Health Care

The health care crisis in America has continued to grow. As more individuals and families continue to lose their health care benefits, the number of Americans without health care coverage has reached record levels. The cost of health care is rising at a rate significantly higher than inflation, resulting in anxiety for workers, their families, businesses and the government. Workers are paying significantly larger shares of their premiums and co-payments while getting less coverage. Older manufacturing companies continue to disproportionately suffer from the burden of “legacy” health care costs that all too often have contributed to bankruptcies, plant closings and job loss, as well as the loss of coverage for many retirees.

The Bush administration has done nothing to address these serious problems in our health care system. Instead, the administration has pushed proposals for association health plans and high-deductible, so-called consumer-driven health savings accounts. These measures would undermine comprehensive negotiated health care coverage for workers and retirees and their families. The Bush administration and GOP congressional leaders have steadfastly opposed proposals to bring down drug prices by allowing Medicare to negotiate reductions from the drug manufacturers and by allowing for the importation of cheaper pharmaceuticals from other countries. They have opposed efforts to expand the State Children’s Health Insurance Program (SCHIP) to provide health insurance coverage for millions of children. And they have turned a cold shoulder to proposals to help older manufacturing companies with their legacy health care costs and to level the playing field with foreign companies. At the same time, the administration has proposed taxing workers’ health care benefits.

During the coming year, the UAW and our progressive allies will continue to fight the misguided health care proposals being pushed by the Bush administration. We will work with other progressive groups and our Democratic allies to demand positive measures to expand coverage, contain escalating costs, strengthen Medicare and Medicaid, and address the serious retiree health care legacy cost problems facing older manufacturing companies.

Medicare

When the Bush administration and the GOP-controlled Congress enacted the Medicare prescription drug (Rx) program in 2003, they included a provision that prohibits Medicare from negotiating drug price discounts from the pharmaceutical companies. This represented a direct payoff to the major drug companies, who had been strong supporters of President Bush and congressional Republicans.

The UAW and a broad coalition of labor, senior citizen and other groups denounced this provision. The Veterans Administration already uses its bargaining power to negotiate drug price discounts under the VA health care program. In our judgment, there is no reason Medicare should not be allowed to do the same for our nation’s seniors. This would help reduce costs, both for the Medicare program and its beneficiaries.

When the Democrats regained control of the House and Senate after the 2006 elections, one of their first priorities was to move legislation to eliminate the prohibition on Medicare negotiating drug price discounts. In the first 100 hours, the House passed UAW-backed legislation that would require Medicare to negotiate drug price discounts. Subsequently, the Senate took up somewhat milder legislation that would have allowed Medicare to negotiate such discounts. Unfortunately, even this softer provision was too much for Senate Republicans, who used a filibuster to block it.

Despite this setback, the UAW remains committed to the struggle to enact Medicare drug price discount legislation. We will continue to work with Democratic congressional leaders and our progressive allies to keep up the pressure on Congress to pass this important legislation.

The UAW also has major concerns over the huge subsidies for Medicare Advantage plans. The reimbursement rates for these plans are 12 to 19 percent higher than beneficiary costs under traditional Medicare. In 2010 the Medicare program will be forced to compete with these heavily subsidized, private managed-care plans in an experiment that would advance the effort to privatize Medicare.

In addition, the UAW will continue to work with other labor and senior citizen groups to urge Congress to approve additional reforms to the Medicare Rx program, including measures to improve the benefit (i.e., eliminate the “donut hole”), guarantee access to a federal Medicare-sponsored option, eliminate discrimination against retirees who have drug coverage from their former employer, and allow the importation of safe, lower-cost drugs from other countries.

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Medicaid and the State Children’s Health Insurance Program (SCHIP)

The Medicaid program provides health care to 56 million Americans. This includes low-income children, pregnant women, people with disabilities and senior citizens. In addition, under the State Children’s Health Insurance Program (SCHIP) the federal government provides funding to the states to help support programs to provide health insurance coverage to children in low-income families.

In previous Congresses, the Bush administration and GOP congressional leaders have repeatedly pushed deep cuts in the Medicaid and SCHIP programs. In early 2006 they rammed through a budget reconciliation bill that slashed $10 billion from Medicaid. In his budget for FY 2008, President Bush proposed $26 billion in cuts to Medicaid over five years. He also proposed a funding level for SCHIP that would not even enable this program to continue covering current enrollees. The UAW and a broad coalition of progressive groups strongly opposed these attacks on Medicaid and SCHIP, which would force states to cut back on health care services for millions of vulnerable individuals.

When the Democrats took control of the House and Senate following the 2006 elections, they vowed to chart a new course on funding for Medicaid and SCHIP. The budget plan approved by the Democratic-controlled Congress in 2007 maintained funding for Medicaid. In addition, it called for $50 billion in increased funding for SCHIP to enable this program to cover millions of additional uninsured children. The House and Senate subsequently passed bills to reauthorize and expand SCHIP that would have provided health care to an additional 4 million uninsured children. But President Bush vetoed this legislation because he claimed it represented an unwarranted expansion of government health care programs. Despite a strong grassroots campaign by the UAW and our progressive allies, House Republicans subsequently voted to uphold this terrible veto. At the time this paper was written, it was unclear what would happen to this vital legislation.

During the coming year, the UAW will continue to work with our allies to enact the legislation to expand the SCHIP program to provide health care to millions of children. This represents an important component of the campaign to assure that all Americans receive adequate health insurance coverage.

