PNHP

Ten drug companies have more profits than the other 490 Fortune 500 companies combined

Ten drug companies have more profits than the other 490 Fortune 500 companies combined

Public Citizen
Press Release
June 23, 2003
Drug Industry Employs 675 Washington Lobbyists, Many with Revolving-Door Connections, New Report Finds

Profits registered by the 10 drug companies on the list (Fortune 500) were equal to more than half the $69.6 billion in profits netted by the entire roster of Fortune 500 companies – when all losses are subtracted from all gains.

“The drug industry contends that it needs high prices to finance the discovery of new, innovative drugs,” Clemente said (Frank Clemente, director of Public Citizen’s Congress Watch). “But a closer look shows that drug-makers make far more money in profits than they spend on research and development.”

http://www.citizen.org/pressroom/release.cfm?ID=1469

Comment: Most of the Republicans in the House and Senate are making every effort to be certain that the traditional Medicare program will not be allowed to provide coverage for prescription drugs (except for a fallback provision in the Senate for rural regions without willing plans, though the House leadership has stated that even this is unacceptable). Coverage would be provided exclusively by private insurance plans, whether as an isolated drug plan or as part of an HMO or PPO.

The Republicans contend that including prescription coverage in the traditional Medicare program would lead to price controls of drugs. But other Medicare providers, including physicians, hospitals, laboratories, and home health agencies already have their fees and prices controlled by Medicare. Why should prescription drugs be the exception?

The explosion in physician fees and hospital charges after the introduction of Medicare led to the switch from usual, customary and reasonable fees to the enactment of mechanisms to control Medicare costs. In recent years we have seen an explosion in drug costs, with truly outrageous profits.

The Republicans are correct. Including drugs in the traditional Medicare program would result in negotiated prices – but fair prices. Isn’t it now time to modernize Medicare by including prescription drugs and making them affordable?

K. Sullivan responds on rationing

Kip Sullivan responds to the following quote of Humphrey Taylor of Harris Interactive from “The Health Care Debate We Are Not Having”:

Humphrey Taylor:

“Increasing productivity, reducing errors, lowering costs, improving lifestyles and prevention, and cutting waste, fraud and abuse are all admirable goals which would make the money go further – but never far enough to avoid the need to ration care.”

Kip Sullivan:

I’m amazed at how often health care experts and insurance industry officials make statements like this with utter confidence. The claim that rationing is inevitable is pure ideology.

Part of the problem is the failure of those who use the term “rationing” in a health policy context to define it, which in turn permits loose usage. “Rationing” in the health policy context, as opposed to most other contexts, currently has two meanings. In the hands of right-wing critics of the health systems of other countries, “rationing” always means denial of NECESSARY medical services. (It’s no fun accusing Canada of denying UNnecessary services to its citizens.) But in the hands of people like Taylor criticizing opinion makers in this county, “rationing” means ANY denial of medical care, necessary or unnecessary.

In every other context that I can think of offhand, one needn’t define “rationing.” That’s because in other contexts we assume that — or at minimum we do not debate the proposition that — if people want the item in question their wants should be respected. Thus, if a history book says sugar was rationed in World War II, or if a newspaper says Cuba is rationing electricity on hot days, we assume that all of the sugar and electricity demanded was needed, or, at minimum, it doesn’t occur to us to question whether all those slobs on the home front really needed all that sugar, or whether the demand for electricity in Cuba was 80 percent legitimate and 20 percent frivolous. Because rationing means in most other contexts denial of necessary or, at minimum, legitimately demanded goods or services, we ought to insist that it be used that way in the health policy context.

Ergo, we should conduct guerilla warfare against “rationing” when it is used to refer to ANY denial of medical services, needed or not needed. It is utterly unenlightening to say that I have been “rationed” if I asked my doctor for a medical service I didn’t need and my doctor refused to order it. We have perfectly good words to describe what has been done to me that don’t imply that I was denied medicine I needed.

Similarly, it is of no interest to me to learn from Taylor that “rationing” occurs all over the industrialized world. Unless speakers like Taylor present some evidence that the health systems of the French, the Canadians, etc. are routinely denying NECESSARY medical services, I consider it meaningless to say that “rationing” is universal.

Kip

The Case for Public Patents

by DENNIS J. KUCINICH
The Nation

[posted online on June 19, 2003]

The US Centers for Disease Control and Prevention has stated that it wants an exclusive patent on the SARS virus to guarantee the discovery remains in the public domain. That’s the right thing to do. In fact, any eventual vaccine or cure for SARS should also remain in the public domain so access to affordable treatment is possible in the event of a public health emergency. If the patent were held in private hands, it could prevent cooperative efforts among scientists across the globe and complicate efforts to make treatments or vaccines available to the public at large.

Despite, or maybe because of these facts, several laboratories have already filed US patent applications for SARS virus genes, and CDC director Dr. Julie Gerberding said that more than thirty biomedical companies have requested SARS viral samples for their efforts to develop a treatment, vaccine or test. The speed of the patent race is impressive, but this race for profits isn’t good for public health.

What’s the danger if private companies hold the patent? Research is stifled and products are overpriced. Our nation’s experience with prescription drugs should teach us a lesson. We are the only country that grants monopoly rights in the form of patents without asking for anything in return, and as a result, American citizens pay twice as much for the exact same medications as their counterparts across the border. Now faced with global public-health threats like SARS, we must stop foolishly pandering to the pharmaceutical industry and demand balance.

I will soon be introducing legislation that would create a new network of government labs for the research, development and manufacture of pharmaceutical products and biologics. The labs would be responsible for developing new cures and bringing them to the American people in a timely and affordable manner, something that the pharmaceutical industry has glaringly failed to do. Under the leadership of the National Institutes of Health, these government labs would receive direction on public health priorities. Labs would both perform the R&D for new therapies and cures, and form cooperative agreements with educational, research and private institutions.

In return for cooperative agreements to perform R&D, all research data and findings would be made public on a central website, just like the Human Genome Project. When discoveries are made, the patents would be held by the government and nonexclusive licenses would be attached to them. This would allow companies to compete to manufacture pharmaceutical products, just like generic drug companies do now. This would radically bring down the cost of drugs. In 2000, if drugs had not been subject to patent protection, total savings for government and consumers would have been roughly $80 billion.

