Health care

Is it true that UAW members never pay a penny for health care?

No. The package of health benefits available to UAW-represented workers in the auto industry includes a traditional Blue Cross Blue Shield insurance option. This plan does not pay for routine doctor office visits (although tests and laboratory costs associated with the visit may be covered). Surgical and hospital services are fully covered.

UAW members may also elect HMO or PPO health care options, which require less out-of-pocket expenses but limit the choice of health care providers. HMO plans typically require copays for doctor visits ranging from $0 to $10; PPO plans require a 30 percent to 50 percent copay for office visits.

Newly hired workers covered by UAW contracts at the Big Three, Delphi and Visteon receive health care benefits after seven months on the job; they are required to join HMOs for the first 48 months of health care eligibility and may then enroll in any plan.

What types of health care benefits are available to UAW members?

Employer-paid health care for UAW members in the auto industry includes a comprehensive range of services, whether the benefits are provided through an HMO, a PPO or a traditional Blue Cross Blue Shield plan.

Covered services for active and retired members include hospital, surgical and medical services; prescription drugs; dental care; vision care, and hearing aids.

Can the issue of rising health care costs be solved at the bargaining table?

No. America’s health care crisis is a national problem that requires a national solution. It cannot be fully resolved within any one industry, or during any set of labor negotiations.

The challenge of providing quality health care in the face of rising costs is by no means restricted to UAW employers in the auto industry. In fact, large auto industry employers are under somewhat less cost pressure than smaller businesses, because the sheer volume of their purchases in the health care marketplace allows greater leverage to negotiate more reasonable prices from health care providers.

The fact that large employers can achieve savings when paying for health care suggests where the true solution to this problem lies: a universal, single-payer health insurance program covering every woman, man and child in the United States.

A universal program would be much fairer than our current system, which is a national disgrace. More than 41 million people, including 9 million children, have no health insurance whatsoever. Universal, single-payer health care would also be more cost-efficient. Those presently uninsured would have access to lower-cost preventive services, instead of relying on emergency room care, the most expensive form of medical treatment.

In addition, under a universal health insurance system, a single payer could exercise much more effective cost control than is possible under the present patchwork of government, industry and personal health insurance plans.

The United States is the only major industrialized nation in which the responsibility for providing health care benefits rests primarily with employers. Other nations address this issue through universal systems, funded by broad tax revenues. Industrialized nations with universal health care achieve quality care while spending significantly less of their gross domestic product (GDP) on health expenditures than we do in the United States.

Health care spending as a share of gross domestic product

Source: Organization for Economic Cooperation and Development, 2000.

In 2000, according to the Organization for Economic Cooperation and Development, the United States was spending 13 percent of its GDP on health care, more than any other industrialized nation. By 2002 health care spending in the United States had grown to 14 percent of GDP.

The tax-funded universal systems used in other industrialized nations result in cost savings and efficiencies, and also spread the cost of paying for health care more evenly to all stakeholders. In the United States, employers who provide quality health insurance for active and retired workers are penalized in the marketplace when they face competitors who do not provide such benefits.

Is there anything less than a total reform of the U.S. health care system that can address rising health care costs?

Yes. Although the UAW continues to believe that a universal, single-payer system is the best way to ensure quality, cost-effective coverage, there are other measures that would be helpful in the near term.

On the state level, our experience in the auto industry shows that medical costs are lower in states that have Certificate of Need (CON) legislation. Such measures require hospitals to apply to an impartial government panel for authority to purchase major new equipment or undergo major facility expansion. Such procedures reduce unnecessary expenditures by providers. It is unnecessary, for example, for a dozen different hospitals in one community to each have an MRI machine, if the medical needs of the community can be met with just two or three machines.

By holding down expenditures, Certificate of Need procedures hold down medical costs. Studies undertaken by General Motors, Ford and DaimlerChrysler demonstrate that health care expenditures per employee are significantly lower in states with CON legislation, such as Michigan and New York, than in states without it, such as Indiana, Ohio and Wisconsin.

DaimlerChrysler Health Care Costs

Source: DaimlerChrysler, Testimony for Economic Alliance of Michigan, July 2002. Age, gender and geographically adjusted 2000 costs, using Syracuse as a base. General Motors and Ford also report significant savings in Certificate of Need states.

Federal action is required on the issue of prescription drugs. The UAW supports prompt enactment of a Medicare prescription drug bill that will provide comprehensive benefits to all seniors through the traditional Medicare program. This will help all senior citizens. It will also relieve part of the cost burden now being shouldered by the Big Three, Delphi and Visteon, and help to level the playing field with their competitors.

We are troubled by a number of aspects of the prescription drug legislation moving through Congress as of this writing. The benefits are much too modest, would leave seniors with large out-of-pocket costs and are delivered through unreliable private insurance carriers. Worst of all, the bills discriminate against retirees who already have prescription drug coverage through an employer-sponsored plan, providing them with less benefits than other retirees. The UAW is urging Congress to correct these deficiencies as the legislation moves forward.

Has the escalation of health care premiums in the last few years impacted the UAW’s ability to negotiate health benefits for its members?

Yes. Many employers have tried to “solve” the problem of rising health care premiums by attempting to shift costs to workers while reducing covered benefits. Retiree health care benefits are also a frequent target as some employers seek to renege on promises made over decades.

Cost shifting is frequently cited as a means to reduce utilization of health care, the idea being that if people have to pay more to go to the doctor, they will do so less often. This approach assumes that large numbers of people are visiting doctors and hospitals to demand unnecessary medical procedures, an assumption which flies in the face of available data and real life experience.

