Administration accused of giving unions 'special treatment' with exemption from ObamaCare fee

Sept. 9, 2013: Richard Trumka, American Federation of Labor and Congress of Industrial Organizations president, addresses members during the quadrennial AFL-CIO convention at Los Angeles Convention Center. (AP)

The Obama administration is being accused of giving labor groups "special treatment under the law" after formally proposing a change that could exempt union health plans from a pesky ObamaCare fee.

Sen. John Thune, R-S.D., who flagged the obscure rule change after it was filed in the Federal Register (see page 70), blasted the exemption as "crony capitalism at its worst."

"Unions are now experiencing the ugly reality of this law, and they want out," he said in a statement.

Indeed, the AFL-CIO has fought against what is known as the "reinsurance fee" in the Affordable Care Act. The temporary fee would kick in next year and is meant to raise $25 billion over three years, to help pay for the cost of people with pre-existing conditions signing up for coverage through the ObamaCare exchanges.

The proposal filed Monday would exempt certain self-insured plans -- those that do not use a third-party administrator for core functions -- for 2015 and 2016.

Republicans charge this is aimed at unions' so-called Taft-Hartley plans, though union officials had downplayed the change and suggested some of their plans wouldn't be eligible anyway.

AFL-CIO President Richard Trumka said earlier this month -- when the administration first telegraphed that it might craft the exemption -- that the change does not single out the union insurance policies, according to The Associated Press.

A Health and Human Services official also disputed the claim that this is directed at unions.

"This definition would exempt any self-insured group health plan that does not use a third party administrator for claims processing or enrollment, not only union plans," the official told FoxNews.com, adding they are proposing the change to better "align" the definition with the law. "The phrase 'self-insured, self-administered plans' is not synonymous with multiemployer plans, or Taft-Hartley plans."

But Republicans say the change is clearly aimed at unions, particularly after labor leaders made a high-profile push to extract some relief from the health care law.

Trumka and other labor leaders met with President Obama and Vice President Biden at the White House in September, as part of a bid to win additional health care subsidies for their workers. The administration determined it could not give them any more subsidies, but later made clear it would look at providing relief from the so-called reinsurance fee.

The fee would start at $63 per person next year, but then drop to a bit more than $40 per person in 2015. It would drop again the following year.

The proposed change would not provide any exemption in 2014.

Thune and a dozen other senators are pushing a bill to bar the administration from exempting unions. Thune's office said that the senator is concerned the exemptions in 2015 and 2016 will end up forcing other self-insured plans to pay more.

The proposal in the Federal Register appeared to signal this possibility. The proposal said that the Department of Health and Human Services decided not to make any changes for 2014 because it would mean rates "would have to be raised for other contributing entities."

Asked for clarification on how the change would affect other plans' rates and fees for 2015 and 2016, the HHS official said "it is true that the fee will be higher for plans that do have to pay the fee in 2015 because some plans are exempt."