In addition to making new cures affordable for Americans, this proposal would increase the affordability of cures worldwide. Of the 42 million people with AIDS around the globe, approximately 300,000 are receiving proper treatment. Patents give drug companies monopolies on therapies and cures, thus allowing prices as high as the market will bear. When the price is unbearable, as in poor African nations, it can mean a public health disaster.

Finally, this proposal will improve the quality of R&D by using an “open source” system that makes data and findings publicly available, instead of held secret as proprietary data. This will allow us to tap the collective genius of the world community of scientists. Open source is how the Linux computer operating system has become a competitive force against Microsoft’s Windows. Anyone can download Linux without restriction, and many people catch bugs and submit improvements for the common goal of having the best system for operating our computers.

If smart people across the world do this for computers, can we not do it for the sake of public health? Over time, we have watched the pharmaceutical industry fail on three counts: submitting fewer and fewer drugs to FDA for approval, creating “copycat” drugs instead of truly new cures and raising drug prices higher every year. Our current patent system is what encourages artificial improvements and keeps prices high. It seems clear that one of the keys to public health is establishing public patents. Let’s do it today.

http://www.thenation.com/doc.mhtml?i=20030707&s=kucinich

Medicare made worse

Rube Goldberg would’ve loved the bill now in Congress.
By Theodore Marmor and Jerry L. Mashaw

Not since Medicare was enacted in June 1965 has the program been front-page news so often – and the source of such confusion.

Now, as then, critics claim the reform package is inadequate or misguided, supporters use the language of “acceptable compromise” to soothe worried constituents, and most Americans do not have the foggiest idea what the reform would mean.

In 1965, the enactment of Medicare – a health-care insurance program for people over age 65 – was assured because the Democratic Party had routed the Republicans the year before and Congress was overwhelmingly Democratic. In 2003, changes are again being driven by politics, but this time by the increasing potency of the prescription-drug benefit as a weapon of political warfare that is threatening both Democrats and Republicans if it is not solved.

The Medicare prescription drug benefit issue dominated campaigns for the Senate, the House and, to a lesser extent, the presidency during the last few election cycles. With drug prices escalating and seniors being hit hard, the battle for the votes of the elderly often revolved around this issue.

The result was a confused jumble of Republican and Democratic candidates slamming each other with their competing visions. Now, to take it off the table, they’ve decided to reach a compromise.

To do so, both were prepared to sacrifice crucial features of their traditional policy aspirations. The Democrats agreed to give up a generous drug benefit that would have paid for the lion’s share of pharmaceutical bills. The Republicans agreed to a strategic compromise, no longer insisting that the drug benefit be only for those willing to join private health insurance plans.

The prescription drug coverage that will probably emerge from this Congress will disappoint almost every likely beneficiary. Why? The concessions required of both parties made certain that the available funds for reform could not finance the more generous benefits the parties had advertised.

The Bush administration insisted on a $400-billion budget limit over 10 years, one-half the amount the Democratic reform had presumed. The Republicans had to accept the Democratic demand that benefits be available to all the elderly and disabled, not just those willing to join private insurance plans. All the benefit plans under consideration thus include more eligible recipients than the Republicans had wanted and a much lower budget constraint than the Democrats had presumed.

The result: Either reform would address only catastrophic expenses in the first instance or, to give the impression of wider coverage, it would have convoluted, almost unintelligible, sharing of costs with patients.

We are getting the latter, Rube Goldberg plan. The Senate version of prescription drug coverage features premiums set by federal guidelines, deductibles ($275 a year), co-insurance (50 percent cost-sharing by the recipients up to $4,500 a year) and gaps in coverage (no coverage from $4,500 to $5,800 in drug expenditures).

Few Medicare beneficiaries will be able to make sense of these benefits. They provide neither full protection against financial catastrophe from drug outlays nor the cost savings of a broader plan with workable cost controls.

But is this muddle a step in the right direction, a step likely to lead to revisions over time that would provide adequate coverage at reasonable cost? Medicare’s history of incremental reform in hospital and medical benefits suggests skepticism.

Partial measures on this large a scale typically make incremental adjustments more difficult, because the beneficiaries who are financially able to buy additional gap-filling insurance diminish the squeaky wheels who would pressure Washington for reform. Yet events may force later revision.

The plan is so complex that the government may not be able to implement what Congress passes. And no one knows whether private insurers will believe that participation will be profitable.

The compromise prescription drug bill poised to pass in this Congress fails to achieve anyone’s sensible goals. Whether initial failure will breed later success is far less certain.

Theodore Marmor and Jerry L. Mashaw teach health law and policy at Yale Law School. This piece originally appeared in the Los Angeles Times.

Labor's Health Problem

From The Nation July 7, 2003

By Steve Early

When 3,000 General Electric factory workers and supporters held a contract rally outside GE’s Lynn, Massachusetts, plant on June 7, one question preoccupied the crowd: Would there be another strike over healthcare?

Back in January, these workers–members of Local 201 of the International Union of Electrical Workers-Communications Workers of America (IUE-CWA)–walked out as part of a nationwide protest against higher medical plan co-payments. GE, they discovered, had made $15 billion in 2002, while its healthcare expenses had increased less than the national average. Yet management insisted that all employees pay a bigger share of the cost of their doctor visits, hospital stays, emergency-room care, and prescription drugs.

In a tentative agreement on a new 4-year contract, announced June 15, GE unions were able to blunt the company’s drive for further givebacks, averting a second work stoppage.

But in other workplaces across the nation, healthcare cost shifting continues unabated. Where workers have no union-and 87 percent do not-the burden of medical cost inflation is shifted from management to labor with little fuss for the former, regardless of the financial pain inflicted on the latter. In the unionized sector, industrial strife about health insurance is spreading. Since 2001, state employees in Minnesota, teachers in New Jersey, janitors in Massachusetts, candy makers in Pennsylvania, food processors in Wisconsin, uranium-plant workers in Kentucky, truck builders in Tennessee , and aerospace workers in Texas have all experienced healthcare-related strikes or lockouts-and several are still going on.

Later this summer, major contracts in the telephone and auto industries will be renegotiated. If management tries to reduce health coverage for the hundreds of thousands of workers and pensioners at General Motors, Chrysler, Ford, or Verizon even greater confrontations lie ahead.