Action

Retiree Health Care Legacy Costs

The major auto, steel and other older manufacturing companies have much higher health care costs because they have many retirees and the age of their active workers tends to be older. In contrast, newer manufacturing companies have much lower health care costs because they have few retirees and a younger active workforce. Foreign competitors also have much lower health care costs because these costs are spread across their entire societies through national health care programs. The net result is that older manufacturing companies in the United States have been placed at a tremendous competitive disadvantage due to their “legacy” health care costs. This has led to cutbacks in health care coverage for workers and retirees. In some cases, it has also contributed to layoffs, plant closings and even bankruptcies for certain firms.

Unfortunately, the Bush administration has failed to step forward with any meaningful proposals to address this problem. However, with the Democrats having regained control of Congress following the 2006 elections, there is now much more interest in the House and Senate in tackling this difficult issue. During 2007 the UAW worked with other unions and older manufacturing companies in support of various proposals that would provide some relief for retire health care “legacy” costs. This included proposals to establish a catastrophic reinsurance program, to allow early retirees to buy in to Medicare, and to expand eligibility for the existing health care tax credit (HCTC) that is now available only to early retirees whose companies have gone bankrupt and dumped their pension plans on the Pension Benefit Guaranty Corporation.

During 2008 we will redouble our efforts to get Congress to approve legislation to provide meaningful relief for retiree health care legacy costs. Whatever the mechanism, we need the federal government to step forward to ensure that retirees maintain their health insurance coverage, regardless of whether it is provided by their former employer or through a VEBA. We also need measures to help level the playing field so that older manufacturing companies are not placed at a competitive disadvantage because of their retiree health care legacy costs.

Action

GOP Assaults on Health Care; Need for Real Cost Containment Initiatives

The Bush administration and GOP congressional leaders have continued to push proposals to expand tax breaks for individual health savings accounts for active and retired workers. This would undermine good comprehensive health care benefits negotiated by the UAW and other unions, and leave workers with high-deductible catastrophic health care coverage that shifts the burden of health care costs onto workers and retirees.

The Bush administration and GOP congressional leaders also have continued to push legislation exempting association health plans (AHPs) from state laws and regulations. This misguided legislation would further fragment the small business health insurance market, segregating the risk pool of younger, healthier individuals from families seeking more comprehensive coverage. The net result is that many workers covered under traditional comprehensive plans would see their costs rise. AHPs also would cause consumers to lose important state-based protections regarding plan solvency and fraud.

The UAW and our progressive allies continue to strongly oppose health savings account (HSA) and association health plan (AHP) proposals. In the last Congress, we were able to block these proposals in the Senate. With the Democrats having regained control of Congress following the 2006 elections, we were in a better position to block these dangerous proposals in the first session of the 110th Congress. But we will have to remain vigilant against efforts by the Bush administration and Congressional Republicans to move these dangerous proposals during 2008.

Meanwhile, the Bush administration and some members of Congress are continuing to push proposals to tax workers’ health care benefits. Proponents of these proposals claim that this will discourage overly generous health care coverage and encourage individuals to be more economical in their utilization of health care services. But the reality is that these proposals are simply a means of imposing a huge and growing tax increase on middle-class working families. In addition, these proposals are designed to undermine comprehensive negotiated health care coverage, and push workers into HSAs and defined-contribution plans. The UAW and our progressive allies will remain vigilant against any efforts to move these misguided proposals to tax workers’ health care benefits!

Instead of these phony and counterproductive approaches to cost containment, the UAW will be urging Congress to take a number of meaningful steps to contain the escalation in health care costs. This includes passing measures to help introduce modern information technology into the health care system, support disease management and health promotion programs, encourage better information on the effectiveness of drugs and medical procedures, and crack down on excessive executive compensation.

The need to invest in modernizing health care is long overdue. Patient care declines in quality when physicians do not have access to timely information about the patients they serve. Health care costs increase when tests or procedures are duplicated because critical records are missing or inaccessible. By one estimate, the nation would save $140 billion annually with the proper use of health information technology (HIT). The UAW and our progressive allies will continue to support legislation to encourage the use of health information technology. We will also fight to ensure that any HIT legislation includes privacy safeguards and is properly funded.

In addition, spending for biologic medications (drugs made from a living organism or its products and used in the prevention, diagnosis and treatment of cancer and other diseases) is one of the fastest growing expenses in health care. By some estimates, Medicare could save $14 billion over the next 10 years if a pathway existed at the Food and Drug Administration (FDA) to create generic versions of these biologic drugs. Overall savings for government and private-sector health care plans are estimated to be $71 billion over this period. While the process to create generic or “follow on” versions of these biologics is complex, it is not beyond the capacity of any well-trained biochemistry team working in labs equipped with the latest technology available on the commercial market. Last year our Democratic allies in Congress introduced legislation to establish a pathway for the FDA to approve generic versions of biologics. During 2008 the UAW and our progressive allies will continue to fight to pass this important legislation.

Action

National Health Care Reform

The UAW continues to believe that the best answer to the many problems facing our health care system in the United States would be the enactment of a comprehensive, national single-payer health care reform plan. This reform plan should guarantee universal coverage to all Americans, without regard to age, income, health status or employment. All Americans should receive comprehensive health care benefits as a basic right. A single-payer national health care plan would get rid of the massive waste and inefficiency that now characterizes our health care system. At the same time, it should contain an equitable financing mechanism that protects working families and the poor, and establishes a level playing field among all businesses.

Last year a number of positive measures were introduced in Congress for comprehensive national health care reform. They include the Medicare for All Act (S. 1218; H.R. 2034) introduced by Sen. Ted Kennedy, D-Mass., and Rep. John Dingell, D-Mich.; the AmeriCare Health Care Act (H.R. 1841) introduced by Rep. Pete Stark, D-Calif., and the United States National Health Insurance Act (H.R. 676) introduced by Rep. John Conyers, D-Mich. During the coming year, the UAW and our allies will continue to educate members of Congress about the need for comprehensive national health care reform and the positive approaches contained in these bills.

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