Labor's Misdiagnosis

U.S. Labor and the Fight for National Health Care

by Nancy Watzman

PENNSYLVANIA SENATOR HARRIS WOFFORD edged out rival Dick Thornburgh last fall by proclaiming the need for it; Nebraska Senator Bob Kerrey tried to make it all the way to the presidency on it alone; and now even President Bush has reluctantly come up with a pseudo-plan for it. With public awareness of the health-care crisis heightened by a recession replete with layoffs and benefit cut-backs, the issue of health-care reform is the hottest it has been since the 1960s, when the American Medical Association (AMA) beat back a movement for national health care and the nation got Medicaid and Medicare instead.

 More than $756 billion - over 13 percent of the GNP - is being paid out yearly in health care, and 37 million U.S. citizens are uninsured. Even those who are employed and have strong union representation have had their health benefits cut back. "Of the folks going on strike in recent years [and facing permanent replacements], 69 percent are on strike over health care," says Claudia Bradbury, a policy associate for the AFL-CIO.

Public pressure and constant media attention have pushed the issue to the point where the chance for real reform of the imploding U.S. health-care system seems possible. Even CEOs of major corporations are calling for some sort of government intervention. Yet the U.S. labor movement is split on how to solve the crisis, and may be missing the opportunity to make health-care reform a reality in this century.

 "The labor movement is paralyzed by divisions. The AFL-CIO can't get itself together. It's so riven by narrow self-interest, it keeps it from doing what needs to be done," says Dr. David Himmelstein, a long-time participant in the health reform debate and co-founder of Physicians for a National Health Program. Physicians for a National Health Program advocates a Canadian-style health-care system, often called a "single- payer" approach, for the United States.

 It is in the approach to reform that the labor split has occurred. While the proliferation of health care proposals may seem stupefying, they are all essentially variations of three basic types: tax credits, play or pay and single payer. The labor movement is divided between the play-or-pay and single-payer approach.

The alternatives

 The tax-credit approach, the sort of policy that President Bush advocated in his State of the Union address in January, barely qualifies as a reform at all. Bush's plan would give individuals a tax credit that they can use to buy health insurance. This kind of plan is touted by conservatives like those at the Heritage Foundation, who claim that credits will make people smart consumers of health care. Of course, such a plan does nothing to solve the problem of health insurance companies dumping people from policies when they become sick with AIDS or cancer; nor does it include anything to cut rising health-care costs, other than supposed free-market corrections.

 Play-or-pay proposals, the type of plan that former presidential candidate Michael Dukakis pushed through in Massachusetts and now trumpeted by Senators Ted Kennedy, D-Massachusetts, and George Mitchell, D-Maine, are, ironically, quite similar to the approach championed in the early 1970s by then-President Richard Nixon. Under this type of plan, employers must either provide their employees with health insurance or pay into a government health insurance program, a sort of expanded Medicaid program. But, critics say, play or pay is more pay than play. In Massachusetts, for example, the hospital and other medical business lobbies kept cost controls out of the program, with the result that the state cannot afford the new plan and has not yet been able to implement it.

 The single-payer system, in place in Canada since the late 1960s, severs the link between employment and health care by setting up a national plan that provides health services to all citizens. It makes the federal government the only provider of health insurance, and eliminates all private health insurance. It is the most radical waste-reducing type of plan, eliminating the bloated administrative costs from which the United States currently suffers. In Canada, there is no need for legions of actuaries furiously laboring to calculate whether or not to deny coverage to someone with diabetes: every citizen is covered by the national health insurance program. Canadians pay only 11 cents on the dollar for administrative costs associated with health-care provision; U.S. citizens pay up to 24 cents. Another measure of the single-payer system's cost-slashing success: Blue Cross of Massachusetts covers 2.7 million subscribers and employs 6,680 people, more than are employed in all of Canada's provincial health programs, which insure 26 million Canadians. A number of members of Congress have sponsored single-payer-type plans, including Rep. Marty Russo, D-Illinois, and Sen. Paul Wellstone, D-Minnesota.