How US unions respond to this challenge has important implications for the future of healthcare reform. The actions of organized labor-at the negotiating table or on the picket line-can become a rallying point for all Americans ill-served by our current system of private, job-based medical benefits. When unionized workers resist benefit cuts in a way that projects the broader demand for “healthcare for all,” they help generate pressure for a political solution to the larger problem: how to get affordable coverage for everyone that’s not tied to their age, income, or job. If, however, organized labor chooses piecemeal change and refuses to challenge the link between medical insurance and employment, it will miss the chance to connect with millions of poorly insured and uninsured workers who have no union.

“We need a universal, comprehensive single-payer healthcare program to cover every man, woman and child in the United States,” says new United Auto Workers’ president Ron Gettelfinger, who is pushing Detroit auto makers to support such a plan. “You can’t fix the healthcare crisis in America at any one bargaining table or within any one industry.”

The last time labor had a similar historic opportunity to shape the healthcare reform debate, it made a promising start-and then blew it. In the late 1980s and early 1990s, medical cost inflation was reaching double digits, just like today. Healthcare disputes were causing four out of every five strikes. In monumental battles like the Mine Workers’ yearlong walkout at Pittston, unions that successfully resisted concessions did so by forming alliances with community groups and other unions seeking healthcare reform. Some AFL-CIO affiliates began to do systematic member education about why a tax-supported universal health system like Canada’s would be better for workers than the current patchwork quilt of Medicare, Medicaid and myriad private plans. A number of big unions endorsed single-payer legislation, and through grassroots coalitions like Jobs With Justice, they demonstrated for fundamental change.

Just as this campaign was gaining momentum, the AFL-CIO abruptly switched course. The labor federation embraced Bill and Hillary Clinton’s Health Security Act, an ill-fated scheme that preserved the role of private insurers and was so convoluted that few unions could even explain it to their members. The Clinton bill represented a step backward for labor, mirroring conservative mandated-benefits legislation developed by Richard Nixon in the 1970s to fend off universal coverage based on the model of Medicare. But by 1993, most unions and Democrats were nevertheless rallying around the bill, which sought to shore up a private, job-based benefits system.

Like similar proposals in some states today, Clinton’s approach-obligating employers to pay for a portion of their employees’ health costs-was strikingly out of sync with work-force trends, notably the creation of millions of part-time, temporary and independent-contractor jobs with little or no health coverage. As Marie Gottschalk shows in her incisive study, The Shadow Welfare State: Labor, Business and the Politics of Health Care, labor’s willingness to settle for the Clinton bill reflected crackpot realism at its worst, for the whole “system of employment-based benefits was crumbling just at the moment when the AFL-CIO sought an employer-mandate solution.”

After the Clinton plan flopped, most firms offering health plans devised managed-care fixes of their own, which kept the system’s “crumbling” from becoming a collapse-at least for a few years. But management-imposed limits on employees’ choice of doctors, hospitals and treatment options are no longer restraining costs. Premium increases may reach 15 percent this year, and business wants workers to foot the bill. Private health insurance for 16 million retirees is a primary management target, particularly in troubled industries like steel, where companies blame such “legacy costs” for landing them in or near Chapter 11.

Twenty-five years ago, more than 80 percent of all medium- and large-sized firms offered medical benefits to retirees. Now only 40 percent do–and 1/5 of those firms have eliminated such benefits for new hires. In the ailing steel industry–which has 600,000 pensioners and dependents but only 124,000 ative workers–firms like Bethlehem, LTV, and National Steel plan to save $4.4 billion this year by eliminating retiree health coverage as well. Ex-steel workers will have to pay for it themselves–if they can–out of Social Security or their diminished monthly checks from the Pension Benefit Guaranty Corp., the federal agency now responsible for bankrupt steel makers’ pension liabilities.

Successful union resistance to cost shifting in the past is thus no guarantee that the same group of workers won’t face benefits cuts in the future-even when they retire from a profitable company. Fourteen years ago, a four-month telephone strike preserved fully paid health coverage for then-Nynex workers in the Northeast; now its successor firm, Verizon, wants to cap all retiree medical contributions in bargaining this year-affecting many veterans of the 1989 walk-out who’ve since taken early retirement offers.

The challenge facing unions today is how to broaden their defense of negotiated benefits, for active and retired workers, when a record number of Americans-as many as 75 million at one point during the past two years-have no coverage at all. If struggles against cost shifting are framed narrowly, they will be, in effect, just another special-interest fight against givebacks by workers who already enjoy above-average coverage. However, if resistance to cost shifting is framed in terms of the larger political demand of healthcare for all, these fights could attract much broader labor and community support.

When GE workers struck in January, for example, they saw the big picture. IUE-CWA Local 201 joined forces with Jobs With Justice, as well as senior groups, the state nurses’ association and low-income organizations, to hold a community rally for healthcare reform. Speakers highlighted the medical coverage problems of everyone from immigrant workers to the self-employed to retirees who get bounced around from one collapsing Medicare HMO to another. Pat Lawrence, a member of the Lynn Health Care Task Force, told the crowd, “We’re here to support the GE workers because you will bring attention to those who have no insurance-the elderly, the disadvantaged and the homeless-through your strikes and walkouts.”

Engaging this broader public during benefit disputes requires a candid admission by labor that today’s healthcare crisis can’t be settled at the bargaining table. This is particularly true when a unionized workforce is low-paid, part-time or transient, and lacking strike leverage. In Boston this past fall, despite major community support, a citywide strike by immigrant janitors began to weaken after a month. It ended unhappily for many workers because larger wage increases were sacrificed to pay for expanded medical coverage–a benefit that will only apply to 1,000 part-timers out of 8,000 in the third year of a five-year contract! Given the nature of building services and other low-wage sectors, it’s doubtful that collective bargaining will ever be able to achieve the quality of job-based benefits once enjoyed in traditional bastions of union strength like manufacturing, utilities and construction.

In trucking and the building trades, there’s an additional complication: many union officials don’t want to forsake job-based medical coverage-no mattered how tattered-because they’re in the benefits business themselves. As Gottschalk notes in her account of how labor conservatives have impeded past efforts at comprehensive healthcare reform, over half of all union members are still insured through Taft-Hartley funds, jointly administered by labor and management. Such arrangements have long been defended as a way to promote union loyalty. Unfortunately, by aligning the interests of union officials and insurers, the Taft-Hartley funds give one wing of organized labor what Gottschalk calls “a vested interest in maintaining the status quo.” It also leads to AFL-CIO pronouncements that appear to be a balancing act between single-payer advocates, at the grassroots, and union affiliates more inclined to partnerships with employers that would preserve and extend job-based coverage.

