New York City Teachers Union Is Largest Recipient of Obamacare Waiver; Parent AFT Union Spent $1.9 Million on Obama Election

Fred Lucas | January 31, 2011 | 4:52pm EST
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President Barack Obama speaks in the Oval Office on Jan. 10, 2011. (AP Photo/J. Scott Applewhite)

( – The United Federation of Teachers (UFT), the union representing New York City’s public school teachers, is the largest beneficiary of a waiver from one of the provisions in the health-care law signed by President Barack Obama last year.

The UFT is a chapter of the American Federation of Teachers (AFT), which spent $1.9 million on the election of President Barack Obama in 2008. The UFT is also an affiliate of the New York State United Teachers, which spent $46,139 in independent expenditures on the election of Obama.

The health care law, the Patient Protection and Affordable Care Act, requires that annual caps on how much an insurance plan will pay in benefits for an enrollee in any given year must be eliminated by 2014. Under the law, the Department of Health and Human Services is now phasing the coverage limits out. In 2011, yearly caps can be no less than $750,000; in 2012, they can be no less than $1.25 million; and in 2013, they can be no less than $2 million in 2013.

The waivers granted to the UFT locals exempt them from having to comply with the phasing out of the annual benefits caps. A total of 351,000 enrollees are in the UFT’s health insurance plan, the UTF Welfare Fund.

The UFT enrollees comprise about 15 percent of the total 2.2 million enrollees on plans with one-year waivers. The UFT insurance plan has more enrollees than any of the other 733 entities on the list that are receiving HHS-approved waivers.

An example of an annual limit is found in the UFT Welfare Fund, which caps spending on prescription drugs at $100,000 per year per policy holder. Under the HHS regulation to phase out annual limits, the cap would have to be $750,000. Thus, without a waiver from the federal government, the Welfare Fund would not be in compliance with the new health care law.

The waivers are granted if the Department of Health and Human Services determines “compliance in the interim final regulations would result in a significant decrease in access to benefits or a significant increase in premiums,” according to a Sept. 3 memo by Steve L. Larson, director of the HHS Office of Consumer Information and Insurance Oversight.

In retaining the lower $100,000 limit on prescription drug coverage, the  UFT reported that a waiver “was granted by the U.S. Department of Health and Human Services based on the [Welfare] Fund’s representation that providing $750,000 in coverage for prescription drugs for 2011 would result in a significant decrease in your access to benefits.”

The UFT notice, posted on its Web site, explained that providing insurance would be cost-prohibitive without the waiver.

“To maximize the [Welfare] Fund’s resources, the Fund must prudently manage and administer these programs,” the notice said. “One way of accomplishing this is by establishing reasonable annual dollar limits on benefits, such as prescription drugs. The Affordable Care Act requires plans to remove these annual limits. Without an increase in the Fund’s fixed contribution rate, which is highly improbable at this time, it would not be able to sustain benefits in excess of the current annual limits.”

Health and Human Services Secretary Kathleen Sebelius. ( Starr)

UFT spokesman Richard Riley referred to the union’s Web site for answers to questions about waivers and the health fund.

The UFT is entirely focused on New York City public school matters. But it has both state and national affiliates involved in public policy and which contribute to political campaigns.

“The UFT was founded in 1960 as Local 2 of the now 1.4-million-member American Federation of Teachers (AFT),” the UFT Web site says. “Our union is also affiliated with the 600,000-member New York State United Teachers (NYSUT) and a member of the AFL-CIO and the New York City Central Labor Council.”

The AFT spent $1.9 million in independent expenditures for the election of President Barack Obama in 2008 after he secured the Democratic nomination.

The AFT has also been a major contributor to Democratic candidates across the country. In 2008, the organization donated $1.9 million to House Democratic candidates and $285,000 to Senate Democratic candidates. In 2010, the group contributed $2 million to House Democratic candidates and spent $217,000 on Senate Democratic candidates.

The New York State United Teachers (NYSUT) political action committee spent $46,139 on Obama buttons and yard signs, according to a Sept. 15, 2008 report with the Federal Elections Committee.

On Sept. 14, 2009, the NYSUT issued a press release stating that the Patient Protection and Affordable Care Act would not increase the cost of care and that reform would not cause its insurance coverage to change.

The release said: “Myth: We can’t afford universal health insurance coverage. Fact: President Obama identifies ways to pay for the majority of the upfront costs. The plan will cut fraud and abuse within existing federal programs; end big subsidies to insurance companies; coordinate care; and streamline paperwork. Reform will bring down escalating costs contributing to the national fiscal crisis.”

On another point, the release said. “Myth: Health care reform will force you out of your current insurance plan or force you to change doctors. Fact: You can keep your existing insurance; reform will expand your medical options, not eliminate them.”

Only four entities on the HHS waiver list had plans covering more than 100,000 enrollees, some of which contributed heavily to Republican candidates in 2008 and 2010. The other three ware Cigna, which covers 265,000 enrollees; Aetna with 209,000 enrollees; and BCS Insurance, with 115,000 enrollees.

According to the Center for Responsive Politics, which tracks money in politics, the Cigna PAC contributed $185,650 to congressional candidates, 58 percent went to Republican candidates. In 2008, the Cigna PAC contributed $178,000 to congressional campaigns, 62 percent to Republican candidates.

President Obama signs the Democrats’ health care bill into law in the East Room of the White House on Tuesday, March 23, 2010. (AP Photo/J. Scott Applewhite)

The Aetna PAC, meanwhile, contributed $393,000 to congressional candidates in 2010, 70 percent of which went to Republican candidates. In 2008, the Aetna PAC contributed $241,750 to congressional candidates, 64 percent of which went to Republicans.

Other unions getting waivers were the Bricklayers Local 1 for Maryland, Virginia, and the District of Columbia, which has 1,985 enrollees; the Southern California Pipe Trades Trust Fund, which has 12,700 enrollees; and the Texas Carpenters and Millwrights Health and Welfare Fund, with 4,729 enrollees.

In the case of unions, the enrollees are generally staff for the union administrative office. The members represented by the union are generally insured through their employer, an HHS spokesperson told

The UFT Welfare Fund is a separate fund from the public school teachers’ health insurance, and is available to retirees and other employees of the New York City public schools. The UFT also covers school nurses, guidance counselors, and occupational and retired teachers who have been employed by New York City.

“The fund was established to provide certain benefits to supplement City Basic Health Plans,” the UFT Web site says. “It was created as a result of collective bargaining between the United Federation of Teachers and the New York City Department of Education located at 52 Chambers Street, New York, New York 10007. Employer contributions are predicated on the amount stipulated in the current Collective Bargaining Agreements and are provided at the annual rates, prorated monthly, on behalf of each covered member.”

Under the “Who is covered?” section, the UFT Web site says, “Employees of the New York City Department of Education who are ‘covered’ under agreements with the United Federation of Teachers, and for whom the Department contributes monies to the UFT Welfare Fund. Any other employee who is covered by a collective bargaining agreement in which the employer makes a contribution to the UFT Welfare Fund.”

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