 Labor rally in New York City during the Republican National Convention, Aug. 31, 2004. Photo: Bill Hackwell |
In industry after industry across the United States, workers are facing attacks on their health care benefits. Bosses are trying to pass off increasing health costs onto the backs of the workers through higher premiums, higher co-pays, and cuts in services.
It has become a major issue in the organized labor movement. It is now a central issue in major contract negotiations involving grocery workers in California and hotel workers in California and Washington, D.C.
Building service workers in the New York City region put bosses on notice: Health care is their number-one priority. Service Employees Local 32BJ issued a press release on Sept. 9 announcing that their 70,000 members were ending their contract early to press for health benefits.
“If a contract agreement that secures employer-paid health coverage is not reached by Sept. 30, building service workers from Hartford, Conn., to Trenton, N.J., could strike,” the union stated.
Health care was at the root of the nearly five-month grocery workers’ strike in southern California. Current employees managed to hold on to their health coverage-but only by sacrificing the wages and benefits of future employees.
In January 2003, 20,000 General Electric workers walked off the job for two days when GE increased health insurance co-pays mid-contract. After threatening an open-ended strike in June 2003, the Communication Workers beat back GE’s attempt to increase the workers’ share of health costs. But if health costs increase at the rate of 12 percent per year, increases in the workers’ contribution alone could eat up the entire increase that the workers won over the contract’s four years.
In the hundreds of other examples, big and small, one picture becomes clear. Unions are fighting defensive, largely isolated battles to maintain whatever health care coverage they had managed to win in the past. To the extent that some unions have managed to hold the line on health care, it has come at the cost of concessions in the form of lower raises, two-tier wage and benefit packages and other givebacks.
How can the labor movement rise to meet this challenge?
Any strategy to roll back the bosses’ offensive must begin with an analysis of the problem: What’s behind the rising costs? A report by the Kaiser Family Foundation released Sept. 9 reported that the costs of providing health care to employees rose 11 percent last year-on top of the 14 percent increase in 2002. As prices rise, bosses are cutting coverage and fewer workers can afford insurance. The same Kaiser study found that the number of workers without any health insurance in 2003 jumped by 1.5 million to 45 million.
The problem: health care for profit
A wide range of explanations is given to explain the skyrocketing costs: rising prices for pharmaceuticals, increased technology, an aging population relying on more medical care, etc. All of these undoubtedly contribute to the problem.
But these are all symptoms of a more deadly disease: Health care in the United States is a commodity. Health care decisions are made not on the basis of individual or social needs. Instead, private profit drives all aspects of health care in the U.S.
At the level of direct health care providers, corporate giants like HCA and Tenet Health care earn billions of dollars a year in profits. HCA, which owns 191 hospitals, reported over $1 billion in profits in 2003.
HealthSouth touts itself as “the nation’s largest healthcare services provider.” It operates more than 1,800 hospitals and medical centers across the U.S. and around the world. It reported net profits of $202 million in 2003. (Its CEO that year, Richard Scrushy, was fired amid a $3.4 billion accounting fraud scandal. The new CEO, Jay Grinney, was formerly a top executive of HCA.)
Health care providers are only one source of riches that are flowing into the accounts of banks and corporate investors. A report by the consumer group Public Citizen showed that profits of the ten pharmaceutical companies in the Fortune 500-giants like Merck, Johnson and Johnson, and Pfizer-totaled nearly $36 billion in 2002.(1) That amount dropped off in 2003 to “only” $30 billion.
These profits are above and beyond the billions of dollars these companies spend in advertising-an amount in itself tied to the health-care-as-commodity phenomenon. They are also above and beyond the funds used for research and development.
Insurance companies profit while patients suffer
But by far the most pervasive source of profits built into the health care system is the health insurance industry. Since the insurance companies actually perform no service themselves, the profits from this sector are completely wasteful. By inserting themselves into an area of basic human need like health care to extract profits, the insurance companies channel vast resources out of basic health care and into the banks and stock markets.
A September 2003 article in HHN Magazine, published by the Hospital and Health Network, detailed the crisis. “The health insurance industry has been on a roll like few other sectors of the sputtering U.S. economy,” writes Dave Carpenter. “Double-digit premium increases, an easing of runaway cost growth and less competition have led to record profits and plentiful cash reserves.” Carpenter goes on to describe some of the excesses: profits for the 12 largest publicly traded insurance companies tracked by Standard and Poor’s skyrocketed by 50 percent in the first quarter of 2003-amounting to $2.6 billion for those three months alone.(2)
Milton Fisk, writing in the January 2004 issue of Labor Notes, points to the source of these profits: “Since 2000, the total amount of premiums paid for health insurance has increased roughly 2 percent more per year than the total cost of all claims made by the privately insured to pay for the care they receive. By increasing the premiums they charge faster than their costs are rising, insurers earn larger and larger profits.”