Such internal tensions produce labor-backed legislative proposals-now being pushed in about ten states-that are a very mixed bag. In Ohio, leading unions and the state labor federation are uniting with healthcare professionals and community groups to build the Single Payer Action Network, a coalition seeking a comprehensive solution to the state’s healthcare crisis. In California, however, the AFL-CIO threw its weight behind a far less ambitious pay-or-play bill. This would require employers to offer their workers health insurance or pay into a state-operated pool that would provide alternative coverage. The problem with “pay or play,” says Dan Hodges, chair of California’s Health Care for All (HCA) is that it “creates a two-tiered system in which people covered through their jobs might have adequate benefits but those who get public coverage will receive an explicitly bare-bones package. Since those with the public package will more likely be people of color, the two-tiered system will have a racial character as well.” HCA and the militant California Nurses Association support an alternative bill, which would establish universal, publicly funded coverage.

The finer points of such policy debates are lost on most union members. That’s because unions tend to leave healthcare strategy and lobbying in the hands of experts. In contract talks, negotiators desperately seek new cost-containment schemes to sugarcoat medical plan changes. Meanwhile, labor policy wonks organize events like the current series of AFL-CIO Regional Health Care Conferences-open only to union reps and too narrowly focused on “recent best practice given the current climate.” This top-down, technocratic approach fails to address the need for massive workplace education and debate about healthcare reform. Because that’s been so neglected lately, most trade unionists still think of universal healthcare as something that would benefit someone else. The term “single payer” often draws blank stares [see David Corn, “Healthcare for All-Now,” January 6]. And the concept of a government-run insurance plan strikes many union members as a formula for longer waits, inferior care and higher taxes-rather than real security and relief from out-of-pocket costs.

One group trying to change “the current climate” through rank-and-file education and cross-union activity is Jobs With Justice. On June 5, the group sponsored a statewide Health Care Day of Action in Massachusetts, endorsed by more than fifty unions and community groups. Participating organizations distributed more than 65,000 stickers demanding “Health Care for All” and did the mobilization necessary to get workers-from nurses facing staffing cuts and state workers facing benefits givebacks to utility workers facing slashed retirement coverage-to wear them on the job. This workplace activity was accompanied by informational picketing and rallies calling for a healthcare system that “covers everyone, is publicly financed, and saves money by eliminating bureaucratic waste.”

The most active participants were workers at GE and Verizon who have been-or may soon be-on strike over cost shifting. If 80,000 members of CWA and the International Brotherhood of Electrical workers (IBEW) walk-out in August at Verizon, this could lead to termination of their benefit coverage–a further lesson on why healthcare shouldn’t be controlled by employers. “When a boss cancels everyone’s insurance during a work stoppage, it’s a teachable moment,” says Rand Wilson, a Service Employees International Union staffer in Boston. “It really gets people thinking about what’s wrong with having medical coverage tied to their job. The financial risks and penalties of getting laid off, changing jobs, working part time or retiring early-not to mention going on strike-would all be greatly reduced if we had a Canadian-style system.”

Other unions, like the United Electrical Workers, are following up Health Care Action Day with bargaining table challenges to management. UE developed an Employer Pledge that offers two choices: Either join the union in lobbying for real healthcare reform or continue to pick up the tab for the present for-profit system, with its increasingly high costs and shabby care. In Canada, where labor is fighting to improve a thirty-year-old Medicare-for-all program, the Canadian Auto Workers won business backing for the single-payer approach. In a recent letter signed jointly with the union, GM, Ford and Daimler/Chrysler demanded that Canada’s “publicly funded health care system be preserved and renewed, based on its existing principles of universality, accessibility, portability, comprehensiveness, and public administration.”

Jobs With Justice didn’t attract such corporate support for Health Care Action Day. But the diversity of its labor endorsers shows how widespread conflict over cost shifting has become, in both the private and public sectors. As such disputes intensify, more trade unionists are reaching the conclusion that incremental private-sector solutions aren’t the answer. As Colin Gordon concludes in Dead on Arrival: The Politics of Health Care in Twentieth Century America, “employment-based health insurance, floated as an alternative to public insurance in the middle years of the last century, is now little more than a leaky life raft for politicians clinging to budget-neutral solutions and workers with nowhere else to swim.”

Growing budget deficits, legislative gridlock and huge military expenditures create a daunting context for new healthcare initiatives that would expand public coverage at the state or federal level. Nevertheless, mounting workplace attacks on employee benefits are forcing unions to fight back in a more political way for what workers really need, not just what some leaders think they can get. This represents an important first step toward revitalizing labor involvement in healthcare reform–and projecting unions as a champion of all workers, not just those with a membership card.

(Steve Early is an International Representative for the Communications Workers of America and Jobs with Justice activist. Based in Boston, he has been involved in health care bargaining and strikes at manufacturing and telecom firms.)

Labor’s Health Problem

From The Nation July 7, 2003

By Steve Early

When 3,000 General Electric factory workers and supporters held a contract rally outside GE’s Lynn, Massachusetts, plant on June 7, one question preoccupied the crowd: Would there be another strike over healthcare?

Back in January, these workers–members of Local 201 of the International Union of Electrical Workers-Communications Workers of America (IUE-CWA)–walked out as part of a nationwide protest against higher medical plan co-payments. GE, they discovered, had made $15 billion in 2002, while its healthcare expenses had increased less than the national average. Yet management insisted that all employees pay a bigger share of the cost of their doctor visits, hospital stays, emergency-room care, and prescription drugs.

In a tentative agreement on a new 4-year contract, announced June 15, GE unions were able to blunt the company’s drive for further givebacks, averting a second work stoppage.

But in other workplaces across the nation, healthcare cost shifting continues unabated. Where workers have no union-and 87 percent do not-the burden of medical cost inflation is shifted from management to labor with little fuss for the former, regardless of the financial pain inflicted on the latter. In the unionized sector, industrial strife about health insurance is spreading. Since 2001, state employees in Minnesota, teachers in New Jersey, janitors in Massachusetts, candy makers in Pennsylvania, food processors in Wisconsin, uranium-plant workers in Kentucky, truck builders in Tennessee , and aerospace workers in Texas have all experienced healthcare-related strikes or lockouts-and several are still going on.

