Labor's Health Problem
From The Nation July 7, 2003
By Steve Early
When 3,000 General Electric factory workers and supporters held a contract rally outside GE’s Lynn, Massachusetts, plant on June 7, one question preoccupied the crowd: Would there be another strike over healthcare?
Back in January, these workers—members of Local 201 of the International Union of Electrical Workers-Communications Workers of America (IUE-CWA)—walked out as part of a nationwide protest against higher medical plan co-payments. GE, they discovered, had made $15 billion in 2002, while its healthcare expenses had increased less than the national average. Yet management insisted that all employees pay a bigger share of the cost of their doctor visits, hospital stays, emergency-room care, and prescription drugs.
In a tentative agreement on a new 4-year contract, announced June 15, GE unions were able to blunt the company’s drive for further givebacks, averting a second work stoppage.
But in other workplaces across the nation, healthcare cost shifting continues unabated. Where workers have no union-and 87 percent do not-the burden of medical cost inflation is shifted from management to labor with little fuss for the former, regardless of the financial pain inflicted on the latter. In the unionized sector, industrial strife about health insurance is spreading. Since 2001, state employees in Minnesota, teachers in New Jersey, janitors in Massachusetts, candy makers in Pennsylvania, food processors in Wisconsin, uranium-plant workers in Kentucky, truck builders in Tennessee , and aerospace workers in Texas have all experienced healthcare-related strikes or lockouts-and several are still going on.
Later this summer, major contracts in the telephone and auto industries will be renegotiated. If management tries to reduce health coverage for the hundreds of thousands of workers and pensioners at General Motors, Chrysler, Ford, or Verizon even greater confrontations lie ahead.
How US unions respond to this challenge has important implications for the future of healthcare reform. The actions of organized labor-at the negotiating table or on the picket line-can become a rallying point for all Americans ill-served by our current system of private, job-based medical benefits. When unionized workers resist benefit cuts in a way that projects the broader demand for “healthcare for all,” they help generate pressure for a political solution to the larger problem: how to get affordable coverage for everyone that’s not tied to their age, income, or job. If, however, organized labor chooses piecemeal change and refuses to challenge the link between medical insurance and employment, it will miss the chance to connect with millions of poorly insured and uninsured workers who have no union.
“We need a universal, comprehensive single-payer healthcare program to cover every man, woman and child in the United States,” says new United Auto Workers’ president Ron Gettelfinger, who is pushing Detroit auto makers to support such a plan. “You can’t fix the healthcare crisis in America at any one bargaining table or within any one industry.”
The last time labor had a similar historic opportunity to shape the healthcare reform debate, it made a promising start-and then blew it. In the late 1980s and early 1990s, medical cost inflation was reaching double digits, just like today. Healthcare disputes were causing four out of every five strikes. In monumental battles like the Mine Workers’ yearlong walkout at Pittston, unions that successfully resisted concessions did so by forming alliances with community groups and other unions seeking healthcare reform. Some AFL-CIO affiliates began to do systematic member education about why a tax-supported universal health system like Canada’s would be better for workers than the current patchwork quilt of Medicare, Medicaid and myriad private plans. A number of big unions endorsed single-payer legislation, and through grassroots coalitions like Jobs With Justice, they demonstrated for fundamental change.
Just as this campaign was gaining momentum, the AFL-CIO abruptly switched course. The labor federation embraced Bill and Hillary Clinton’s Health Security Act, an ill-fated scheme that preserved the role of private insurers and was so convoluted that few unions could even explain it to their members. The Clinton bill represented a step backward for labor, mirroring conservative mandated-benefits legislation developed by Richard Nixon in the 1970s to fend off universal coverage based on the model of Medicare. But by 1993, most unions and Democrats were nevertheless rallying around the bill, which sought to shore up a private, job-based benefits system.
Like similar proposals in some states today, Clinton’s approach-obligating employers to pay for a portion of their employees’ health costs-was strikingly out of sync with work-force trends, notably the creation of millions of part-time, temporary and independent-contractor jobs with little or no health coverage. As Marie Gottschalk shows in her incisive study, The Shadow Welfare State: Labor, Business and the Politics of Health Care, labor’s willingness to settle for the Clinton bill reflected crackpot realism at its worst, for the whole “system of employment-based benefits was crumbling just at the moment when the AFL-CIO sought an employer-mandate solution.”
