PILOT PROPOSAL 

(GENERAL MOTORS / UNITED AUTO WORKERS)

Written by Michael Westfall

 7/15/90

OUTLINE

INTRODUCTION ...............

OVERVIEW .................

UNITED AUTO WORKERS ...........

AMERICAN BUSINESS ............

AMERICAN MEDICAL ASSOCIATION .......

DOMESTIC HEALTH CARE PROGRAMS ......

COALITION ................

CONCLUSION ................

SOURCES .................

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INTRODUCTION

Today's existing prescription of dealing with America's health care costs, quality and accessibility is obsolete.

Our methods have been in effect for so long that various elements of the system are now feeding upon themselves and have become an uncontrollable self-perpetuating force whose insatiable appetite cannot be curbed.

If your family lacks the finances then they won't get the needed health care.

Rocketing health care costs are driving downwards our standard of living and quality of life, as more and more employers are demanding that workers pick up part of the costs as they force consumers to pay higher prices for goods and services that reflect higher health care prices.

Clearly, we have a national crisis on our hands and it is a war that won't be won with bullets and bombs but collective intellect leading to some form of national health insurance for all our citizens.

The U.A.W. has been an institution committed to dynamic social change and U.A.W. members enjoy a measure of the world's best health care yet the scope of the health in-surance crisis in this country today surpasses even what the worlds strongest and most socially motivated union can hope to address at the negotiating table.

The U.A.W., doesn't operate in a vacuum and has always operated within the context that organized workers will ad-vance not at the communities expense but in concert with the community.

My intent of this position paper is to develop a con-sensus to deal with our health sectors interconnected prob-lems which include the unsustainable rising of costs, the outrageous allocation of resources, the unequal distribution of benefits and burdens and the increasing numbers of our citizens who lack the availability to medical care. Living without medical insurance in the 1990's holds a great many risks.

One injury or illness will start you through a hospitals emergency room door which will cost you several hundred dollars and if you had to stay for a few days it could take you years of struggling to pay the bill for just one single illness or injury.

From a unionist perspective it is critical that a joint Union-Management coalition be developed to aggressively work for the solution of these various elements through an intense program to design an achievable national health program.

The desperate need for a program of national health care in this country, to control inflation, and permit equal access to quality health care for all our citizens has never been clearer.

OVERVIEW

Health care costs in this nation are going up at double the rate of inflation and now cost $600 billion a year or a debilitating 11.5% of our gross national product. By comparison, Canada spends 8.5% of its gross national product on health care; Japan 6.7% and Britain 6.2%.

By the year 2,000 it is estimated that if health care costs continue to rise at today's rates that we will be spend-ing 15% of our gross national product on health care and at that point even our big auto companies will break under the cost burden. If America's premier manufacturing companies will not be able to afford employee health care - who will?

Today, some conservative studies indicate that 37 million American's live their lives without health care coverage. One out of ten Americans die each year before their first birthday because of the lack of adequate health care.

Twenty five million of our citizens without health coverage are employed at least part time and ironically end up subsidizing, through with-holding taxes, the medical coverage of one of our better protected segments of society which is our senior citizens enrolled in the Medicare program.

About twenty million of this segment every year does not receive needed care because they cannot afford it.

Only a surprisingly small percentage of the dollars spent for health care in this country gets through the layers of medical bureaucracy, and needless testing procedures back to the patient for actually needed health care.

Many of these citizens are suffering from illnesses and injuries that are either preventable or treatable if access to health care services had been provided at an earlier time. Our health care system is so inefficient that we pay up to seven times more for some of the same operations and medical procedures done in Canada under their more efficient national health care programs.

Even Bail Wilensky, who is vice chairman of President Bush's task force on health care reform and head of the "Health Care Financing Administration" acknowledges that federal attempts to control hospital costs haven't done the job.

In Forbes magazine, June 1990, Wilensky stated that hospitals have jacked the bills up rather than become more efficient and that the medical care system has be-come an inefficient engine for wealth redistribution.

Our competitive ability is dying a slow death due to rising health care costs.