(These profits are on top of the much-noted costs for health care administration-estimated by the Harvard Medical School to be $1.3 trillion in 2003 alone.)(3)
The sheer scale of profit making across the entire industry-from for-profit hospitals and clinics to the drug industry to the all-pervasive health insurance industry-also reveals the stakes in the battle for decent health care. Any reforms within this profit-driven system risk being crushed between competing sectors trying to maximize whatever profits can be made.
Which way forward?
There is a growing realization within the organized labor movement that solving the health care needs of union members cannot be achieved within the boundaries of individual contract negotiations with individual bosses. Unions have reached the limit of what they can achieve here: trading off wages, benefits or job security for holding the line on health care.
That growing realization has prompted a number of campaigns aimed at a national solution to this crisis. For example, the Service Employees staged a national demonstration on June 19, with tens of thousands of SEIU members and their supporters in 165 locations rallying for quality and affordable healthcare.
Jobs with Justice, a community group with close connections to the AFL-CIO, is planning an “Affordable Health Care for All” action week beginning October 3. Their call notes, “Acting together that week, we can put pressure on employers and the government for immediate action to expand and improve Medicare-type coverage rather than undermine and privatize it.”
The Jobs with Justice proposal is in line with various plans for a “single-payer” health care system. These proposals aim to make health care less expensive by eliminating or reducing the role of the insurance companies. Instead, they call for the government to take over this role for wider groups of people, as it already does for elderly and low-income people through Medicare and Medicaid.
This solution would be a big gain over the present system. But it leaves important sectors of the health care economy-like the pharmaceutical industry and the medical technology sector-in the hands of profit-making giants.
Other plans aim for “universal coverage,” which would not touch the role of health insurance companies, but would try to drive down costs for individuals by offering the insurance companies profits through volume instead of through high prices.
All these solutions though-along with the much more modest proposal by Democratic candidate John Kerry-stay firmly within the bounds of the profit system. The ability to build a powerful movement based on organizing millions of people around this basic human need is crippled at the outset by recognizing the right of the country’s biggest banks to enrich themselves from sickness and infirmity.
 Labor Day rally in San Francisco Sept. 6, 2004, focuses on healthcare and other benefits. Photo: Bill Hackwell |
Health care belongs to the people
The starting point for a movement to win health care coverage for all is the slogan, “Health care belongs to the people.” The health care economy needs to be reorganized on the basis of people’s needs, not the profit of a few.
The giant pharmaceutical and health care corporations have proven unable to meet the needs of the vast majority of people. They need to be taken out of the hands of the banks and super-rich.
The insurance companies that profit only from misery need to be abolished, with their vast resources turned over to a general fund dedicated to providing free health care for all.
Health care-from top to bottom, including the pharmaceutical giants and health care corporations-should be nationalized.
The health care crisis affects hundreds of millions of workers and their families-far beyond the reaches of the labor movement, which represents about 13 percent of U.S. workers. But the organized labor movement could be a decisive force in winning health care for all. If the growing number of strikes being waged for health care was generalized into a political movement for health care as a right-transforming the economic strikes into political strikes-it would win support from the millions in need of care. It would show the working class as a whole, in and out of unions, the power of organized labor.
More than that, the unions should have a direct role in overseeing any nationalized health care system. To win the confidence of the millions that it would serve, a nationalized health care system should be directly accountable to the working class. The unions, working-class organizations, and the communities they serve should elect those who run the system. Ultimately, health care workers cannot only serve the community-they can run the health care system.
Socialist Cuba, a country of 11 million people, provides health care to its entire people free of charge, and has life expectancy and infant mortality rates that rival any developed country despite a U.S.-imposed blockade. Imagine what a health care system in the richest country in the world could provide if it were organized on the basis of need, not on profit.
Notes
1. “2002 Drug Industry Profits: Hefty Pharmaceutical Company Margins Dwarf Other Industries” Public Citizen Congress Watch, June 2003.
2. Dave Carpenter, “Insurers Reign.” HHN Magazine, September 2003.
3. Malcolm Berko, writing in the Charlotte Sun-Herald, March 9, 2004.
