Health Benefits : Medical Insurance Becoming Standard Bargaining Issue as Unions, Management See Costs Continue to Skyrocket
Michael Mattson, who reads 225 meters a day for the Brooklyn Union Gas Co. in New York, says that he does not mind forking over $4.08 of his $227 gross pay for health benefits every week. A sick friend was overwhelmed recently by a $30,000 hospital bill, so Mattson, 24, says that he figures “it’s safer to be covered, for a few dollars.”
With the price of medical insurance now rising 21.5% a year, a growing number of companies are asking workers to shoulder part of the burden. As a result, the key issue in labor-management negotiations this year is not wages or job security. It is health care.
“Every negotiation that I participate in, the escalating cost of health insurance is a main issue,” said Bill Kirrane, who has bargained contracts from Houston to New York as international vice president of the 100,000-member Transport Workers Union.
The Metropolitan Life Insurance Co. concluded the same after polling labor and business leaders on their top negotiating priorities. Preventing employers from increasing the amount workers pay toward their health-care premiums was cited as the main goal by a majority of labor leaders. Getting employees to share the cost of health care was the response of a majority of corporate executives.
How the issue is resolved is of interest to millions of Americans. More than 796 collective bargaining sessions are expected to take place this year, affecting more than 3 million workers at private companies and public institutions nationwide.
Unions have not just discovered medical-cost inflation, of course. For about 10 years, they have been working with employers to help cut costs through such things as enrolling in health maintenance organizations and getting second medical opinions before undergoing costly surgery.
But both sides have recently begun to recognize that such concessions have failed to have much impact on skyrocketing health costs.
The average manufacturing employer paid $1,994 per employee for health costs in 1986, and by various estimates is paying anywhere from $2,592 to $6,181 per employee now. And while experts say that the cost is rising at a pace of 10% to 35% a year, some companies report annual increases of 60% to 70%.
Several factors have led insurance companies to raise their rates: increases in the number of visits to doctors and hospitals, extensive use of costly medical tests, and higher prices for prescription medicines. Workers with serious illnesses such as AIDS, heart disease and cancer account for much of the increase; this 2% to 5% of the individuals covered by an average corporate health plan account for 70% of the cost, according to an AFL-CIO survey.
As insurance companies have passed along the higher costs to employers, employers have increasingly passed along part of the increases to workers. A survey by the Bureau of National Affairs, a private labor-relations publisher, shows that cost-sharing is now found in 28% of contracts, compared to 19% two years ago.
It is a trend that concerns even younger workers. “There was a time in the labor movement when the young people didn’t care about welfare benefits,” said Rocco Campanaro, executive vice president of the Long Island Federation of Labor, and a member for 30 years. “They would say, ‘I don’t care if the benefits are terrible, I just want to see an increase in my paycheck.’ But now they realize how high the bills run if even a healthy young person gets sick.”
Some unions and companies have begun arguing for a totally different solution to a decade of cost increases--legislation. The AFL-CIO, the United Auto Workers, and even Chrysler Chairman Lee Iacocca are calling for national health insurance, creating the potential for new alliances between traditional adversaries.
“Costs are rising at such a rate that no individual industry can solve it,” said Greg Tarpinian, director of the Labor Research Assn. in New York. “It requires restructuring of the entire health care system.”
Next month the AFL-CIO will launch a lobbying campaign for a national health insurance plan. The United States is one of the few industrialized nations with no form of nationalized health care, and corporate executives like Iacocca are complaining that health care costs prevent U.S. companies from being competitive on the international market.
“We are no doubt in a bargaining crisis,” said Karen Ignani, health policy director of the AFL-CIO. “The silver lining is that labor and management are going to be working together in an unprecedented kind of coalition.”
Labor historians and economists temper that optimism, however, citing an “ideological block” by some executives against a nationalized health plan. Business, they point out, opposed a similar plan introduced by President Truman after World War II.
“You’re going to have particular industrialists uniting with labor pushing for socialized medicine,” said Joshua Freeman, a professor of labor history at Columbia University in New York. “But in the short run, unions are going to have to fight very hard to even maintain the benefits they have.”
