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Rising Health Insurance Costs Become Issue in US Labor Disputes - 2004-02-03

The rising cost of health insurance has become an issue in labor disputes around the United States. Medical costs are soaring and are raising the question "who should pay, workers or employers."

The question is at the center of an ongoing work stoppage by 70,000 California grocery clerks. It also sparked a mechanics' strike that stopped Los Angeles buses and subway trains for more than one month last year. Labor disputes over health benefits have broken out among power plant workers in New York State, government employees in Minnesota and cargo handlers in Idaho.

Dr. Mark Smith of the California HealthCare Foundation, a private research group, says rising medical costs are being debated across the country. "The number one problem that most Americans have with health care is it costs too much. And most of the people that buy it, whether state government, federal government, employers and individuals, want it and would like for the other guy to pay for it," he says.

Doctor Smith took part in a recent panel on health care benefits, sponsored by a civic group called Town Hall Los Angeles. Labor and industry were also represented.

Doctor Pamela Hymel oversees medical benefits for Hughes Electronics Corporation and says health care costs are rising faster than company profits. "And so, as the health care premiums increase, employers are forced to either absorb a bigger portion of those health care increases, or share them with employees. And so that is the dilemma we find ourselves in," she says.

A study by the Kaiser Family Foundation found that payments for medical benefits by U.S. employers rose 14 percent last year, and were held down only by shifting some of the burden to workers. Hughes Electronics Corporation has done that, as have many other companies.

While medical insurance is getting more costly, at least 40 million Americans have no insurance to pay for their medical care. Trade union leader Tony Bixler, regional vice president of the Communications Workers of America, says Washington politicians should fix the problem. "We have to have a national health care plan. We're the only civilized country, industrialized country, that doesn't. It doesn't even make sense," he says.

Pamela Hymel thinks a national health care system is a bad idea and would remove whatever incentives employers and workers now have to hold down medical spending. Critics of universal health care like Ms. Hymel say that when patients do not share the cost, they may visit the doctor for minor ailments, and not take full responsibility for maintaining their own health.

She says companies like hers are educating workers, suggesting they ask for cheap generic drugs instead of expensive brand-name medicines. Her company also offers health classes to help workers lose weight and stop smoking.

Union representative Tony Bixler says that approach will not fix the problem. "That's a Band-Aid. Using generic drugs, the whole idea of cost shifting, we're opposed to. And we believe that we have been in the forefront of fixing this problem, because it needs to be fixed. And corporate America, almost all companies have ignored this. And so we're fighting this battle without any help," he says.

For decades, labor unions have urged a national health care plan. But in the face of opposition from business and the health care industry, who worry that costs will rise and quality will suffer, such proposals have not found enough support in Congress.

Mark Smith says countries that have lowered their health care costs through national programs include Canada and Britain, but he says there is always a tradeoff. He says Britain's public health care system is troubled and under-funded, and that even effective national plans limit treatment options.

But he worries that the U.S. system, which is largely private, offers pharmaceutical companies and health care providers few incentives to lower their prices. "They have not been particularly interested in reducing costs because if you stop and think about it, every dollar in health care costs is a dollar in health care income to some doctor or hospital or health insurance company or pharmaceutical company. So it's not that people are evil or greedy people, but like most of us, the prospect of reducing income is not particularly attractive," he says.

Tony Bixler says the rising price of health care is an issue in every contract that his union negotiates. "I think we will see it in almost all of our negotiations from now into the future," he says.

Mark Smith of the California HealthCare Foundation says some changes are bound to come because health care costs are soaring and nearly all Americans are unhappy about it. But he thinks the United States must work out its own solution, not copy someone else's.

Health care is likely to be an issue in this U.S. presidential election year. In December, President Bush signed into law a sweeping overhaul of the federal Medicare system, which provides health benefits for the elderly and disabled. The program will offer drug subsidies for low-income seniors, and give them access to cheaper medicines through managed health care systems, beginning next year. Mr. Bush is promoting a series of other proposals, from limiting awards for medical malpractice lawsuits to encouraging businesses to form coalitions to negotiate better prices on health care plans.

Some Republicans object to the cost of the Medicare overhaul, whose 10 year price tag has jumped $100 billion over November estimates. Democrats say the president's prescription drug benefit will help the pharmaceutical and health care industries more than seniors, and they want the government to negotiate directly with drug companies. Democratic critics also want to rewrite the recent Medicare overhaul to give seniors more treatment options.