Anatomy of a split

While the labor movement has worked on the health-care issue for decades, the prospect for reform was stymied throughout the 1980s by the Reagan administration. The AFL-CIO took up the health-care issue with renewed vigor in 1989, organizing a series of hearings around the country and producing television advertisements about the disintegrating system.

After more than a year of information gathering, the AFL-CIO's executive council split 8 to 8 over whether to support a single-payer solution or a play-or-pay program at a February 1991 meeting in Bal Harbour, Florida. The AFL-CIO decided not to decide; instead, individual unions were allowed to go their own way. The executive council passed a list of basic principles for health-care reform, vague enough to embrace either the play- or-pay or single-payer approach.

Ever since that decision, most unions have been working hard to dismiss it as a minor strategy split. "In a sense, the AFL-CIO fully captures what's happening in the country," says Liz Novotny, an economist for Communications Workers of America (CWA), which is in the single-payer camp. "The argument and debate is right here [between play or pay and single payer]." She argues that the labor movement has made it difficult for advocates of weak-kneed reform to gain support. "After all, the Bush proposal hasn't been taken seriously. The labor unions have helped push the debate to that point."

The American Federation of Teachers (AFT), however, which represents 750,000 teachers nationwide, has reached the point of exhaustion over that very debate. "We've been fighting among ourselves for about a year about the best way to have comprehensive reform. People treat it like it's a foregone conclusion that we're going to get it at all. It's 1992, and we still haven't got it," says John Abraham, assistant director of research for the AFT.

Like the AFL-CIO, the AFT has decided not to decide; instead of endorsing one position or the other, Abraham says, "We just want comprehensive reform." The AFT has endorsed a play-or-pay-type proposal put out by the National Leadership Coalition (NLC), a business-led group that also includes the likes of Safeway, Chrysler and Xerox. Abraham insists, however, that the NLC endorsement means little, and that the group would also endorse an independent single-payer proposal.

 Those unions supporting play-or-pay proposals find themselves in an awkward situation, since, as even the AFL-CIO admits, the single-payer approach makes more sense to the most people. "Our own closest neighbor has this system, and we look so much like them. It's easy to explain, and the system is equitable," says the AFL-CIO's Bradbury. But play-or-pay advocates claim they must work for what can realistically be achieved. "We have to get from here to there," says Bradbury. "If we had a [U.S.] president who sat on the eighth floor [of the AFL-CIO building] and said ŠWhatever you say, we'll do,' it's guaranteed we would ask for single payer. If the president says, 'Maybe you'll get one quarter of what you want,' we have to address [the health insurance issue] in steps."

Labor on the sidelines

 Right now, a wide range of health-care reform proposals are languishing on Capitol Hill. The Kennedy-Mitchell play-or-pay proposal, presented with much hooplah in summer 1991, has failed to pick up much steam. No unions have endorsed it. The Russo single-payer proposal has picked up 69 co-sponsors, but has been opposed by some health-care-reform groups for not going far enough to eliminate the for-profit insurance industry. A bill proposed by Wellstone takes the Russo proposal and improves on it, but has only recently been introduced. Meanwhile, Bush's tax-credit proposal remains the Republican establishment's best effort toward reform. Given this discouraging scenario, it seems that only a Democratic President would bring the potential for change.

So far, most unions have not endorsed specific legislative proposals. A number of AFL-CIO affiliates are working from a single-payer angle, but have not endorsed a bill. Similarly, unions advocating play-or-pay plans have not endorsed particular bills, although a number have endorsed the play-or-pay proposal of the National Leadership Coalition.

