Controlling costs while improving quality

Aside from pay, healthcare coverage has become today’s most important bargaining issue. In many locals, battles over healthcare are more likely than pay to cause tough 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 schools.

For people without coverage—47 million at last count, including nearly 9 million children, according to the 2006 U.S. Census—routine doctor and dentist checkups are an unaffordable luxury. The alternative of last resort is often the emergency room. 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 their studies.

AFT president Edward J. McElroy calls it "unconscionable" that so many citizens lack health insurance in a country as rich as ours.

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."

A 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 says.

Although many AFT members currently have good insurance, McElroy points out, "We will lose it if others continue to lose it."

The key 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.

States take the lead

Other than the 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 (see story), the action on healthcare reform increasingly is being advanced by the states. As the SCHIP debate shows, even a small federal program—one that shouldn’t be controversial because it expands coverage to the most vulnerable segments of society—can generate plenty of conflict.

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. 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 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.

Another tack is persuading the legislature to let every school district statewide band together to buy health insurance for all K-12 employees. That’s what AFT Oregon did this year, working closely with the Oregon School Employees Association (OSEA). A few school districts are already enrolled in the insurance program; all will be by 2010.

The two unions worked "hip to hip" for five years, introducing the idea in 2003, taking the resulting legislation through the state assembly in 2005 but losing by one vote, and finally building such a critical mass of union action in 2007 that the bill passed. "It’s nice to
be able to see your action and lobbying and work by the members come to
fruition," says AFT Oregon president Mark Schwebke. "It’s an affirmation
of the political action program, of stick-to-itiveness."

The new law will be particularly sweet for part-time school employees who need all their pay just to cover healthcare costs, says OSEA executive director Steven Araujo. "It’s the closest thing we’re going to get today to controlling healthcare costs," he says. "With everybody coming into the pool—by just sheer numbers—the vendors are going to provide a better benefit for less cost. For us, it’s quite a victory."

Maine and Vermont are among 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. One big sticking point for unions in California, including the AFT’s state federation, has been the governor’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 president Marty Hittelman. As in Massachusetts, competing reform plans in California wouldn’t affect many of his members, Hittelman says, although any requirement that part-time employees be covered would help.

Hittelman says a ballot initiative probably will end up going before California voters in 2008. Ultimately, what the state federation has endorsed is a so-called single-payer plan—one in which healthcare is financed through one source, usually the state or federal government, rather than insurance companies. It’s a concept—similar to national plans in Canada and Western Europe—that exceeds what most American policymakers 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. Even though many paraprofessionals and school-related personnel earn more than the minimum wage, they may take home close to this amount because of the short work year.

For AFT locals, 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 chapter’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 and higher copayments for office visits and prescriptions.

"The out-of-pocket costs are hurting people," Kraus notes. "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 school employees can be satisfied with lower pay than other professionals because they receive better benefits. The continuing erosion in benefits has 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 ways to control costs.

Even when a local union reaches what it considers 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 pointed out by June Davis, a field representative for the local and a member of the AFT PSRP program and policy council, it’s difficult to explain the changes to members when they have multiple plans to select from, different coverage options, and are at different steps and lanes in the salary schedule.

Now is the time

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, those costs are shifted to people with coverage, explains AFT research and information services staffer John Abraham. "The best thing to do is to get more people covered in the healthcare system so their routine and preventive medical needs are met."

With that 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."