Labor’s Problems With Health Law Deepening

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When activists from UNITEHERE—the union of hospitality industry workers—were recently lobbying in Washington DC in an effort to get relief from some of the provisions of the Affordable Care Act (ACA) that are undermining the hard won healthcare coverage of the union’s mostly low-wage membership, they were told by an aide to New Jersey Senator Menendez that, “Labor needs to regress to the mean.”

Of course, under the laws of mathematics, if you only reduce those factors that exceed a mean, the mean itself constantly adjusts downward. In that context, another term for “regress to the mean” is “race to the bottom”.

For many workers, the ACA is having that exact effect. UNITEHERE’s recently released report Making Inequality Worse documents how Obamacare, supported by many unions as a means of leveling the playing field between union and non-union workers, is having the perverse and opposite effect of increasing inequality.

UNITEHERE is not the only union experiencing buyer’s remorse. While expanding Medicaid and private insurance coverage to many who were previously uninsured and outlawing some of the most egregious practices of the private insurance industry, the ACA is also accelerating the transformation of employment based coverage into a defined contribution system. Delegates to last year’s AFL-CIO Convention outlined many of these concerns in a resolution that was passed unanimously.

Part of the problem stems from Republican intransigence in refusing to consider even technical adjustments to the ACA that would correct oversights and errors in the original Bill. But the bigger problem resides in the fact that the ACA was deliberately designed to continue to treat healthcare as a commodity to be bought and sold in the marketplace and primarily delivered through employment-based private insurance plans. No amount of technical adjustments can fix that problem.

In the section entitled “Labor’s Healthcare Muddle”, Steve Early’s new book, Save Our Unions documents how we got into this mess. Unlike unions in almost every other industrialized country, in the years following World War II labor made a fateful decision to move away from the social insurance model of healthcare reform that would have made it a birthright for everyone in America. Their focus shifted to bargaining for healthcare as a benefit of employment. These union-negotiated benefits then set the pattern for many millions more of non-union workers.

Defining healthcare as a benefit, not a right, made workers and their families vulnerable whenever their employment situation changed. Worse, since the healthcare security of all working families ultimately relied on a fragile system of collective bargaining maintained for some workers, everyone was in danger of losing everything if unions were weakened or busted.

And that’s exactly what happened to millions of workers and their families beginning in the anti-labor onslaught in the 1980’s. As unions were weakened, they were no longer able to set the standards for wages and benefits for the entire working class and non-union workers had their healthcare benefits reduced to ever-lower levels while unions circled the wagons to protect their own hard-won benefits.

This created a perception that unions were only interested in preserving their own bloated benefit packages at the expense of everyone else. In addition, the treatment of healthcare as a commodity, delivered through access to private insurance, led to a price explosion as profiteers moved in and created massive inefficiencies up and down the system, leading to healthcare costs in the U.S. that are two and one half times greater than the OECD average. For some low wage workers, the annual cost of private family healthcare insurance is now greater than their annual income.

Early also dissects labor’s involvement in the struggles over the Affordable Care Act and its subsequent impact on collective bargaining (see also our briefing paper, 10 Things Unions Need To Look Out for When Bargaining Under Obamacare). He maintains that these consequences were predictable and were ignored by most unions at the time as they embraced an American Enterprise Institute model of healthcare reform and engaged in a cycle of bargaining against themselves that any shop steward could have predicted was doomed to failure.

The “regression to the mean” that UNITEHERE focuses on in their report will only get worse. In 2018, the “Cadillac Tax” will take effect. It’s basic design will ensure that nearly every union-negotiated healthcare plan in the country will eventually be subject to an unaffordable 40% excise tax unless they cut their own benefits to the bone. The Boeing Corporation has already demanded and won a contract provision that workers and retirees will pay 100% of any future tax.

The times are long past when the labor movement can seek to bargain and maintain healthcare benefits that are far superior to those enjoyed by the rest of the working class. Right wing politicians have figured out how to exploit these disparities to promote a politics of resentment. These attacks have been a huge component of the anti-union campaigns in Wisconsin, Michiganand elsewhere. And they provide the basis for the assault on public workers everywhere.

As Early points out, “If organized labor settles for piecemeal changes 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.” This is the crucial challenge for the U.S. labor movement. We cannot move backwards. The only way to guarantee healthcare for every worker is to guarantee healthcare for all through a single-payer Medicare for All program.