In 1988 domestic automakers paid about $5,800 for health care for each employee or between $600-$-700 for every vehicle produced. Assuming that health care costs continue at today's rate of increase this will translate into $980 for employee health care costs for every domestic vehicle produced in 1993, at that rate just how much longer will America's pre-mier manufacturing industries remain "Premier"?

By contrast, competitive companies that operate in coun-tries that have a national health care program spend signi-ficantly less per vehicle produced for employee health care including Japan at $246 per vehicle produced and Canada at $223 per vehicle produced. This gives non-domestic producers a profound pricing edge putting U.S. businesses at a compet-itive disadvantage.

The helter-skelter design of our health system has led to a helter-skelter reimbursement situation where many employers have become expert at shifting the costs to others and this ability to shift costs has created large incentives for many other employers to not provide employee group health insur-ance at all.

Rising health care costs have encouraged some employers to demand co-pays and-or deductibles from workers along with cut backs on benefits.

A recent study by the Service Employees International Union (SEIU) clearly shows that many strikes are now occurring over rising health care costs.

According to this study the number of strikes caused by labor-management confrontations in the last three years over who will pick up the escalating health care costs has more than tripled.

Statistics from the Bureau of Labor Statistics found that in 1989 alone, work stoppages, related to health insurance bargaining cost the United States economy over $1.1 billion due to lost wages and productivity losses.

In 1986, health care costs were the main reason for 78% of all strikes.

With employers attempting to put the costs off onto workers and unions more inclined then ever before to strike over this issue the only way out is a major change in the way health care is provided in this country.

Access to care is based exclusively on ability to pay, quality of care is varied and provider abuse is out of control.

The performance of unneeded medical procedures; surgery and the prescribing of unnecessary pharmaceuticals are all elements we have to deal with while assuring the access to necessary health care services to all citizens.

The June 1990 issue of "Investors Digest", one of Wall Streets investment letters, tells of how to profit from the on going U.S. health care crisis. The investment letter says that a major play in stocks is in the area of prescrip-tion drugs because their price has been rising so fast over the last few years and the trend will continue as America's population ages and the demand increases.

Money will continue to be made by wealthy money movers at the expense of our less fortunate unless we correct this injustice.

Collectively these statistics are very chilling and for us to continue down the road of ignoring this situation as the grave and growing competitive and social crisis that it is, is very dangerous to our country and way of life.

Today many top U.S. business leaders are finally speaking out on the necessity of a national health programs.

There is clearly theoretically and conceptually a better way and the timing has put us at a point of no return. We must act. We now have a window of opportunity open to us to turn this collective concern into a coalition designed to develop a public consensus and legislative action for a national health program.

UNITED AUTO WORKERS

Labor unions, by their very nature will play a key role in the success of a U.S. national health insurance plan.

Over the past four decades the U.A.W. has been a key leader in the fight that created the health care breakthroughs that have set the pattern for the rest of the nation. Today union workers are facing an uphill fight on the issue of health care benefits and these costs are crowding out other impro-vements in the compensation package, including wages.

The first thing on the bargaining table is health care and whatever is left over goes to other things.

The U.A.W. has always blocked company demands against shifting the costs onto the backs of workers and has demand-ed that health care providers deliver cost effective-quality service.

It is, as it should be, very difficult for employers to reduce employee benefits that were won through bargaining in good faith. The solution today lies in labor and business joining forces to develop a method or blend of methods to control health care costs without reducing or compromising benefits. Meaningful cooperation in coalition form must begin. Rocketing health care costs adversely affects international competition and places the jobs of millions of American workers in jeopardy.

The U.A.W. believes that the disparity of cheaper health care costs has become a major incentive by multinational corporations to shift jobs and production capacity to other countries. What is so difficult to understand about this?

The U.A.W. believes that businesses should not be forced to compete on the basis of health care costs and that since all employers presently pay the same percentage of wages to social security, in order to provide a basic level of retire-ment income to workers that the same principle should also be applied to finance health insurance for their workers.

Health insurance costs for every sector would be profound-ly reduced as this national health insurance package was implemented.

The numbers are growing on both sides of the bargaining table calling for support for national health care reform. That is the only way to stop the out of control costs and eliminate declining access and wipe out the unfair subsidy used by those employers who refuse to provide coverage for their employees.