In fact, in any given year, a relatively small portion of a health plan’s population generates the majority of health care costs. Sick people should not be penalized for seeking the health care they need, nor should others be discouraged from seeking preventive services when appropriate.

Attempting to shift rising health care costs onto the backs of consumers ignores one of the most basic realities of health care economics: the widespread differences in provider practices throughout the country, regardless of benefit design. For instance, the adjusted, per-person health care costs for autoworkers vary up to 2½ times depending on what city they reside in. Similar geographic discrepancies have been found in studies of the Medicare population.

In both the short and the long run, addressing these disparities will have a much greater impact on controlling health care costs than trying to force workers to pay more for health care.

The UAW will defend its health care programs while simultaneously working to reduce unwarranted variations in medical practice in those communities where we can make an impact. We continue to believe that quality health care can be cost-effective, and that cost-effective health care need not compromise on quality.

How can cost controls be achieved without compromising the quality of health care?

Quality health care does not mean endless doctor visits, endless procedures and a medicine cabinet full of prescriptions. It means providing the right level of care and the right medicines to the right person at the right time. Health care providers who can achieve this will take better care of their patients – and control costs – at the same time.

The UAW continues to raise the bar on quality and cost-effectiveness for health plans used by our members.

All HMOs and PPOs used to provide health care benefits by UAW employers must be accredited by either the National Committee for Quality Assurance (NCQA) or the Utilization Review Accreditation Commission (URAC), independent nonprofit organizations which evaluate and certify the quality of health plans. Health plans offered to our members must also meet internal UAW standards.
We have established programs at each of the auto companies to promote wellness, including confidential, health risk assessments.
We have implemented and are seeking to improve disease management programs to better coordinate care for certain chronic conditions such as asthma, heart disease and diabetes.
We have established regular communication links with our members at each of the auto companies to provide detailed health information on specific conditions so they can better understand appropriate treatments.
We are working in various communities to promote evidence-based medicine and reduce the significant treatment variations that occur both among and within the states.
We are engaged in various projects to provide members with “report cards” or other information on hospitals and health care providers.

What is the Community Health Care Initiative (CHCI)?

The initiative is a negotiated pilot project carried out in cooperation with each of the automakers in locations where there are sizable numbers of UAW-represented autoworkers.

The initiative brings together the various stakeholders including doctors, hospitals, insurers, employers and consumers to address shortfalls in community health status and improvements in the delivery of health care. As an example of the latter, the initiatives have engaged local providers to collaborate on standard treatment protocols for a number of common diseases, such as diabetes, depression, asthma and congestive heart failure. Through such efforts, the community initiative sites have produced both measurable increases in quality and a dampening of escalating health care costs.

There are a variety of pilot projects under way in eight locations: Flint, Mich.; Anderson, Ind.; Kokomo, Ind.; Kenosha, Wis.; Warren/Youngstown, Ohio; Kansas City, Kan.; Wilmington/Newark, Del., and Louisville, Ky.

Major changes in a community’s health care system don’t happen overnight, of course. But Community Health Care Initiatives are already producing significant improvements in health care quality and controlling costs, as the following examples indicate:

Anderson, Ind. – CHCI started in 1995

Asthma emergency room rate down 40 percent since 1999
Diabetes emergency room rate down 6 percent since 1999
Diabetes in-patient admit rate down 13 percent since 1999
Hysterectomy surgery rate down 40 percent since 1995
Generic drug substitution rate up 3 percent since 1999
Reduced/moderated physician and hospital fees: $15 million since 1996

Flint, Mich. – CHCI started in 1995

Breast cancer screening (mammogram) – 70+ percent vs. GM corporate average of 65 percent; highest for GM in Michigan
Hysterectomy surgery rates down 23 percent over last three years
Generic drug substitution rate improved each quarter, from the second quarter of 2001 through the second quarter of 2002

Warren/Youngstown, Ohio – CHCI started in 1998

In-patient hospital admissions per 1,000 down 19 percent since 1998
Generic drug substitution rate up 3.5 percent since 1999
Use of beta-blockers after heart attack – 96 percent vs. GM corporate average of 84 percent
Breast cancer screening (mammogram) – 69 percent vs. GM corporate average of 65 percent

How have rising prescription drug costs impacted bargaining?

In the last decade prescription drugs have assumed an increasingly important role in the treatment and prevention of disease. As a result, prescription drugs are consuming a greater portion of the health care dollar.

Many of the critical issues relating to prescription drugs are public policy matters that cannot be resolved at the bargaining table: patent and price manipulation by the pharmaceutical industry; the misallocation of significant research dollars to “me too” drugs rather than drugs that would produce genuine clinical breakthroughs; and the industry’s use of taxpayer-financed research in the early stages of drug development without a commensurate return to the public in the form of reasonable pricing.

Pharmaceutical firms are able to win policies favorable to their industry with the help of more than 625 lobbyists, a brigade that outnumbers the elected members of the Senate and House of Representatives. While the nine largest pharmaceutical firms took in more than $30 billion in profits in 2001, 29 percent of Americans were unable to fill a prescription in 2000 because they could not afford the high price of medicine.

The UAW continues to support the use of generic drugs as a way to reduce costs. There are significant opportunities for expanded utilization of generics in the next five years as numerous “blockbusters” are scheduled to come off patent.

The UAW opposes the use of rebate schemes to steer patients to particular drugs that happen to be “preferred” by the pharmacy benefit manager. Individuals react differently to any particular drug. The medical literature reflects 1 million to 3 million hospital admissions each year due to adverse drug reactions, a staggering human and economic cost. The appropriateness of a particular drug should be decided by the physician and the patient, not by benefit managers who may have a financial incentive to promote the use of a particular medication.