After the Clinton plan flopped, most firms offering health plans devised managed-care fixes of their own, which kept the system’s “crumbling” from becoming a collapse-at least for a few years. But management-imposed limits on employees’ choice of doctors, hospitals and treatment options are no longer restraining costs. Premium increases may reach 15 percent this year, and business wants workers to foot the bill. Private health insurance for 16 million retirees is a primary management target, particularly in troubled industries like steel, where companies blame such “legacy costs” for landing them in or near Chapter 11.
Twenty-five years ago, more than 80 percent of all medium- and large-sized firms offered medical benefits to retirees. Now only 40 percent do—and 1/5 of those firms have eliminated such benefits for new hires. In the ailing steel industry—which has 600,000 pensioners and dependents but only 124,000 ative workers—firms like Bethlehem, LTV, and National Steel plan to save $4.4 billion this year by eliminating retiree health coverage as well. Ex-steel workers will have to pay for it themselves—if they can—out of Social Security or their diminished monthly checks from the Pension Benefit Guaranty Corp., the federal agency now responsible for bankrupt steel makers’ pension liabilities.
Successful union resistance to cost shifting in the past is thus no guarantee that the same group of workers won’t face benefits cuts in the future-even when they retire from a profitable company. Fourteen years ago, a four-month telephone strike preserved fully paid health coverage for then-Nynex workers in the Northeast; now its successor firm, Verizon, wants to cap all retiree medical contributions in bargaining this year-affecting many veterans of the 1989 walk-out who’ve since taken early retirement offers.
The challenge facing unions today is how to broaden their defense of negotiated benefits, for active and retired workers, when a record number of Americans-as many as 75 million at one point during the past two years-have no coverage at all. If struggles against cost shifting are framed narrowly, they will be, in effect, just another special-interest fight against givebacks by workers who already enjoy above-average coverage. However, if resistance to cost shifting is framed in terms of the larger political demand of healthcare for all, these fights could attract much broader labor and community support.
When GE workers struck in January, for example, they saw the big picture. IUE-CWA Local 201 joined forces with Jobs With Justice, as well as senior groups, the state nurses’ association and low-income organizations, to hold a community rally for healthcare reform. Speakers highlighted the medical coverage problems of everyone from immigrant workers to the self-employed to retirees who get bounced around from one collapsing Medicare HMO to another. Pat Lawrence, a member of the Lynn Health Care Task Force, told the crowd, “We’re here to support the GE workers because you will bring attention to those who have no insurance-the elderly, the disadvantaged and the homeless-through your strikes and walkouts.”
Engaging this broader public during benefit disputes requires a candid admission by labor that today’s healthcare crisis can’t be settled at the bargaining table. This is particularly true when a unionized workforce is low-paid, part-time or transient, and lacking strike leverage. In Boston this past fall, despite major community support, a citywide strike by immigrant janitors began to weaken after a month. It ended unhappily for many workers because larger wage increases were sacrificed to pay for expanded medical coverage—a benefit that will only apply to 1,000 part-timers out of 8,000 in the third year of a five-year contract! Given the nature of building services and other low-wage sectors, it’s doubtful that collective bargaining will ever be able to achieve the quality of job-based benefits once enjoyed in traditional bastions of union strength like manufacturing, utilities and construction.
In trucking and the building trades, there’s an additional complication: many union officials don’t want to forsake job-based medical coverage-no mattered how tattered-because they’re in the benefits business themselves. As Gottschalk notes in her account of how labor conservatives have impeded past efforts at comprehensive healthcare reform, over half of all union members are still insured through Taft-Hartley funds, jointly administered by labor and management. Such arrangements have long been defended as a way to promote union loyalty. Unfortunately, by aligning the interests of union officials and insurers, the Taft-Hartley funds give one wing of organized labor what Gottschalk calls “a vested interest in maintaining the status quo.” It also leads to AFL-CIO pronouncements that appear to be a balancing act between single-payer advocates, at the grassroots, and union affiliates more inclined to partnerships with employers that would preserve and extend job-based coverage.
