|
UE Takes the Offensive
On Health Care: Demands Improvements, HCP Rollback
NEW YORK, May 29 — Union proposals for health-care improvements followed a union presentation on health-care
costs, as UE members went on the offensive. Among the union’s demands: rescind the Health Care Preferred co-pay
increases that went into effect the first of the year.
UE Research Director Lisa Frank demonstrated that GE is part of the health-care problem and its remedies for the
health-care crisis—cost-containment and cost-shifting—are no solutions.
Frank reviewed a quarter-century of GE cost-containment, pointing out that the company’s interest in this strategy
has remained constant regardless of whether costs are rising, staying the same or declining. GE’s cost-containment has
not been particularly effective, she said. Encouragement of alternatives to hospitals and voluntary second opinions was
followed by mandatory second opinions and pre-certifications. Then came managed care and preferred networks and
hospitals, and a harder line. The experience with generic drugs reveals a pattern, Frank observed. First, the use of
generic drugs was encouraged on a voluntary basis; next, generic drugs became essentially mandatory; finally, the use of
non-generic drugs is now penalized, even when no generic substitutes are available. Similarly, GE has gone from full
payment of in-hospital costs, to "preferred" hospitals, and now to $150 deductibles regardless of hospital
used.
Employee contributions have risen steadily, even as GE’s aggregate costs have declined. The 372% rise in employee
contributions from 1985 to 2000 is six times greater than the increase in GE’s health-care costs. The experience with
spousal contributions reveals another pattern in the way GE attempts to shave its bill at workers’ expense, Frank
said. When first introduced in 1991, spousal contributions were geared to spousal pay; in 1997, they became scaled to
employee pay. The creation of Health Care Preferred (HCP) is a classic example of "bait and switch."
Introduced as the GE managed care option, HCP boasted smaller fees and no deductibles. Once a majority of employees
moved from the traditional Comprehensive Medical Benefits plant into HCP, GE raised the costs—with major increases
imposed as of January 1.
GE workers are supposed to concede further cost-shifting because GE’s medical insurance costs have risen 45%, Frank
observed. "GE should get some perspective on its medical costs," she suggested. While workers’ costs have
mounted year after year, the company’s costs have risen and dipped and risen again. Only recently have GE’s
aggregate health costs gone back up to the level of 1992. And aggregate costs as a percentage of net income and revenue
have been declining, not rising, she pointed out. What was affordable in 1992 is affordable in 2003, Frank said.
Where has the company ever lost a contract or failed to purchase a business because of its health-care costs? Frank
queried. "GE has not had to down-shift its money-making machine in anyway because of health-care costs," she
said. Health-care improvements are not going to sink the company or even slow it down, Frank said. She displayed a graph
demonstrating that while health-care costs have risen faster than revenues during the last three years, dividends, net
earnings and executive compensation have been rising faster still.
While GE has claimed big health-care cost increases, Frank observed, it has also enjoyed double-digit profits from
increases in health-care costs.
GE has a long history of involvement in social problems in ways that add to company’s profits. Health care is no
exception, Frank said. GE Medical System (GEMS), a leading manufacturer of medical equipment, actively works toward
health-care "solutions" in ways that add to GE’s profits, hospital profits—and the high costs of health
care. Using a series of slides first used by GE CEO Jeffrey Immelt in a presentation to analysts, Frank showed the
company’s goal is to convince hospitals to purchase expensive technology and make greater profits by pushing more
patients through machines. "Technology creates demand," a slide read. Of course, people should have access to
medical technology, Frank said, but there are questions about need and allocation of resources. "In our
competitive, deregulated, fragmented, increasingly for-profit health-care system, use of these machines often represents
less bang for the buck," she said.
The close-circuit "The Patient Channel" is offered free to hospitals that buy or lease GE equipment.
Advertisers include leading pharmaceutical companies and pharmacy chains, Frank said, and the company particularly
targets drug advertising. "It’s a little galling to be punished for using brand-name drugs, when GE is beaming
drug ads at people when they are the most vulnerable," she said.