 Play-or-pay unions may well find themselves in a box. Tony Mazzocchi, former secretary-treasurer of the Oil, Chemical and Atomic Workers, is a longtime supporter of the single-payer approach. He says that while play-or-pay-supporting unions may believe they are advocating a winning proposal, they are ignoring the importance of being able to mobilize workers in support of a national health-care plan. Reform-by-steps may seem to make sense when one is sitting in a conference room with senators - but it has little appeal to a mother who cannot afford to pay for her daughter's hospital bills. And without the active support of that mother and others in similar situations, it may be impossible to enact any reform.



The Canadian System

CANADA ESTABLISHED its single-payer system in the 1960s. Each province administers its own health plan, partly paid for by federal payments and tax transfers, which are adjusted according to the size of the population. Provinces pay for the rest, also through tax revenues.

There are two basic forms of cost control. First, provinces set budgets for hospitals and clinics to cover day-to-day expenses, such as q-tips and syringes. If hospital administrators want to invest in a new piece of equipment, such as an MRI machine, they apply to the province for the funds. Second, the provinces negotiate with medical associations to determine the amount doctors may charge for specific services. This is not very different from what happens in the United States when states set Medicaid reimbursement rates - except that doctors in the United States are always allowed to charge more than that rate, while Canadian doctors are barred from doing so.

 The Canadian system works. According to Consumer Reports magazine, a Canadian who earns the equivalent of $26,000 per year pays about $1,300 in taxes for health care. People in the United States, or their employers, pay $2,000 yearly, plus another $500 or so for co-deductibles and other expenses. Canadians are, by and large, more satisfied with their system than U.S. citizens are: a 1988 Harris poll shows that nearly 60 percent of Canadians are satisfied with their health-care system, compared to only 10 percent of the U.S. population.

 - N.W.



How Labor Lines Up

Single-Payer Unions

Play-or-Pay Unions


Business' Cry for Help

CORPORATIONS ARE FEELING the health care crunch too - in the form of spiraling costs for health coverage for employees. "I hope none of us will abandon our employees, but we are going to cut our losses," Richard Heckert, president of the National Association of Manufacturers, told Congress last year, echoing the sentiments of many corporate leaders.

International cost differences are apparent to the heads of major corporations. Chrysler's Lee Iacocca notes that his company pays $700 in health care for every car it produces in the United States, whereas health-care costs in Canada run less than $225 per car.

 Small businesses are hard hit too: horror stories abound of small employers suddenly facing exorbitant premiums because of a single employee's treatment for cancer or other major disease.

 Many corporations have turned to the government, asserting that it will have to take the health insurance burden off of employers. A number of companies, especially in the steel industry, have signed on to the National Leadership Coalition's play-or-pay-type proposal. Among them are: Bethlehem Steel, Chrysler, Control Data, Georgia-Pacific, Inland Steel, James River, LTV Steel, Lockheed, Northern Telecom, Time Warner, Westinghouse and Xerox.

 - N.W.



AARP's Conflict

THE 32-MILLION MEMBER American Association for Retired People (AARP) has endorsed a play-or-pay approach to national health care, in spite of criticism from its members. Some believe AARP's position is influenced by the fact that it provides health insurance to its members; a single-payer plan, which would make the federal government the only health-insurance provider, would put AARP out of the health insurance business.

AARP denies that its position is affected by its role as an insurance provider. A January 1992 document produced by the organization's national legislative council states, "Although AARP derives considerable revenue from providing health insurance to members, the Association will gladly forgo every penny of it in exchange for a national system that provides universal access to quality care, real cost containment and a way to pay for it that is broadbased and fair."

Yet the AARP consistently has prevented its members from even commenting on a single-payer option. In January 1992, the organization's national office mailed a questionnaire to 10,000 volunteers asking them about the AARP health-care proposal. The survey addressed only the play-or-pay option, allowing no room for comments on a single-payer approach.

The March 1992 issue of Public Citizen's Health Letter, edited by Dr. Sidney Wolfe, harshly criticized the AARP's actions: "AARP members will continue to rise up and demand that their organization give them real alternatives to ŠPlay or Pay.' Such a grassroots revolt has taken place before. It's time to stop playing with a stacked deck."

 - N.W.