Later this summer, major contracts in the telephone and auto industries will be renegotiated. If management tries to reduce health coverage for the hundreds of thousands of workers and pensioners at General Motors, Chrysler, Ford, or Verizon even greater confrontations lie ahead.

How US unions respond to this challenge has important implications for the future of healthcare reform. The actions of organized labor-at the negotiating table or on the picket line-can become a rallying point for all Americans ill-served by our current system of private, job-based medical benefits. When unionized workers resist benefit cuts in a way that projects the broader demand for “healthcare for all,” they help generate pressure for a political solution to the larger problem: how to get affordable coverage for everyone that’s not tied to their age, income, or job. If, however, organized labor chooses piecemeal change and refuses to challenge the link between medical insurance and employment, it will miss the chance to connect with millions of poorly insured and uninsured workers who have no union.

“We need a universal, comprehensive single-payer healthcare program to cover every man, woman and child in the United States,” says new United Auto Workers’ president Ron Gettelfinger, who is pushing Detroit auto makers to support such a plan. “You can’t fix the healthcare crisis in America at any one bargaining table or within any one industry.”

The last time labor had a similar historic opportunity to shape the healthcare reform debate, it made a promising start-and then blew it. In the late 1980s and early 1990s, medical cost inflation was reaching double digits, just like today. Healthcare disputes were causing four out of every five strikes. In monumental battles like the Mine Workers’ yearlong walkout at Pittston, unions that successfully resisted concessions did so by forming alliances with community groups and other unions seeking healthcare reform. Some AFL-CIO affiliates began to do systematic member education about why a tax-supported universal health system like Canada’s would be better for workers than the current patchwork quilt of Medicare, Medicaid and myriad private plans. A number of big unions endorsed single-payer legislation, and through grassroots coalitions like Jobs With Justice, they demonstrated for fundamental change.

Just as this campaign was gaining momentum, the AFL-CIO abruptly switched course. The labor federation embraced Bill and Hillary Clinton’s Health Security Act, an ill-fated scheme that preserved the role of private insurers and was so convoluted that few unions could even explain it to their members. The Clinton bill represented a step backward for labor, mirroring conservative mandated-benefits legislation developed by Richard Nixon in the 1970s to fend off universal coverage based on the model of Medicare. But by 1993, most unions and Democrats were nevertheless rallying around the bill, which sought to shore up a private, job-based benefits system.

Like similar proposals in some states today, Clinton’s approach-obligating employers to pay for a portion of their employees’ health costs-was strikingly out of sync with work-force trends, notably the creation of millions of part-time, temporary and independent-contractor jobs with little or no health coverage. As Marie Gottschalk shows in her incisive study, The Shadow Welfare State: Labor, Business and the Politics of Health Care, labor’s willingness to settle for the Clinton bill reflected crackpot realism at its worst, for the whole “system of employment-based benefits was crumbling just at the moment when the AFL-CIO sought an employer-mandate solution.”

After the Clinton plan flopped, most firms offering health plans devised managed-care fixes of their own, which kept the system’s “crumbling” from becoming a collapse-at least for a few years. But management-imposed limits on employees’ choice of doctors, hospitals and treatment options are no longer restraining costs. Premium increases may reach 15 percent this year, and business wants workers to foot the bill. Private health insurance for 16 million retirees is a primary management target, particularly in troubled industries like steel, where companies blame such “legacy costs” for landing them in or near Chapter 11.

Twenty-five years ago, more than 80 percent of all medium- and large-sized firms offered medical benefits to retirees. Now only 40 percent do–and 1/5 of those firms have eliminated such benefits for new hires. In the ailing steel industry–which has 600,000 pensioners and dependents but only 124,000 ative workers–firms like Bethlehem, LTV, and National Steel plan to save $4.4 billion this year by eliminating retiree health coverage as well. Ex-steel workers will have to pay for it themselves–if they can–out of Social Security or their diminished monthly checks from the Pension Benefit Guaranty Corp., the federal agency now responsible for bankrupt steel makers’ pension liabilities.

Successful union resistance to cost shifting in the past is thus no guarantee that the same group of workers won’t face benefits cuts in the future-even when they retire from a profitable company. Fourteen years ago, a four-month telephone strike preserved fully paid health coverage for then-Nynex workers in the Northeast; now its successor firm, Verizon, wants to cap all retiree medical contributions in bargaining this year-affecting many veterans of the 1989 walk-out who’ve since taken early retirement offers.

The challenge facing unions today is how to broaden their defense of negotiated benefits, for active and retired workers, when a record number of Americans-as many as 75 million at one point during the past two years-have no coverage at all. If struggles against cost shifting are framed narrowly, they will be, in effect, just another special-interest fight against givebacks by workers who already enjoy above-average coverage. However, if resistance to cost shifting is framed in terms of the larger political demand of healthcare for all, these fights could attract much broader labor and community support.

When GE workers struck in January, for example, they saw the big picture. IUE-CWA Local 201 joined forces with Jobs With Justice, as well as senior groups, the state nurses’ association and low-income organizations, to hold a community rally for healthcare reform. Speakers highlighted the medical coverage problems of everyone from immigrant workers to the self-employed to retirees who get bounced around from one collapsing Medicare HMO to another. Pat Lawrence, a member of the Lynn Health Care Task Force, told the crowd, “We’re here to support the GE workers because you will bring attention to those who have no insurance-the elderly, the disadvantaged and the homeless-through your strikes and walkouts.”

Engaging this broader public during benefit disputes requires a candid admission by labor that today’s healthcare crisis can’t be settled at the bargaining table. This is particularly true when a unionized workforce is low-paid, part-time or transient, and lacking strike leverage. In Boston this past fall, despite major community support, a citywide strike by immigrant janitors began to weaken after a month. It ended unhappily for many workers because larger wage increases were sacrificed to pay for expanded medical coverage–a benefit that will only apply to 1,000 part-timers out of 8,000 in the third year of a five-year contract! Given the nature of building services and other low-wage sectors, it’s doubtful that collective bargaining will ever be able to achieve the quality of job-based benefits once enjoyed in traditional bastions of union strength like manufacturing, utilities and construction.