"While GE’s costs aren’t at a crisis level, what’s happening to the health-care system is," Frank
said. The UE research director reviewed the indications of crisis and pointed to a more meaningful solution than either
GE’s cost-shifting or cost-containment.
Health care in the United States is overpriced and under-performing, Frank said. The U.S. spends more but lags behind
every advanced nation in overall performance. According to the World Health Organization (WHO), the U.S. level is
somewhere between Bosnia and Iraq, she noted. More than 40 million are uninsured in the U.S., which spends only 1-2% of
its resources on preventative care. Much more money is spent less efficiently on acute intervention and post-symptomatic
diagnosis. Americans have more machines per capita but fewer doctors than most industrially advanced nations.
UE’s solution is the "Just Healthcare" program devised by the Labor Party, Frank noted. The experience
has been that when insurers have the upper hand over providers, costs drop. The theory behind single-payer health-care
plans like Just Healthcare is that one powerful insurer can drive down costs, but not so much that it frustrates use and
forces providers to leave the system. "This is the only way to get at costs," Frank suggested. Americans are
already paying for national health care—when various government expenditures are added to private outlays—but don’t
get the benefits. Existing funding, plus a payroll levy on companies of 5.5% and an income tax surcharge on the very
wealthy could provide coverage to every woman, man and child. Such a system would clearly save GE money, Frank said.
"If you have a better plan, come out with it," President Hovis told the GE representatives. "GE should
be a leader in reforming the system, not just in cost-shifting. We’re tired of putting bandages on an
amputation."
While the Canadian health system is not necessarily the best example of a single-payer plan, Ford, General Motors and
Daimler/Chrysler signed a joint letter with the Canadian Auto Workers supporting the Canadian system. The companies
recognized that they enjoy significantly lower labor costs in Canada because of this system, as does GE, Frank observed.
The UE research director said she hoped negotiations would add a sense of urgency on the company’s part about
health-care reform. However, she said, "GE’s stake in profitability doesn’t lead to optimism about the company’s
role in finding humane solutions." UE remains "wholly unreceptive to this company’s efforts to solve the
crisis by pushing costs onto us," Frank concluded.
President Hovis pointed out that the importance of the health-care crisis fixed national media attention on the
two-day strike in January. Added UE’s Steve Tormey, "Cost-shifting does nothing to deal with the root of the
problem, that’s our frustration."
John Curtin, GE spokesperson, commented that the company’s goal of gaining an additional $60 million in
cost-shifting is a movement towards a 70/30 employer-employee cost split. Tormey responded, "That’s outlandish
and repugnant, and totally unjustified."
The UE committee proceeded to lay out its insurance contract demands.
HCP should be fully negotiable, with no mid-contract reopener, the union said. And the HCP co-pay increases that went
into effect on January 1 should be rescinded.
"Our members are telling us in no uncertain terms, they want no more surprises," said Tormey, commenting on
the demand that there be no mid-contract reopener. "You have our attention on that one," Curtin responded.
"We will be taking a position on that that is probably closer to where you want to be."
The union called for expanded opportunities to switch medical plans beyond once a year. UE also demanded the
elimination of the spousal insurance contribution. "That’s especially important," said Pat Rafferty, Local
506. In Erie, spouses employed part-time or in low-wage shops are offered expensive insurance plans directed at
higher-compensated employees. These plans are so expensive that it wouldn’t be worthwhile to work, Rafferty said.
Tormey reminded the company that GE’s intention in the 1991 negotiations was to discourage well-paid spouses with
access to cafeteria-style benefits from taking advantage of GE benefits, so that the spouse’s employer picked up the
tab. However, the increases in health-care costs have affected other employers, and particularly small companies that
lack GE’s economies of scale. Many spouses now find themselves enrolled in plans with not-great coverage and large
out-of-pocket payments. "What we end up with is something that wasn’t the original problem," he said.
