Profits would grow if health care were universal, the president of the most progressive industrial workers’ union shows.
Today the nation is faced with a private/public health care financing system that has left one-third of the American people with either inadequate health insurance or no coverage at all. Forty-nine percent of people with insurance tell pollsters they are somewhat or completely unprepared to cope with a costly medical emergency over the coming year.
Twenty-nine percent of people with underinsurance often postpone medical care because of costs, problems compounded by the fact that incomes have been relatively stagnant for active workers and are in decline for those on fixed incomes. Health-insurance premiums are going up while benefits are going down.
Four percent of middle-income families—those earning between $40,000 and $80,000 annually—lost employer-based health insurance between 2000 and 2005. Four percent may sound small, but it represents two million families. Half of those families lost their insurance because their employers abandoned health-insurance programs, another 15 percent because their premiums became unaffordable.
Union negotiators and health care program administrators have spent years pulling rabbits out of hats to compensate for the increasing costs of health care. Introducing generic drugs, preferred-provider organizations, as well as raising deductibles and co-pays have all been strategies developed to patch a collapsing system. Despite these “innovations,” employers’ costs of group health insurance rose from $331 billion in 2000 to $514 billion in 2005, or about 9 percent of total wage and salary costs.
Many of today’s collective bargaining disputes are driven by health care costs.
Rather than joining labor to lobby for universal, affordable health care, private employers are abandoning financial responsibility for health care costs at the rate of about 5 percent per year, reducing the number of group-plan participants, driving down employee living standards, and further undermining private-sector health care financing. As employer definancing of health care continues unabated, the move to a national system will no longer be a choice; it will be a necessity in order to maintain any health care system whatsoever.
Employers increasingly point to the disadvantage they suffer when competing globally, especially companies operating in the many nations that have developed uniform, government-supported health care. In those nations, even where financing is derived from both private and public sources, administration of the system and guidelines for care have become publicly supported social services.
In the United States, where financial accounting standards require employers to carry their long-term liabilities for retiree health care on their balance sheets, unions are put in the unenviable but inevitable position of having to press demands for health care benefit coverage in bargaining not only for their existing dues-paying members but also for a considerable number of retirees. Especially in the industrial sectors of the economy, the number of retirees whose interests must be represented often far exceeds the number of active members, as was the case with United Steelworkers (USW) negotiations with the Goodyear Tire and Rubber Company and the United Automobile Workers negotiations with the auto industry.
It is little wonder, then, that in negotiations with these companies, unions have felt compelled by the twin goals of preserving and securing retiree benefits and keeping employers competitive to negotiate Voluntary Employee Benefits Associations (VEBAs), trusts funded by the companies and administered by boards of trustees independent of the employer. Because their assets will be immune from any potential bankruptcy of the employer, these VEBAs provide continuing and secured health care benefits for current and future retirees while lifting a significant body of health care liabilities that employers are obliged to carry on their books. And their assets can be increased through contributions negotiated in future contract bargaining.
No competitor of General Motors or Goodyear elsewhere in the industrialized world carries such liabilities or obligations, as all are beneficiaries of health care subsidized by their governments in one fashion or another. Only in the United States must these obligations be secured through collective bargaining if workers and retirees are to have any hope of receiving health care benefits. The value of securing such benefits is of course not lost on those workers who have enjoyed health care coverage only to see it wiped out by their employers’ bankruptcies.
CRUEL IRONY
That retired union members should be among those most victimized by the nation’s health care crisis is cruelly ironic, for the origins of America’s current health care financing system are rooted in labor-management collective-bargaining agreements forged during World War II. Negotiators introduced enhanced health care benefits as a reward for workers during a period when wage increases were restricted by war-policy measures. These benefits soon became a standard part of employment compensation.
The result was a stable financial base for the growth and improvement of health care systems across the nation. Communities had money for hospitals and infrastructure. The medical profession was able to upgrade its capabilities, do more research, and professionalize care. Financing was handled by a growing private insurance industry that was dominated by nonprofit-style carriers.
There was another, less noticed outcome of America’s health care evolution. Health care professionals began to enjoy a new upper-middle-class status, and health-insurance executives became increasingly acquisitive as they gained control of significant pools of health-insurance reserves. Eventually a system that had been nonprofit in character morphed into a for-profit enterprise, with costs spiraling out of control as the health-insurance industry became concerned with the bottom line rather than providing a real health care benefit to working Americans.
Rife with inefficiency and shaped by the drive for profit and exorbitant executive compensation, the private financing system is inherently ill equipped to provide equitable health care for all of America’s population, let alone to continue to provide it affordably to workers with a union contract. As the costs of care have increased, often much more rapidly than the rate of inflation, the deficiencies of a system that relies disproportionately on employer-based financing have become more apparent.
The inefficiency and rising costs of the American health care system have ripple effects throughout the economy, affecting not only unions but all Americans. Health care costs impede efforts to reverse the United States’ massive trade deficits, which are further eroding competitiveness and well-paying jobs. Our product and service costs are driven up by the refusal to implement an efficient health care system. Some estimates cite the waste in our health care system as representing as much as 7 percent of the nation’s productive capacity (gross domestic product). Since we are a debtor nation, these costs flow directly into the national debt and further weaken our national financial strength.
The best face that can be put on the unwillingness of corporate executives to abandon our broken system in favor of universal health care is their misbegotten belief that the current system can be stabilized enough to make the costs amenable to effective business planning. Yet, in reality, as things stand today, businesses have no leverage whatsoever over either quality or price. Their only “control” is over the amount of coverage they will pay for—an approach they all too frequently default to in contract negotiations.
A national single-payer system would relieve corporations of the burden of health-insurance administration, stabilize costs, and give corporations the global level playing field they want. Businesses can play a major role in solving the health care dilemma, therefore, by overcoming their blind resistance to a national system and insisting instead that a national plan be designed that provides their employees with proper coverage without runaway costs. Universal coverage through a single-payer system offers the best hope of achieving these goals.
Adapted from 10 Excellent Reasons for National Health Care.