December 2003: Dark Clouds Over Medicare

Storm raging over health care in U.S. may spill over into Canada
December 1, 2003

Even as Canadians struggle to maintain universal health care through our uniquely Canadian method of Royal Commissions, federal-provincial bickering and name-calling, our neighbours to the south are mired in a costly and ineffective private health care system that not only doesn’t work. It appears to be getting worse.

A 2001 study by the National Coalition on Health Care (NCHC) concluded that a confluence of trends--recession, rising unemployment, increases in premiums, and the aftermath of the terrorist attacks--is brewing a “perfect storm” that could dramatically increase the number of people in the United States who lack health coverage.

It appears that, like the spate of hurricanes that battered the Eastern seaboard last fall, the health care storm has unleashed its fury on the United States. According to the U.S. Census Department, the number of Americans with no medical insurance at all went up from 14.6% in 2001 to 15.2% in 2002. That’s over 44 million Americans.

The increase in those with no medical benefits didn’t come from children or the elderly, who usually qualify for some kind of state-assisted Medicaid. The increase came from people who used to have medical benefits when they were employed. But, when they lost their jobs in the current American recession, they lost their health care coverage as well. And there’s quite a lot of the newly unemployed. The statistics show that the U.S. has lost nearly three million jobs in George Junior’s first three years. Not only that but, since he came to power, household incomes have fallen every year.

With the average cost of a family health plan rising from $8,000 in 2002 to more than $9,000 this year--and expected to exceed $10,000 in 2004-- many U.S. employers are simply balking at the cost and refusing to provide benefits. As bad as it is, the situation could have been far worse. The census data shows that, if it were not for the growing numbers of people who either purchased their own insurance or enrolled in a government-subsidized program, the total number of uninsured Americans would have been almost 3 million greater.

All of this has made Medicare a big campaign issue that Boy George has to be concerned about in the never-ending Presidential campaign. It has also meant that health care is the No. 1 issue on every union-management bargaining table in the United States. South of the border, health care benefits have always played an important role in collective bargaining, but as employers are trying to deal with 10-15-20% increases in health and medical care premiums, they’re trying to take some of that benefit back from their unionized employees.

Earlier this year, 17,500 General Electric workers went on strike to protest a demand from their employer to pay an extra $28 million in deductibles. And they were just the first wave of picketers, soon followed by auto workers, janitors, telecommunication workers, state and municipal workers, all making health care benefits the key issue in their contract negotiations throughout 2003.

In fact, over half of the ongoing American strikes and lockouts that began in 2003 are as a direct result of the health benefit issue and threatened take-backs by employers. A case in point is the situation at Flynn Ready-Mix Concrete, which has operations all over the mid-western United States and where a strike by teamsters was sparked by the workers’ refusal to accept a co-payment clause for health care coverage. Company officials claimed they couldn’t afford a 30% increase in weekly premiums, and the strike only ended when the co-payment clause was dropped in exchange for a smaller wage increase. Other disputes have been settled in the same manner, but in some cases workers have had to shoulder some of the additional burden.

At King’s Material Inc. of Cedar Rapids, Iowa, workers went back to work after a six-day strike that saw the union assume an initial 15% co-payment for health care benefits, with future adjustments in that percentage tied to any increase in the plan premiums. At another branch of the same company a 17-day strike ended with a three-year agreement that calls for the company to maintain the existing health care coverage in the first year, with provisions for changing the payment plan in years two and three.

Only in the United States, you say? Sorry. Some Canadian workers have already experienced this new reality first hand. For 3example, over 1,100 workers at Sterling Truck in St. Thomas, Ontario, went on strike early this year when the company refused to back off its demand for implementing new escalating employee payments for health benefit coverage. After two weeks of picketing, the company withdrew this demand and the employees went back to work with a first collective agreement without the offensive benefits provision.

We should give thanks for our Canadian Medicare system--and long may there be a commission of some form that is studying it. As long as they’re talking about it, they’re not likely to do more damage to it. But, given the fiercely competitive global economy and the ability of employers to shift not only manufacturing plants but ideas to other countries, Canadians have reason to be very worried about this trend in the United States.

The storm may be closer than we think.


(Mike Martin is an Ottawa writer and consultant specializing in communications and wellness issues. He can be reached at [email protected])