In trucking and the building trades, there’s an additional complication: many union officials don’t want to forsake job-based medical coverage-no mattered how tattered-because they’re in the benefits business themselves. As Gottschalk notes in her account of how labor conservatives have impeded past efforts at comprehensive healthcare reform, over half of all union members are still insured through Taft-Hartley funds, jointly administered by labor and management. Such arrangements have long been defended as a way to promote union loyalty. Unfortunately, by aligning the interests of union officials and insurers, the Taft-Hartley funds give one wing of organized labor what Gottschalk calls “a vested interest in maintaining the status quo.” It also leads to AFL-CIO pronouncements that appear to be a balancing act between single-payer advocates, at the grassroots, and union affiliates more inclined to partnerships with employers that would preserve and extend job-based coverage.

Such internal tensions produce labor-backed legislative proposals-now being pushed in about ten states-that are a very mixed bag. In Ohio, leading unions and the state labor federation are uniting with healthcare professionals and community groups to build the Single Payer Action Network, a coalition seeking a comprehensive solution to the state’s healthcare crisis. In California, however, the AFL-CIO threw its weight behind a far less ambitious pay-or-play bill. This would require employers to offer their workers health insurance or pay into a state-operated pool that would provide alternative coverage. The problem with “pay or play,” says Dan Hodges, chair of California’s Health Care for All (HCA) is that it “creates a two-tiered system in which people covered through their jobs might have adequate benefits but those who get public coverage will receive an explicitly bare-bones package. Since those with the public package will more likely be people of color, the two-tiered system will have a racial character as well.” HCA and the militant California Nurses Association support an alternative bill, which would establish universal, publicly funded coverage.

The finer points of such policy debates are lost on most union members. That’s because unions tend to leave healthcare strategy and lobbying in the hands of experts. In contract talks, negotiators desperately seek new cost-containment schemes to sugarcoat medical plan changes. Meanwhile, labor policy wonks organize events like the current series of AFL-CIO Regional Health Care Conferences-open only to union reps and too narrowly focused on “recent best practice given the current climate.” This top-down, technocratic approach fails to address the need for massive workplace education and debate about healthcare reform. Because that’s been so neglected lately, most trade unionists still think of universal healthcare as something that would benefit someone else. The term “single payer” often draws blank stares [see David Corn, “Healthcare for All-Now,” January 6]. And the concept of a government-run insurance plan strikes many union members as a formula for longer waits, inferior care and higher taxes-rather than real security and relief from out-of-pocket costs.

One group trying to change “the current climate” through rank-and-file education and cross-union activity is Jobs With Justice. On June 5, the group sponsored a statewide Health Care Day of Action in Massachusetts, endorsed by more than fifty unions and community groups. Participating organizations distributed more than 65,000 stickers demanding “Health Care for All” and did the mobilization necessary to get workers-from nurses facing staffing cuts and state workers facing benefits givebacks to utility workers facing slashed retirement coverage-to wear them on the job. This workplace activity was accompanied by informational picketing and rallies calling for a healthcare system that “covers everyone, is publicly financed, and saves money by eliminating bureaucratic waste.”

The most active participants were workers at GE and Verizon who have been-or may soon be-on strike over cost shifting. If 80,000 members of CWA and the International Brotherhood of Electrical workers (IBEW) walk-out in August at Verizon, this could lead to termination of their benefit coverage–a further lesson on why healthcare shouldn’t be controlled by employers. “When a boss cancels everyone’s insurance during a work stoppage, it’s a teachable moment,” says Rand Wilson, a Service Employees International Union staffer in Boston. “It really gets people thinking about what’s wrong with having medical coverage tied to their job. The financial risks and penalties of getting laid off, changing jobs, working part time or retiring early-not to mention going on strike-would all be greatly reduced if we had a Canadian-style system.”

Other unions, like the United Electrical Workers, are following up Health Care Action Day with bargaining table challenges to management. UE developed an Employer Pledge that offers two choices: Either join the union in lobbying for real healthcare reform or continue to pick up the tab for the present for-profit system, with its increasingly high costs and shabby care. In Canada, where labor is fighting to improve a thirty-year-old Medicare-for-all program, the Canadian Auto Workers won business backing for the single-payer approach. In a recent letter signed jointly with the union, GM, Ford and Daimler/Chrysler demanded that Canada’s “publicly funded health care system be preserved and renewed, based on its existing principles of universality, accessibility, portability, comprehensiveness, and public administration.”

Jobs With Justice didn’t attract such corporate support for Health Care Action Day. But the diversity of its labor endorsers shows how widespread conflict over cost shifting has become, in both the private and public sectors. As such disputes intensify, more trade unionists are reaching the conclusion that incremental private-sector solutions aren’t the answer. As Colin Gordon concludes in Dead on Arrival: The Politics of Health Care in Twentieth Century America, “employment-based health insurance, floated as an alternative to public insurance in the middle years of the last century, is now little more than a leaky life raft for politicians clinging to budget-neutral solutions and workers with nowhere else to swim.”

Growing budget deficits, legislative gridlock and huge military expenditures create a daunting context for new healthcare initiatives that would expand public coverage at the state or federal level. Nevertheless, mounting workplace attacks on employee benefits are forcing unions to fight back in a more political way for what workers really need, not just what some leaders think they can get. This represents an important first step toward revitalizing labor involvement in healthcare reform–and projecting unions as a champion of all workers, not just those with a membership card.

(Steve Early is an International Representative for the Communications Workers of America and Jobs with Justice activist. Based in Boston, he has been involved in health care bargaining and strikes at manufacturing and telecom firms.)

R. Mueller responds on the hidden costs of uninsurance

Rudolph Mueller, M.D., author of “As Sick As It Gets,” responds to the Institute of Medicine report on the hidden costs of uninsurance:

It’s interesting to see the IOM report showing that “the best available estimate of the value of uncompensated health care services provided to persons who lack health insurance … is roughly $35 billion annually…and the best estimate…of the diminished health and shorter life spans of Americans who lack health insurance is between $65 and $130 billion for each year of health insurance forgone.” Also estimates “of the cost of the additional health care …to the uninsured once they became insured range from $34 to $69 billion per year”. At least the report shows that lack of health coverage to the uninsured ends up costing society overall more than providing insurance to the uninsured. However I think the IOM significantly underestimated the problem.