Such internal tensions produce labor-backed legislative proposals-now being pushed in about ten states-that are a very mixed bag. In Ohio, leading unions and the state labor federation are uniting with healthcare professionals and community groups to build the Single Payer Action Network, a coalition seeking a comprehensive solution to the state’s healthcare crisis. In California, however, the AFL-CIO threw its weight behind a far less ambitious pay-or-play bill. This would require employers to offer their workers health insurance or pay into a state-operated pool that would provide alternative coverage. The problem with “pay or play,” says Dan Hodges, chair of California’s Health Care for All (HCA) is that it “creates a two-tiered system in which people covered through their jobs might have adequate benefits but those who get public coverage will receive an explicitly bare-bones package. Since those with the public package will more likely be people of color, the two-tiered system will have a racial character as well.” HCA and the militant California Nurses Association support an alternative bill, which would establish universal, publicly funded coverage.
The finer points of such policy debates are lost on most union members. That’s because unions tend to leave healthcare strategy and lobbying in the hands of experts. In contract talks, negotiators desperately seek new cost-containment schemes to sugarcoat medical plan changes. Meanwhile, labor policy wonks organize events like the current series of AFL-CIO Regional Health Care Conferences-open only to union reps and too narrowly focused on “recent best practice given the current climate.” This top-down, technocratic approach fails to address the need for massive workplace education and debate about healthcare reform. Because that’s been so neglected lately, most trade unionists still think of universal healthcare as something that would benefit someone else. The term “single payer” often draws blank stares [see David Corn, “Healthcare for All-Now,” January 6]. And the concept of a government-run insurance plan strikes many union members as a formula for longer waits, inferior care and higher taxes-rather than real security and relief from out-of-pocket costs.
One group trying to change “the current climate” through rank-and-file education and cross-union activity is Jobs With Justice. On June 5, the group sponsored a statewide Health Care Day of Action in Massachusetts, endorsed by more than fifty unions and community groups. Participating organizations distributed more than 65,000 stickers demanding “Health Care for All” and did the mobilization necessary to get workers-from nurses facing staffing cuts and state workers facing benefits givebacks to utility workers facing slashed retirement coverage-to wear them on the job. This workplace activity was accompanied by informational picketing and rallies calling for a healthcare system that “covers everyone, is publicly financed, and saves money by eliminating bureaucratic waste.”
The most active participants were workers at GE and Verizon who have been-or may soon be-on strike over cost shifting. If 80,000 members of CWA and the International Brotherhood of Electrical workers (IBEW) walk-out in August at Verizon, this could lead to termination of their benefit coverage—a further lesson on why healthcare shouldn’t be controlled by employers. “When a boss cancels everyone’s insurance during a work stoppage, it’s a teachable moment,” says Rand Wilson, a Service Employees International Union staffer in Boston. “It really gets people thinking about what’s wrong with having medical coverage tied to their job. The financial risks and penalties of getting laid off, changing jobs, working part time or retiring early-not to mention going on strike-would all be greatly reduced if we had a Canadian-style system.”
Other unions, like the United Electrical Workers, are following up Health Care Action Day with bargaining table challenges to management. UE developed an Employer Pledge that offers two choices: Either join the union in lobbying for real healthcare reform or continue to pick up the tab for the present for-profit system, with its increasingly high costs and shabby care. In Canada, where labor is fighting to improve a thirty-year-old Medicare-for-all program, the Canadian Auto Workers won business backing for the single-payer approach. In a recent letter signed jointly with the union, GM, Ford and Daimler/Chrysler demanded that Canada’s “publicly funded health care system be preserved and renewed, based on its existing principles of universality, accessibility, portability, comprehensiveness, and public administration.”
Jobs With Justice didn’t attract such corporate support for Health Care Action Day. But the diversity of its labor endorsers shows how widespread conflict over cost shifting has become, in both the private and public sectors. As such disputes intensify, more trade unionists are reaching the conclusion that incremental private-sector solutions aren’t the answer. As Colin Gordon concludes in Dead on Arrival: The Politics of Health Care in Twentieth Century America, “employment-based health insurance, floated as an alternative to public insurance in the middle years of the last century, is now little more than a leaky life raft for politicians clinging to budget-neutral solutions and workers with nowhere else to swim.”
Growing budget deficits, legislative gridlock and huge military expenditures create a daunting context for new healthcare initiatives that would expand public coverage at the state or federal level. Nevertheless, mounting workplace attacks on employee benefits are forcing unions to fight back in a more political way for what workers really need, not just what some leaders think they can get. This represents an important first step toward revitalizing labor involvement in healthcare reform—and projecting unions as a champion of all workers, not just those with a membership card.
(Steve Early is an International Representative for the Communications Workers of America and Jobs with Justice activist. Based in Boston, he has been involved in health care bargaining and strikes at manufacturing and telecom firms.)