By Jane Birnbaum In the early 1980s, when Kenny Adamson was a busboy at a Las Vegas hotel, he dropped his health coverage because he couldn’t afford the $50 monthly premium. Then his wife became pregnant and a county hospital delivered the baby. Adamson spent the next five years paying back the hospital.
Because of his experience, Adamson, now a Culinary Workers Local 226/Hotel Employees & Restaurant Employees member, Caesars Palace cook and 44-year-old father of four, is glad he was not hit with health insurance premium costs after contract negotiations this summer.
“We voted on it, and almost everyone agreed to give up a raise in the first year rather than start paying premiums because we know that once you open that door to premiums, those costs keep going up,” he says. “And I know from experience that you never can tell when you are going to need health insurance.”
Today, working families are all too aware of the fragility of health coverage—and also are experiencing firsthand how the high costs of health care coverage negate wage increases. According to a late September federal Census Bureau report, 1.4 million Americans lost their health insurance in 2001 because of layoffs and employers reducing benefits. As a result, the number of uninsured Americans rose to about 41.2 million, up from 38.72 million in 2000, according to the bureau.
Workers who retain their job-based health insurance increasingly are faced with higher policy premium contributions and deductibles for plans with reduced benefits. (Premiums are the overall cost of insurance policies, often paid on a monthly basis, and differ from insurance deductibles, which are the out-of-pocket costs consumers must pay before insurance coverage kicks in.)
Citing skyrocketing prices for medical technology, prescription drugs and hospital stays, insurers hit employers with group policy premium increases averaging 12.7 percent last year, the biggest increase since 1990, according to the 2002 Employer Health Benefits survey by Kaiser Family Foundation and the Health Research and Educational Trust nonprofit research groups.
A recent study commissioned by insurers’ BlueCross BlueShield Association indentified new technology and hospital industry consolidation as key drivers in rising health care costs (visit www.bcbs.com to read the report, “What’s Behind the Rise: A Comprehensive Analysis of Healthcare Costs”).
Employers, seeking to pass those costs to workers, are using traditional methods, such as increasing premiums. But some are beginning to heed the advice of benefit consultants touting so-called defined-contribution health plans that, like defined-contribution 401(k) retirement plans, would set working families adrift to bear the risks of the private market individually.
Taking it to the table
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| | | Quality care: IAM President Thomas Buffenbarger says the union's efforts at improving health care quality clearly are paying off for members. |
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Unions are fighting back at the bargaining table, standing strong for affordable health care and proposing innovations to slow health care cost hikes. In Las Vegas, for instance, where casino hotels contribute to a union Taft-Hartley health and welfare fund, Sept. 11, 2001, “turned the health plan upside down,” according to Local 226 Secretary-Treasurer D. Taylor. (Taft-Hartley funds are jointly run labor-management plans that provide benefits for groups of workers with different employers.) With health plan reserves low—because employer contributions are based on hours worked and many workers had been laid off or worked short hours—employers wanted workers to start paying out-of-pocket toward premiums. “We see workers at nonunion properties paying $150 to $170 monthly premiums for inferior plans, so we said ‘no’ and made that our line in the sand,” says Taylor. Including an eight-day strike at the small Golden Gate hotel, HERE negotiations covering approximately 45,000 workers and nearly 40 hotels were settled over several weeks this summer.
“To stabilize our health care plan, members agreed it was worth giving up a wage increase in the first year of a five-year contract,” Taylor says. “And with a total $3.23 hourly wage and benefit increase, it’s the best contract we’ve ever gotten in bad economic times.”
According to union health care experts, minimizing monthly premium contributions and deductibles is critical because high employee health care costs encourage workers to drop coverage or not use it even when they have it. “You don’t want a pregnant woman with high blood pressure not seeing a doctor because she can’t afford a $500 deductible,” says Ruth Antoniades, who advises several union health and welfare funds. “Co-payments, like $5 or $10 a visit, are preferable to a deductible because, especially with low-income workers, a doctor will often see them even if they can’t afford the co-payment.”
High deductibles also potentially harm workers’ health plans. If workers avoid seeking care until they wind up in the emergency room with a $50,000 tab, their health plans have to pay that huge bill, which in turn causes premiums to shoot up. “That’s the real disaster of high deductibles,” says Antoniades.
According to union health funds consultant and former SEIU District 1199 director of research Geoffrey Gibson, employers are shifting health costs to workers via premium contributions and deductibles because many employers’ group premiums now are increasing between 35 and 50 percent over a three-year collective bargaining agreement. That cost, added to a 5 percent annual wage increase, represents a labor cost increase that many employers will resist, says Gibson. But, he adds, “with intelligent analyses of plans and option choices, premium increases over three years can be kept to about 20 percent, with savings available for wage increases.”
Focusing on quality
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From America@work, November/December 2002. |
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Buying quality—using and paying for those treatments that research has shown to be effective and investing in prevention and member education—is key to managing today’s rising health costs. Educating members in coping with such common ailments as asthma, diabetes and high blood pressure can reap huge savings, according to Gibson, whose study of an asthma management program found that it saved approximately $2,500 in medical care per asthmatic adult or child. When employers attempt to pass rising costs to employees instead of seeking relatively painless ways to cut costs, unions must take the lead. That’s how 4,400 Machinists Local S/6 members at Bath Iron Works, who make Navy destroyers in Bath, Maine, helped resolve a two-month strike in 2000 caused in part because the employer demanded members pay roughly $200 monthly for HMO family premiums, up from approximately $40 a month.
IAM health experts examined the plan and found that trimming its use could hold down premium hikes. They suggested a prescription price schedule that encourages members to use less expensive generic drugs. In addition to gently increasing co-payments for medical visits, they proposed innovative programs to educate members in using their care wisely and steer them to hospitals with records of success, which minimizes costs because members get well.
Recognizing the value of the union’s suggestions, the employer agreed to absorb more of the premium hike. Today, a monthly family HMO premium for IAM members at Bath Iron Works is $50, up $10 rather than the $160 the employer first proposed.
“Our efforts at improving health care quality clearly are paying off for our members,” says IAM President Thomas Buffenberger. “Bringing employers along in this fight has been slow going, but worth the effort.”
For more information, visit the websites of these nonprofit research groups:
