By Daniel Gursky

Controlling costs while improving quality

For the second group and their union negotiators, healthcare coverage has become today’s most important nonsalary bargaining issue. In many locals, battles over healthcare are more likely than salaries to cause difficult contract negotiations, discontent among members and even some recent strikes.

In the states, Medicaid and other healthcare-related programs are consuming such a large and growing portion of their budgets that less funding is available for other priorities, including education. The same trends are squeezing local government finances, often at the expense of education budgets.

For those without coverage—47 million at last count, according to 2006 U.S. Census Bureau figures—routine doctor and dentist checkups are an unaffordable luxury. The alternative of last resort is often the emergency room when health problems become impossible to ignore. A serious illness can be devastating to a family, with fully half of all bankruptcies in the United States due at least in part to medical expenses. And sad to say, children without health insurance are far more likely to come to school with chronic health problems that make it hard to devote their full attention to academics.

For the overall U.S. economy, total spending on healthcare in 2005 reached $2 trillion—that’s a 2 followed by 12 zeroes. This works out to $6,700 per person, or 16 percent of the country’s gross domestic product. If current trends continue, the number will reach $4 trillion within 10 years. Despite that astounding figure—far and away the largest of any country in the world—universal coverage is merely a fantasy when we still have so many Americans without coverage, including nearly 9 million children. AFT president Edward J. McElroy calls it "unconscionable" that so many citizens lack health insurance in a country as rich as ours.

Key elements of reform

So it should come as no surprise that healthcare has emerged as one of the top issues in the 2008 election campaigns. The AFT, working in partnership with the AFL-CIO, plans to make the issue a central element of union efforts to elect worker-friendly candidates at all levels next year. An AFT resolution passed at the union’s 2006 national convention promises that "the willingness of political candidates to address the national healthcare crisis will be an important criterion for the AFT in making political endorsements."

Hillary Clinton, who has made healthcare reform a central issue in her campaign, received the AFT’s presidential endorsement at the union’s October executive council meeting. As Clinton told the council earlier this year: "Once and for all, we need to get quality, affordable healthcare coverage for every man, woman and child. We can look and see that we spend more money than anybody in the world by a huge amount. ... And yet, we’re not getting our money’s worth."

While the AFL-CIO has not endorsed a specific plan, it has put together what it considers the key elements of healthcare reform. An effective plan, it says:

■  controls rising and irrational costs;

■  provides comprehensive, high-quality healthcare to all;

■  gives every family the opportunity and the responsibility for preventive care;

■  preserves the right to choose and use your own doctor;

■  asks our government to play a strong role to curb corporate greed and incompetence and ensure more fairness and efficiency;

■  lowers employer costs and, in return, asks them to pay their fair share; and

■  builds on what’s best about American healthcare while drawing from what works in other countries.

A couple of these elements are worth noting. First, the plan has to preserve your right to choose or continue to use your own doctor and plan. No reform proposal will earn labor support if it imposes a new level of uncertainty on people who are comfortable with their current healthcare arrangements. Second, any serious proposal must focus on rising costs, which almost every worker with health insurance has experienced in recent years through rising premiums and deductibles, growing copayments for doctor visits, and higher prescription costs. (More on that shortly.)

As part of "In America, No One Should Go Without Healthcare," an AFL-CIO campaign to draw attention to this issue, the federation commissioned a poll that reinforces just how important healthcare is to union members. The poll found that 71 percent of union members believe it is "critical" for elected officials to address healthcare. (By comparison, the figure was 75 percent for Iraq, 67 percent for terrorism and 43 percent for economic conditions.)

One central challenge for policymakers is to move the country closer to universal healthcare coverage. "Accessible, affordable healthcare should no longer be considered a privilege for some; it should be a right for all," McElroy wrote in a recent column.

Although most AFT members currently have good insurance, "we cannot exist as an island of privilege," McElroy often points out. "We will lose it if others continue to lose it."

The key, as outlined in the AFL-CIO’s reform elements, is to work toward state and federal reforms that cover everyone without undercutting the benefits that unions have worked so hard to win for their members over the years.

States take the lead

Other than the ongoing debate in Washington, D.C., between President Bush and members of Congress from both parties over the State Children’s Health Insurance Program, or SCHIP, the action on healthcare reform increasingly is being advanced by the states. (See story on page 20.) As the SCHIP debate shows, even a relatively small federal program—that shouldn’t be very controversial because it expands coverage to some of the most vulnerable segments of society—can generate plenty of conflict and heated rhetoric.

Because most of the state reform plans focus on expanding coverage to more of the uninsured (through methods such as requiring employers to cover their workers or pay into a state fund for the uninsured), they haven’t had much effect on AFT members, who for the most part already receive coverage through their employers. In Massachusetts, for example, where one of the first statewide laws aimed at moving toward universal coverage was passed last year, the AFT’s state federation has focused more on helping its locals deal with a new change in state policy that lets school districts become part of city or town group insurance plans.

Maine and Vermont are among the other states where healthcare reform legislation has been enacted in the past couple of years. Many more state legislatures are debating healthcare proposals, with California being the most prominent. (This month’s "Taxing Concerns" column, on page 22, discusses ways to evaluate proposed state plans.) One big sticking point for unions in California, including the AFT’s state federation, has been Gov. Arnold Schwarzenegger’s proposal to require individuals to buy health insurance as a way to cover more citizens. "We’re opposed to that unless people can afford it," says California Federation of Teachers (CFT) president Marty Hittelman. As in Massachusetts, the various competing reform plans in California wouldn’t affect many of his members, Hittelman says, although any requirement that part-time employees be covered would be helpful to some adjunct faculty members in the state—people like AFT member Neal Kelsey.

Kelsey, a part-time religious studies instructor at Victor Valley College, calls himself "underinsured." He and his wife pay $850 per month for a catastrophic policy with a $5,000 deductible that doesn’t cover prescriptions, office visits, dental or vision care. "I fear that if we actually had to use the insurance," he says, "we would be stuck with huge out-of-pocket expenses that would seriously challenge our financial situation."

Schwarzenegger has planned a special session of the state Legislature to deal with healthcare reform, and Hittelman says it is likely that a ballot initiative—possibly more than one—will end up on the state ballot in 2008. Ultimately, what the CFT has endorsed is a so-called single-payer plan for the state. A single-payer plan is one in which healthcare is financed through one source, usually the government at some level (state or federal), rather than insurance companies. It’s a concept—similar to national plans in Canada and much of Western Europe—that goes beyond what most policymakers in Washington and the states are proposing today, but it has attracted growing support. The 2006 AFT convention resolution says that a single-payer system could "prevent cost shifting and reduce administrative expenses."

A challenge for locals

The push for healthcare reform, whether single-payer or something more incremental, is driven in large part by steadily rising costs. The most recent Kaiser Family Foundation annual survey showed that healthcare costs rose at the smallest level since 1999, but the 6.1 percent increase was still well above the rate of inflation and wage increases. Since 2001, healthcare costs have soared 78 percent, compared with 17 percent for inflation and 19 percent for wage growth. The bottom line in 2007: The average annual premium for family coverage is $12,106, which is almost exactly what a full-time minimum wage worker will earn this year.

For local affiliates, these cost trends have led to growing pressure from management to raise employee contributions or to cut benefits. The Cincinnati Federation of Teachers is a fairly typical example, where local president Tim Kraus says "healthcare is a major, major issue." Under the CFT’s recent contract settlement, members will be paying about 7 percent of the cost of their healthcare (compared with 3 percent in their previous contract) through increased employee contributions, higher copays and more expensive prescriptions.

"The out-of-pocket costs are hurting people," Kraus explains. "We are struggling to stay even" at a time when the district also is intent on holding down pay raises. "My members are having a hard time accepting it and rightfully so. They feel they deserve good healthcare." He also notes that it is no longer the case that teachers—and the same can be said for higher education faculty and state and local government employees—can be satisfied with somewhat lower pay than other professionals with comparable education, because teachers receive better benefits. The continuing erosion in benefits has essentially eliminated that comparative advantage.

Other AFT locals have looked for new ways to deal with rising costs. The Pittsburgh Federation of Teachers, which is still negotiating a successor to a contract that expired in June, has proposed that its school district join a large healthcare consortium of school districts in the greater Pittsburgh area; the city district is one of only two that aren’t currently part of the consortium. The district, however, believes that it would lose control of the program, so it has opposed the idea so far, says local president John Tarka, who plans to continue discussing the consortium and other means to control costs.

Even when a local union reaches what it considers to be a good settlement that holds the line on healthcare costs, as happened recently in Chicago, challenges remain. The Chicago Teachers Union negotiated a contract that keeps employee premiums the same for three years, with possible modest increases in the final two years depending on actual claims. But as John Ostenburg, the local’s officer  liaison, points out, it was difficult to explain the changes to members when they have multiple plans to select from, different coverage options depending on family status, and are at different steps and lanes in the salary schedule.

Now is the time

One concern that union members express, when conversations about healthcare reform move beyond general issues to more specific proposals, is that they might lose out as the focus turns toward achieving universal coverage. But that doesn’t have to be the case, explains AFT research and information services department staffer and healthcare expert John Abraham. In addition to being the right thing to do, covering the uninsured can benefit those who already have insurance. When the uninsured get expensive urgent and emergency care, he explains, those costs get shifted to people with good coverage. "The best thing to do is to get more people covered in the healthcare system so their routine and preventive medical needs are met," he says. This will bring costs down overall and reduce pressure on those with good insurance plans.

With that ambitious goal in mind, it’s more important than ever to elect the right people to office in 2008. Cincinnati local president Tim Kraus puts it like this:

"The only way to have a productive conversation about healthcare is to get an overwhelming majority in the Congress and in the state Legislature. There’s no political will to deal with it right now."