The U.A.W. is calling for enactment of a comprehensive national health insurance plan.

The first necessary step in achieving this will be the development of a labor-business coalition.

AMERICAN BUSINESS

Employer efforts to cut back on health insurance have become a major issue in recent collective bargaining nego-tiations.

Even those workers who successfully resist cutbacks lose because rising health care costs leave very little left for improved wages and other benefits. Rising health insurance costs are certainly not limited to big business and I know in Mich-igan, as in all states, a healthy climate for small busi-nesses is crucial.

Overcapacity, foreign competition and corporate restructuring have led to the downsizing of most major corporations leaving it up to the small companies to create most new jobs.

86% of Michigan's businesses employ fewer than 20 workers and Michigan is a good barometer for the other important Great Lakes States.

Because smaller companies have fewer employees their insur-ance rates can be double the rates of the larger companies.

The employer costs of health care is more than the costs of unemployment insurance, workers compensation and business taxes combined and many small firms no longer offer health insurance benefits to their employees because of this.

Adding to businesses resistance is the reality that start-ing in 1992 they will have to start listing their liability for retiree health insurance premiums on their balance sheets which will have the result of reducing reported earning. G.M., Ford, and Chrysler have expressed interest in scrapping their individual health plans for one combined "big three" plan.

Multi employer benefit plans already common in trucking and building trades are cheaper because they are funded on cents-per-hour basis that eliminates each company's liabil-ity. The auto companies have met several times discussing this issue.

The medical professionals and the large private health insurance providers who continue to make incredible fortunes on our unfair and inefficient system released a survey in April 1990 that said 94 out of 100 top executive respondents opposed national health in-surance. Why did this group oppose it when it would ultimately lower their cost for employee health care? It doesn't make sense and clearly demonstrates the need for a labor-business coalition so the program can be developed jointly with all sides understanding the extensive benefits.

The Health Insurance Association of America said they ordered the survey after becoming worried that the public might believe that Chrysler Chairman, Lee Iacocca, one of the nations top business executives, speaks for American business when he strongly advocates a government health plan to deal with rising health costs based purely on his keen business perspective.

Recently two very large domestic companies negotiated a commitment to national health care in their contracts.

In its labor agreement Bethlehem Steel committed to establish a labor-management coalition whose purpose was to create and pursue a national health insurance policy.

In its labor agreement AT&T also agreed that the health care crisis could not be solved at the bargaining table because of the scope of the problems including cost, quality and access. AT&T said it will join labor to participate in the public policy debate over the new direction the countries' health care delivery system must take at both the national and state levels.

Employers are beginning to understand that only a national program can deal effectively with the health care crisis.

The more enlightened managers are beginning to stand up and proclaim that a national health program is essential for domestic industry to compete in the international market.

I know the U.A.W. believes we have the opportunity to harness this concern into a coalition, which will promote, develop, and encourage the enactment of a national health program.

AMERICAN MEDICAL ASSOCIATION

Our medical system can do miracles but the way in which it is used and funded is unfair, inefficient, uncompetitive and cannot be sustained for very much longer.

Our health care system is provider driven by the doctors, hospitals for profit, drug producers, medical equipment supp-liers and insurance carriers. The actual patient has very little impact on the costs compared to these companies that have turned the system into a provider driven big business which feeds upon itself.

The corporations that pay the bill have no voice as to how the money is spent. Hospitals and doctors benefit handsomely and directly because their situation is strictly a fee for service insur-ance reimbursement system out of control that has no success-ful provisions for cost containment.

Leyden hospital in Chicago recently offered a gift of either a portable cellular phone or a fax machine as an incentive to every one of their doctors that performed ten or more operations over a nine-week period. There is no guaran-tee that this same practice isn't occurring on a much larger scale. Pharmaceutical companies have given airfare, bonuses, free dinners and even NBA basketball tickets as incentives to those who prescribe their drugs.

There is no question that when incentive bonuses are offered health care bills are needlessly run up. Who is address-ing the question of ethics in this situation?

While it is critical to immediately develop a labor-business coalition to creatively study the many health care models available from Canada, Japan, Germany, France, and elsewhere and intelligently develop our own we must be equally aware of the forces who feel they would benefit by our failure. They are the ones who would spend millions of dollars in an attempt to defeat any health care legisla-tion that we would propose.