What the IOM report failed to report was the extra medical costs sustained in our society from people being underinsured or also previously uninsured. I have seen many patients previously uninsured or underinsured who become seriously ill from lack of timely and affordable medical care. If they survive, they frequently fall into poverty and qualify for Medicaid. Should they live long enough, they reach or continue on in Medicare sicker and more costly to care for than if they had been previously “well insured” or “universally covered”. I now call these additional costs and illnesses “Care Denial Induced Effects” or “CDIE,” and in the book “As Sick As It Gets” these additional direct medical costs reached $160 billion in 1998. The costs of CDIE in 2003 are probably many billions more considering millions of even more Americans are uninsured and underinsured since 1998.

The IOM also recently estimated “18,000” young uninsured adults die from lack of health insurance. Again, I think they have significantly under estimated the losses in our nation. When one compares the potential years of life lost before age 70 in the US vs. the average of the next nine largest wealthy democracies, nearly 200,000 Americans die prematurely every year more than those wealthy nations that have had universal health systems in place for decades.

The people of the United States continue to suffer enormously high medical costs and only mediocre medical outcomes relative to the other wealthy nations. Unfortunately these costs to our society and the human losses are even much greater than what the IOM courageously reports.

Dr. Rudy Mueller

Physician Proposes Solution to America's Failed Health Care System

FOR IMMEDIATE RELEASE
June 23, 2003

Contact:
Alan Hood
Tel: (717)267-0867
achood@supernet.com

Peter van Wageningen
Tel: (603)-256-898
hoodbook@sover.net

CHAMBERSBURG, PA, JUNE 20, 2003� In Health Care Meltdown: Confronting Our Myths and Fixing Our Failing System, Dr. Bob LeBow debunks the myths that sustain our current health care morass. LeBow shows how a publicly funded, privately administered National Health Insurance system would do the job better and for less.

�Lack of affordable health insurance is stripping people of their dignity,� says LeBow. �Tax credits, vouchers, federal grants, and subsidies fail. Americans have had enough. They deserve better. Health Care Meltdown proposes the economically viable solution to our nation�s universal crisis.�

Shortly after completing this book, Dr. LeBow was paralyzed in a cycling accident. His own dealings with the unconscionable obstacles the current health care system presents to injured and ill people brought the message home forcefully to his family, friends, and colleagues in the medical profession. After a year of rehabilitation, he has emerged with a stronger determination to educate Americans about the benefits of National Health Insurance.

A graduate of Harvard College and the Johns Hopkins School of Medicine, Robert H. LeBow, M.D., MPH, has been the Medical Director of a community health center in Idaho for more than 25 years. He has devoted most of his career to addressing the problem of health care injustice in the United States. For two years he served as president of Physicians for a National Health Program (PNHP), the organization that advocates for National Health Insurance.

LeBow resides in Pennsylvania with his wife, Gail. Both are available for interviews.

Health Care Meltdown by Robert H. LeBow, M.D.; Hardcover, 6� x 9�, 304 pages; bibliography, glossary, index; ISBN: 0-911469-22-2 ; $25.00; Publication: July 2003

�Available at Bookstores and Online Now�

GROUP SALES� Health Care Meltdown can be ordered directly from the publisher for $25.00 plus $3.50 for postage and handling. Send check or Visa/Mastercard information to Alan C. Hood & Co., Inc., PO Box 775, Chambersburg, PA 17201. Pennsylvania residents must add sales tax. Ask about Group Sales Discount Rates.

Physician Proposes Solution to America’s Failed Health Care System

FOR IMMEDIATE RELEASE
June 23, 2003

Contact:
Alan Hood
Tel: (717)267-0867
achood@supernet.com

Peter van Wageningen
Tel: (603)-256-898
hoodbook@sover.net

CHAMBERSBURG, PA, JUNE 20, 2003� In Health Care Meltdown: Confronting Our Myths and Fixing Our Failing System, Dr. Bob LeBow debunks the myths that sustain our current health care morass. LeBow shows how a publicly funded, privately administered National Health Insurance system would do the job better and for less.

�Lack of affordable health insurance is stripping people of their dignity,� says LeBow. �Tax credits, vouchers, federal grants, and subsidies fail. Americans have had enough. They deserve better. Health Care Meltdown proposes the economically viable solution to our nation�s universal crisis.�

Shortly after completing this book, Dr. LeBow was paralyzed in a cycling accident. His own dealings with the unconscionable obstacles the current health care system presents to injured and ill people brought the message home forcefully to his family, friends, and colleagues in the medical profession. After a year of rehabilitation, he has emerged with a stronger determination to educate Americans about the benefits of National Health Insurance.

A graduate of Harvard College and the Johns Hopkins School of Medicine, Robert H. LeBow, M.D., MPH, has been the Medical Director of a community health center in Idaho for more than 25 years. He has devoted most of his career to addressing the problem of health care injustice in the United States. For two years he served as president of Physicians for a National Health Program (PNHP), the organization that advocates for National Health Insurance.

LeBow resides in Pennsylvania with his wife, Gail. Both are available for interviews.

Health Care Meltdown by Robert H. LeBow, M.D.; Hardcover, 6� x 9�, 304 pages; bibliography, glossary, index; ISBN: 0-911469-22-2 ; $25.00; Publication: July 2003

�Available at Bookstores and Online Now�

GROUP SALES� Health Care Meltdown can be ordered directly from the publisher for $25.00 plus $3.50 for postage and handling. Send check or Visa/Mastercard information to Alan C. Hood & Co., Inc., PO Box 775, Chambersburg, PA 17201. Pennsylvania residents must add sales tax. Ask about Group Sales Discount Rates.

Lawmakers have strong case for health reform

The Orange County Register
June 22, 2003
Commentary

Lawmakers have strong case for health reform

By Dr. Don McCanne
The San Juan Capistrano resident is President of Physicians for a National Health Program.

Everyone agrees that health-care costs are out of control and that something must be done to ensure access to health care for the growing numbers of uninsured. Although the California Legislature is grappling with these issues, several recent opinion articles in The Orange County Register have protested that the public should not want the government involved in reform, and that we do not want any system of rationing that comprehensive reform might entail.

