. And this is targeted at very gold-plated health plans, you know, the richest benefits. And those often are union plans.
GIGOT: Why is that? I mean, when you think about gold-plated plans, you think of Goldman Sachs, you think of the big CEOs. But that's not true. Unions also have these very, very rich benefit packages. Why is that?
RAGO: Well, for years they have traded increases in wages for richer benefits, for more generous benefits.
GIGOT: Meaning sometimes no co-pays, almost no premium contributions. And the employers now are asking the unions, look, our costs are going up. We've got to pass that along to you. So you're going to have to start making premium payments. You're going to have to get lower raises. Or you're going to have to start paying more -- some -- some percentage more than what you've been paying.
RAGO: Right. The same thing we have seen in the private sector, where workers are shouldering more of their health care costs, that's coming to union plans now. It's sort of reached a breaking point. And they're really balking at making contributions that ordinary workers do.
DAN HENNINGER, COLUMNIST & DEPUTY EDITOR: And some of the union plans are fairly complex. There's about 20 million unionized workers in so- called multi-employer plans.
GIGOT: That means there is a single plan, but many employers contribute to it.
HENNINGER: Yeah. That's right. So they're fairly complex. And they have been -- they have negotiated these plans over decades, really. And they're very good plans. For instance, their insurance tends to be portable, which means to say, if you're a construction worker and go from job to job, your insurance follows you --
HENNINGER: -- which is a terrific provision for everybody to have.
GIGOT: We should have more portability for everybody.
GIGOT: And the reason for that is because these tend to be cross- industry plans. So that if they -- they're in the construction industry, say, as you point out.
JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR: Yeah. I mean, I think a big question is, construction industry, casino industry, wherever you happen to work outside of health care, if you're a union worker, what was in it for you? And I think this is a question for the union leadership that all signed on to ObamaCare, is were they fooled like everybody else? The "you can keep your plan" rhetoric, nothing is going to change except costs are going to go down, or did they think they were going to get a lot of exceptions that haven't come?
GIGOT: Well, they couldn't have been fooled by the Cadillac Tax, because that was advertised.
GIGOT: What they did get was a delay in it. But even if it kicks in 2017, 2018, what happens is, the contracts are being negotiated now. So the employers are anticipating the increase in costs.
FREEMAN: Right. I think what you're seeing is the costs that -- rank-and-file union workers are paying for union leadership's alliance with the Democratic Party. There's nothing in this for the union workers.
GIGOT: All right, Joe. So what does this mean politically?
RAGO: Well, I think this highlights the split that James is talking about between the union leadership, which is really kind of a wholly owned subsidiary of the Democratic Party, and the rank and file, the construction workers, the hotel workers, hospitality, grocery workers and so forth. I think you might see a widening split. And it's actually interesting, if you look at the unions objecting, they're all concentrated in those industries that I talked about, the sort of traditional unions. It's -- it might be coming to public-sector unions, as well, which is -- which have generally been a lot more supportive of the Affordable Care Act.
GIGOT: But these union leaders are asking for exemptions from the White House.
HENNINGER: They are.
GIGOT: And they haven't been getting it.
HENNINGER: No. And this points to another rift in the Democratic Party between the labor-union left and the social-engineering left, the progressives, who are more interested in things like health care reform and alternative energy. This is why the Keystone XL Pipeline has become such a point of tension inside the party. And I think they could have a turnout problem in November if some of these union workers decide these guys really don't represent me.
GIGOT: I've heard that, in Michigan, in particular, from some politicians, that they're really subdued across the union, rank and file.
GIGOT: All right. When we come back, it was touted by the White House as a major foreign policy address but did President Obama's West Point speech leave out a few things?