In a recent mailing to doctors across the nation the American Medical Association requested $200 from each doctor to publicize on television and elsewhere their view of the problems with national health care.

It is the medical profession that fought against the U.A.W.'s historic prescription drug program by calling it socialized medicine. When the U.A.W. negotiated the prescription drug program only a handful of drug stores would fully participate. The rest forced their U.A.W. customers to fill out special cum-bersome forms for reimbursement purposes.

Eventually the drug stores that wouldn't fully cooperate found themselves with fewer customers and quickly decided to get on board.

This is but one example that clearly demonstrates that methods can be achieved and financial penalties developed to force participation by those who put their self interests above the countries.

Today the medical profession is the most likely to lobby and fight against national health insurance because their associate members are the ones that benefit handsomely from the systems inefficiencies.

Playing power politics, sabotaging plans through misconcep-tions and blocking essential steps can no longer be toler-ated. A labor-business health coalition must be created and this coalition needs to discuss the concerns and garner the support of the A.M.A. There is a new atmosphere and time is changing things. The old ways are being wiped out of exist-ence and a new cooperative priority is arising, as it should because tomorrow we will be held socially responsible for the decisions we make today.

DOMESTIC HEALTH CARE PROGRAMS

While the only real solution for the health care crisis in this nation is a national health care policy, which our ofederal government has so far failed miserably to provide leadership to achieve, many states in desperation are pre-sently developing minimum coverage health care programs for those citizens that have fallen through the safety net.

There are at least nineteen states that have developed some type of gap group health insurance protection for their population under age 65.

The coverage's are designed to cover the population that still lacks insurance or the so-called "gap group" that falls between private insurance and Medicaid.

Some of the different states programs mandate that employees "must" offer health insurance to their employee's, with the employers getting a tax credit.

Other programs offer subsidized health care for pregnant women, children and the disabled.

California offers low-income employees and their low profit employer's access to the states "Medical" program. These various programs all go under the guidelines to the New York State Department of Heaths 1989 proposal for uni-versal health coverage called "UNY*CARE". U.N.Y.*CARE'S design rests on two principles. The first principle is that universal coverage can only be afforded by accepting and strengthening the system of private employer based insurance and expanding public programs for those not in that work-force.

The second principle is that incremental improvement must be linked to a fundamental reform of the payment system with all providers facing a single payer and with all residents being assured access to a sufficient level of care.

Presently we have fifteen states that have "active" commissions designed to study health care financing and access issues. All of the fifteen states programs cover doctor's procedures, outpatient surgery, ambulance, emer-gency room and hospital inpatient including room and board, surgeon's fees, anesthesiologist fees, doctor's visits and prescriptions.

Almost al1 of these state programs covered outpatient physicals, immunizations, physical therapy, outpatient pre-scriptions with a co-pay and hearing/eye exams. Some states such as Virginia and Washington have enacted laws permitting small employers to offer more limited health plans stripped of more costly mandated benefits.

In Flint, Michigan our Michigan Health Access project offers premium subsidies to employers for low income, former well fare recipients whom they employ.

Oregon's approach to health care represents the most contro-versial proposal under discussion.

The Oregon reform is directed at trading unlimited services for universal access.

Under the 1989 proposal arrangement, Oregon would guarantee limited health services to every Oregon citizen whose income is below the federal poverty level. The private sector would be responsible for providing equal or greater benefits to those workers who earn more.

Oregon studies indicate that eliminating a few expensive operations from the list of state funded procedures would enable Oregon to almost double the number of citizens cover-ed by Medicaid.

Basically all of the state initiatives include mandating employers to offer their employees health insurance with the help of tax incentives and tax credits, state subsidized insurance programs to make insurance more affordable, risk pools to cover the medically uninsurable, reform of the pri-vate insurance market to make insurance more affordable and task forces and commissions appointed by governors and legis-latures to study various financing and access issues.

The well meaning creators and promoters of these programs should all be commended but I believe all of these programs are just "half way" measures or a "band aid" regional approach to a national problem.

