Wisconsin State AFL-CIO Health Care Proposal

From Wisconsin AFL-CIO

Wisconsin and our nation are facing a true health care crisis: rapidly increasing costs will soon put quality health care out of reach of a major portion of the American population. Nearly every employer is faced with health insurance premium increases of twenty, thirty, or even forty percent. Most try to shift these costs to their workers-workers who either can't afford to pay additional costs or else experience a declining standard of living in order to maintain access to health care. Just about every significant labor-management bargaining conflict or strike these days has health insurance costs at its center.

Yet think of the absurdity of our current situation. In the United States we pay about one third more than any other country, per person, for health care; but according to the World Health Organization, our life expectancy is lower than twenty-three other countries! (That's a statistic which many in the general public would not expect-or perhaps even believe. If it's any consolation, we're 15th in overall "health attainment".) We have similar low comparative rankings for other measures of health, including infant mortality. What's the difference? How can we spend so much more on medical care but have such inferior health outcomes? The answer is relatively simple: all of those twenty-three countries whose residents are healthier and who have a life expectancy longer than ours have some form of universal health care system that guarantees quality care to every one of its citizens.

In the United States , most current approaches to reducing costs include initiatives such as computerized drug ordering, quality measures, computerized medical records, etc. All need to be done (certainly with no opposition from the labor movement). These changes should both lower costs and raise the quality of care. But the problem we face is far larger: small incremental changes or adopting "best practice" on a firm or insurance company/HMO level simply will not solve the crisis of health care cost and access in our state or the nation. Voluntary purchasing pools don't work either, because they are inevitably subject to adverse selection-only groups with above average costs want to participate.

What are the basic problems?

There is no real coordinated system of health care. What we have are fragmented relationships between professional health care providers, hospitals, pharmaceutical companies, and insurance companies/HMO's.

The result: there is no way to control costs. Each component in the system sets its own prices, and thus the ordinary rules of competition don't work. Current attempts to control costs in reality result only in cost-shifting.

Therefore, we need a system that is at least quasi-universal and builds in bargaining power for purchasers.

There are two ways to do that:

1. A "single-payer" system similar to Canada 's-but adequately funded, as Canada 's is increasingly not. Nevertheless, per person costs in Canada are half what they are in the U.S., everyone is covered, the same percentage of the population is satisfied with their health care system as in the U.S.-and Canadians live on average two years longer than Americans, so Canadians are every bit as healthy as we are, at half the cost.
2. An employer-based, unified system which guarantees quality health care for everyone who is employed and their family members-which in reality would get us very close to health care coverage for all, since almost every family in Wisconsin includes at least one full-time worker.

The Wisconsin State AFL-CIO is proposing and developing a plan based on this second model. It is totally consistent with the American model of providing health insurance through employers that has been evolving since WW II. The problem is that the current system has never come to scale, it has never provided comprehensive health care to all workers and their families.

And we must not forget those among us who are not working. Those not employed must be provided care through publicly funded programs.

The basic elements of our proposal, which is inspired in part by our successful and widely-supported Workers Compensation and Unemployment Compensation systems, are:

1. A Commission will be established through legislation to develop the plan's coverage as well as a bid process for administration of the plan.
2. All Wisconsin employees and their dependents, public and private sectors, will be covered by the common comprehensive health insurance plan developed by the Commission.
3. The plan will be financed by an employer-paid assessment on each employee, as determined by the Commission. In other words, the Commission will determine the level of assessment necessary to adequately fund the health care plan, its benefits and administration.
4. Employers may offer, or unions may still bargain for, employer payment of part or all of any co-pays, deductibles, or other employee costs as well as additional benefits.
5. The self-employed and their families could buy in to the plan at cost, thus making comprehensive health insurance affordable to those who are currently charged extremely high premiums for sub-standard coverage.

What are the advantages of such a health care plan?

1. It levels the playing field between employers on health care costs.
2. It eliminates cost-shifting between plans that cover active employees and members of their families.
3. It dramatically reduces administrative costs by standardization. (Currently, about 25% of the cost of health care is for administration-most of which is simply figuring out who is to pay what for every single health care encounter. What a waste!)
4. It establishes a group large enough to bargain effectively with pharmaceutical companies, hospitals, and health care providers to control and significantly reduce costs.
5. It makes it possible to universalize, in Wisconsin , best-practice quality standards, such as:

6. Small businesses would pay the same per employee assessment as large ones, thus reducing their costs for health insurance and extending comprehensive health insurance to employees of small businesses, most of whom currently have limited health insurance or none at all.

7. All of this together would bring us close to health care coverage for everyone in Wisconsin, for considerably less than is currently being paid in aggregate by all payers today. (Estimates suggest this plan could cut costs by well over 30 %.)

This proposal, paired with a similar publicly-funded plan for those not covered through employment, would not only solve our health care crisis, it would also be a powerful tool of economic development. Imagine if we could tell current Wisconsin employers, or firms thinking of expanding or locating in Wisconsin, that their health care costs for employees would be lower than in other states, that the quality of care would be higher-and that they would have no administrative costs or responsibilities for the health care of their workers! We would not only have a stronger economy, but we would have eliminated the current incentives for employers not to offer health insurance, to offer inadequate insurance, or to shift costs to their employees in order to save money and be more "competitive".

We don't see this only as a union proposal. We are talking to community and advocacy groups, but we are also actively seeking business support. We are facing a shared crisis with employers and we think that labor and management can agree on a plan such as this and get it implemented: because it is in our common and shared interest.