These opponents of reform are too late. We already have both. Our government spends more of our taxes on health care than is spent in any other industrialized nation. But we are receiving the worst value, primarily because of the profound waste in the private sector. The megabureaucracies of the private plans create an administrative burden that wastes more than enough funds to pay for health care for all of the uninsured. We need new government policies that would redirect health-care dollars to patient care instead.

And rationing? Other nations ration by limiting the capacity of their health-care delivery systems. Since they spend far less than we do, they sometimes end up with delays for elective services such as C-T or MRI scans. Those nations need to spend more to improve capacity. But in the United States we already have adequate capacity in our system.

Nevertheless, we have the worst rationing of all nations, and that is because we ration by the ability to pay for health care. Tens of millions of our citizens potentially go without essential medical care simply because they are uninsured and cannot afford to pay for it. We are the only nation that forces families into bankruptcy court because of medical bills.

This is unnecessary. We can provide access to comprehensive care for everyone without spending one more penny on health care.

Last year, California completed a detailed study of nine models of health-care reform.

Two general concepts evolving from this study have attracted the attention of the legislators.

SB 2 (Burton-Speier) would build on our current system by requiring employers to provide insurance for all employees. Although this is the most expensive proposal studied, primarily because it leaves in place the administrative excesses of our current system, it is considered the least disruptive.

Two bills in the Assembly provide variations of this proposal.

SB 921 (Kuehl) would replace all insurers and other funding sources with a single public program similar to Medicare, but with more comprehensive benefits. Not only is Medicare our most popular insurance program, it also has the lowest administrative costs, and it has been the most effective in limiting health-care cost increases. The study showed that not only would a single insurance program provide comprehensive benefits for everyone, it actually would reduce overall health-care spending for Californians.

The instability caused by rising health-care costs and the increasing numbers of uninsured make reform imperative. The debate is no longer over whether we want the government involved; it already is. The debate now is over which public policies we wish our Legislature to enact to ensure that we are receiving maximum value for our public and private health-care dollars. All Californians need to become informed participants in this debate.

http://www2.ocregister.com/ocrweb/ocr/article.do?id=44682&section=COMMENTARY&subsection=COMMENTARY_COLUMNS&year=2003&month=6&day=22

The safety net is not a substitute for insurance

The Urban Institute
April 2003
Does the Health Care Safety Net Narrow the Access Gap?
By Brenda C. Spillman, Stephen Zuckerman & Bowen Garrett

The empirical results in this paper find little variation in utilization and access among low- income adults by local safety net conditions, but very large differences by insurance status, after controlling for several individual demographic characteristics. In addition, use and access differences between insured and uninsured adults were found to have relatively little relation to local safety net conditions. These results suggest that expanding insurance coverage would be a more effective tool for increasing access to health care among low-income adults than expanding the safety net.

In other respects as well, the safety net is not a substitute for insurance, since insurance coverage confers greater access to the full range of health care providers. As noted earlier, the limited capacity of specialized safety net providers makes it inevitable that improving access requires participation of all providers as well as support for safety net providers. A recent study based on a survey of medical directors of community health centers found that while they generally reported confidence in their ability to provide needed primary care to all of their patients, they reported far greater obstacles in helping their uninsured patients obtain additional services their clinics could not provide.

Our findings suggest that expanded direct support for key safety net facilities, such as the increased support for community health centers in the Bush administration’s budget proposal, is unlikely to be an effective policy tool for narrowing access and utilization gaps between the insured and the uninsured.

http://www.urban.org/UploadedPDF/310668_DP03-02.pdf

Comment: Safety net institutions are extremely important, but comprehensive health insurance is essential. Current innovative private health insurance products that provide flexibility in benefits and cost-sharing actually threaten affordability of care, and thereby may fail to adequately reduce access and utilization gaps. It is unlikely that the management of the private health plans would make the same effort to close these gaps as would the public administrators of a program of social insurance.

Younger adults are uninformed on Medicare, but they do care

The Henry J. Kaiser Foundation
Harvard School of Public Health
Press Release
June 19, 2003
New Survey Finds Most Seniors Favor Reforms that Build on Existing Medicare
Program, But Younger Adults Are More Favorable Toward Private Plans

Eighty percent of seniors have a favorable impression of Medicare and more than six in ten (62%) say the program is well-run. About seven in ten (72%) of those ages 65 and over feel seniors should continue to get their health insurance through Medicare rather than through private plans (16%), and 63% favor offering prescription drug coverage through Medicare over offering all benefits including drug coverage through private plans (23%). When it comes to their own insurance coverage, seniors are far more likely to prefer the current Medicare program over private plans (63% vs. 19%).

Younger adults 18-64 are less likely than seniors to have a favorable view of Medicare and to think that it is well-run: 45% of those under 65 say their view is favorable, 23% unfavorable, and one-third don’t know; and just over a third (36%) say it is well-run (31% say not well-run and 32% don’t know). They are generally less familiar with Medicare, with more than half (55%) of adults ages 18-64 incorrectly saying Medicare covers prescription drugs (vs. 16% of seniors) and less than three in ten (28%) knowing that people on Medicare can choose any doctor or hospital they want (vs. 73% of seniors).

A majority of the public (54%) favors a plan that provides seniors with a benefit that is as generous as what most workers get even if it costs taxpayers more, while 38% choose a less generous benefit at a lower government cost. After hearing arguments against their initial position (would you still favor if it meant giving up further tax cuts; still oppose if some seniors would not fill prescriptions because of the cost), 65% favor the more generous plan and 22% the cheaper plan.

http://www.kff.org/content/2003/20030619a/Final_Medicare_Survey_Release.pdf

Comment: You cannot have escaped the news that this latest KFF/Harvard-Blendon poll has demonstrated that most seniors prefer the traditional Medicare program, whereas younger individuals would prefer private plans. But the comments above, selected from their press release, reveal a couple of very important facts.

Younger adults express their opinions based on inadequate and even incorrect perceptions of the Medicare program. Another point is that when they are provided with merely a short phrase that improves their understanding of the policy issues, they change their opinion to one more supportive of beneficial reform.

Although seniors do have a better understanding of the Medicare program, it is still surprising to see that a small but significant minority still don’t understand that the traditional Medicare program does offer free choice of providers and that outpatient prescription drugs are not a benefit of the program.

A well-functioning democracy requires an informed electorate. With solid facts, they’ll do the right thing. We have a lot of work to do.