The union proposed that brand-name prescription drug co-pays be at the same level as generics if there is no generic
equivalent available. "If you’re pushing us to generics to save costs, don’t force us to pay more if there’s
no generic available," Rafferty said.
Preventive care was an important advance in 1991, said UE members, who proposed that GE substantially increase
preventive care allowances. The union called for an update in the CMB allowances, with a substantial increase on all
scheduled vision care benefits. "Any change that updates the schedules increases cost-shifting," warned
Curtin. "It’s not our intention to bargain against ourselves," responded Tormey. The union called for an
increased hearing aid allowance, and plan coverage of all corrective eye surgery. Wayne Reynolds of the UAW pointed out
that in the Cincinnati area, laser surgery is all that’s available.
The union proposed that the cost of ongoing therapy should be fully covered under HCP after one co-pay. Pat Rafferty
explained that workers on disability leave who require rehabilitation face hefty cumulative co-pays because of repeat
visits. Ed Baran reported that a Local 751 member out on short-term disability had little left over after co-pays and
taxes.
The UE committee demanded a substantial increase in the Short-Term Disability benefit. Designed to be 60% of pay, STD
is has an effective rate of about 54% before taxes, on average. Union members proposed an increase in monthly Long-Term
Disability Insurance, with the "hard test" applicable after 24 months and open enrollment.
The union’s demand for inpatient care for substance abuse and mental health cases, with inpatient admittance
decided by the attending physician, provoked much discussion. "There something to be said for cost-containment, but
cost-containment can be taken too far," as it is in this case, said Rafferty. Local 506 takes on the responsibility
of assuring individuals in need receive care because the system is too restrictive, he said. "The person who needs
to be admitted isn’t, because the bureaucracy is too slow," said David Kitchen, Local 506. Marco Coeur, Local
1010, experienced the frustration of insurance refusing to pay for the inpatient care of his daughter.
The UE committee also called for on-site benefits counselors in major locations. In Erie, the Local 506 officers have
had assume responsibilities formerly shouldered by the company in explaining benefits. Although assisted by reliable
personnel in corporate headquarters, Rafferty said, he believes "the system is broken." Rafferty and Kitchen
spoke at length of their frustrations in Erie, while Bill Wossum and Marco Coeur, Local 1010, described the difficulties
encountered in Ontario. GE’s Curtin stated the company would probably not want to direct additional resources to this
area. It may be a matter of reallocation of existing resources, Kitchen suggested. "We have management sending
people to us. I believe it’s their responsibility as much as ours." Some managers, he continued, "want to
remain clueless so they don’t have to spend time resolving these problems." The company has cut back staff, and
"walked away from its responsibilities," Tormey said.
The union called for substantially increased dental benefits and elimination of the lower two zip code schedules. The
UE committee said the dental premium option should be abolished, with an increased provision for restorative and
prosthodontic procedures under the regular plan. Union members said they wanted to maintain the all-company-paid plan
originally negotiated, and not a migration out of the basic plan as happened with CMB. The union proposed that dental
coverage be extended to spouses of retirees until age 65 on the same basis as medical insurance.
The UE committee also called for basic medical coverage to continue while workers on LTDI for the duration of their
leave or until qualifying for Medicare under a disability pension. Union members observed that there is a potential gap
in benefits that ought to be eliminated.
Negotiations resume Tuesday, June 3.
At the UE table today were General President John Hovis; UE-GE Conference Board Secretary Steve Tormey; Research
Director Lisa Frank; Bob Brown and Dave Dennison, Local 332; Frank Fusco, Dave Kitchen and Pat Rafferty, Local 506; Ed
Baran, Local 751; Marco Coeur and Bill Wossum, Local 1010; Bob Roberts of the IBEW, Wayne Reynolds, UAW; and Mike
Barrow, American Flint Glass Workers. International Representative Chris Townsend represented UE at the IUE table.
|