Of course all of our citizens need health care but the only method that would drive costs down so we could afford health care for all of our citizens is to have the health care spon-sored on a national basis and thus far the federal government has failed miserably in providing the necessary leadership to achieve this.

Each of our states clearly recognize that there is a seri-ous deficiency in health care in this country and I would like to point out again that this just adds evidence to the argument of the need to establish a joint labor-business health coalition.

COALITION

While it is easy to develop and discuss the problematic arguments it is not so simple to develop workable solutions but that is exactly what we must have a mandate to do.

As a nation we can no longer afford to waste billions of dollars for an inefficient health care system that slices our competitive ability by forcing upwards the price of every product we produce.

We must develop a labor-business coalition, which will address the unfair distribution of health care burdens.

The coalition will study all existing health care programs from other nations and garner the best ideas to design and implement a program capable of guaranteeing every U.S. citi-zen a minimum level of government sponsored health services.

The coalition will enlist the cooperation of this countries top labor, business and governmental leaders. This is vital because this will cooperatively offer collective and some-times diverging opinions, ideas and sensitivities.

The alternative is an increasingly desperate mix of con-flicting solutions.

The coalition will work closely together developing a consensus and blending this researched information into a comprehensive impact study which will disclose all details of existing situation, disclose all known details including objectives, likely impact and legal ramifications of each, potential solution and project what wide ranging conse-quences can be expected if projected solutions are not acted upon.

The coalition will bring all of the information together and study if it would be feasible to divert existing funding for programs like Medicaid, Medicare, etc. to this new pro-gram.

The coalition will conduct major working conferences feat-uring top union, business, government and medical leaders as main speakers.

These conferences will quickly garner the spotlight and create a national theatre for the coalition's work allowing the nation to see and hear the common concern and resulting solutions that reflect the emerging future rather than the obsolete past.

CONCLUSION

I believe it is time to create a joint labor/business coalition to work for a national health program and logic should prevail. A major dimension to the coalition would be to operate under a building block approach where the coalition would agree upon a need and then pursue the steps necessary to achieve the goal.

The coalition's objectives would be to break down the barr-iers that bar providers and consumers from the real cost of medical services and eliminate the current incentives for medical care overuse.

The key word is efficiency by redirecting existing monies and utilizing them more efficiently.

The duties of the coalition will be to develop a blueprint for total population health care access at an affordable cost which will challenge us to develop ways of using all of our resources efficiently.

The coalition will have a burning mission to transfer the health care dilemma from the bargaining table to the legislature's tables.

The debate aired in my position paper could lead directly to a better way and if we can all put the cause above our-selves for just a short period of time we will become the social melting pot of the country by making history and delivering our system modernized and fully up to date to the door steps of the next century.

The United States with its people, way of life and politi-cal structure is the most envied and successful country and system in the history of mankind.

We have the most to lose or gain. There will be very definite penalties for not correcting our health care crisis if we fail and very profound benefits when we succeed. Let us put the cause above ourselves and get the job done.

Michael Westfall- U.A.W

SOURCES

· International Union of Autoworker's (U.A.W.)

· Bureau of Labor Statistics

· International Union of Service Employee's (S.E.I.U.>

· The National Center for Policy Analysis

· Robert Wood Johnson Foundation (Alpha Center)

· Health Insurance Association of America

· American Medical Association

· Financial Accounting Standards Board (F.A.S.B.)

· NewHouse News Service

· Jayne Bryant Duinn (Financial Consultant-Writer)

· Forbes Magazine

· Investors Digest

· Detroit Free Press

· Michigan Department of Social Services

· Michigan League of Human Services

· Michigan State Chamber of Commerce

· Michigan Manufacturer's Association

· New York State Department of Health

· New England Journal of Medicine

· Various State Insurance access studies including Michigan Health Access Project

· Oregon-Basic Health Services Act of 1989

· Arizona Health Care Group

· Maine-Managed Care Insurance Demonstration

· Washington Basic Health Plan

· Wisconsin Small Employer Health Insurance Project

· Tennesee Primary Care Association (MED Trust)

· Florida Small Business Health Access Corp.

· Denver-Scope Project

· Bay Area Health Task force, United Way, San Francisco