September 22, 2009

Union and Democrat Party, Speaking with One Voice

Justin Katz

This past weekend's episode of Newsmakers, with AFL-CIO RI President George Nee, is worth a watch:

Nee is among the more reasonable-sounding of the labor representatives, but that presentation only emphasizes the absence of space between how he responds to questions and how any given Democrat partisan would answer them. Sure, he's the guy who said that the state needs more political competition between the parties, but some Democrats have said the same thing, and there's an underlying insinuation that the Republicans should become more like Democrats and, for one thing, court labor more enthusiastically.

His take on a "public option" in healthcare, for example, comes directly from a conversation with Senator Sheldon Whitehouse: He cites public universities as an example thereof. Perhaps to the extent that "public" means "union jobs," the comparison has some validity, but in practice the two structures are substantially different. Notably, public universities are state-level operations, not federal.

More importantly, though, universities hire professors and not only put course offerings together, but fulfill them, as well. Health insurance is almost purely a matter of paper processing and funding. "Public option" doctors would not be competing with private-sector doctors to offer a more attractive healthcare regimen. Moreover, given the location-specific nature of higher education, translating such a thing into healthcare would represent a dramatic restructuring — with clients having to travel to a central healthcare campus, or the government seeking to place its doctors in every community.

Federal and state governments also have not built a web of regulations and mandates for higher education. Apart from accreditation and general business laws, colleges and universities operate under their own directives, which allows actual competition. In healthcare, so many offerings are explicitly required, and the incentives guiding the means of payment are so heavily manipulated, that the entire system is effectively becoming a "public option."

Somehow, I suspect that Nee, like any partisan Democrat, would not extend the principle of competition — which the left is happy to extol under the currently restrictive circumstances — if it meant permitting citizens to purchase plans more freely and companies to offer a greater variety.

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This issue has the potential to drive a wedge within the Union itself and with the coalition of Unions and Advocacy voting groups as they ultimately fight over dollars from the same pie.

No doubt the generic "Union" benefits as the public option gobbles up new "customers" when employers drop coverage. This will happen, and more quickly than some are suggesting. Do the math. Your employer can pay for your family plan at a net cost of $10k or so depending on your co-share. Or they can pay an 8% penalty and leave you to the public option safety net. To anyone earning less than $125,000, it will be cheaper for your employer to choose the penalty. And without cost controlling mechanisms like consumerism in place, the gap between penalty and premium grows, making the decision to drop coverage virtually inevitable, especially when labor markets are flooded with willing and currently unemployed workers. The richer the plan (e.g. state and municipal employee benefits), the greater the incentive provided by Obamacare for the employer to drop it.

Administration of the public plan will require expanding the ranks, and thus relative influence, of the public sector. This is a major opportunity to enhance the organization. After all, who will run the public plan? Those displaced from the dwindling private insurance industry will take up the work, only now paying their weekly dues.

But once implemented, assuming the HR3200 model, existing civil servants will be limited to the public option almost as quickly as their private counterparts. In South Kingstown, for example, the Town pays roughly $10 million in health benefits for town employees. Alternatively, we could pay $4 million in penalties and leave Town employees to finance their own public plan, as they apparently want given the testimonials of their Union leaders. Taxpayers in SK are not going to continuously fork over the extra $6 million in property taxes so the employees can keep a private plan when everyone is losing theirs. This is not a question of whether they will voluntarily sign up for the public plan, but rather whether they are aware that they will be forced onto it, and likely within one negotiation cycle.

The President says we could keep our plan if we like it. That is…er…assuming our employer continues to offer it. If they don't, public option here we come. I do not believe the rank and file would support the HR3200 model if they realized the inevitability of losing their private plan. Heck, they blew a gasket when asked to switch from Blue Cross to United. I also don't think leaders on the left, both progressive and Union, have been particularly forthcoming about this.

The Union will certainly benefit by expanding its headcount. The rank and file, though, will "fund" this power grab through limited choices in health care benefits of inferior design to what they have today. And they will have to pay for the plans on their own, too. I wonder if they collectively realize this as they send their representatives out to speak for them in support of what is clearly against their personal self interest.

Posted by: Roland at September 22, 2009 3:08 PM
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