Can’t anyone here solve this mess? The impending battle between Carcieri and the unions doesn’t get at the real problem — the spiraling cost of health-care BY BRIAN C. JONES
	Devilish details   Premium-sharing isn’t always a recipe for diminished compensation WORKERS WHOSE COMPANIES require them to pay some of their health insurance premiums don’t always lose money in the long run. But union officials say that premium-sharing often makes negotiations more troublesome. "It’s fair to say that all of our locals have battled over health insurance, and they’ve all had to fight to keep either dollars or percentages at a reasonable level," says Rick Brooks, director of United Nurses & Allied Professionals (UNAP), which represents 4000 health-care workers at hospitals and other health providers. UNAP, in fact, owes its existence to premium-sharing. Its local at Rhode Island Hospital was founded after the hospital sharply hiked health care premiums in the ’90s, prompting a successful unionization drive. Since then, Brooks says, it’s been one of the union’s major goals to limit the bite of premium payments. It’s had some success in doing so, he says, although the process has been "contentious." In 1995, the 1800-member UNAP local at Rhode Island Hospital paid 19 percent of premiums, or about $102 a month, for family coverage. Initially, through negotiations, arbitrations, and a price war among Rhode Island insurance companies, the union did see lower premiums and premium shares, so that at one point, UNAP members paid just $43 a month for family coverage. Still, as the union and the hospital argued about dollar amounts and percentage of premiums, the payments rose steadily, and this year, nurses and others are paying about $134 monthly, about 12 percent of a $1097 family plan premium. Some UNAP locals have maintained 100 percent employer-paid premiums, including the one at Memorial Hospital of Rhode Island, in Pawtucket. But Brooks says that that has led Memorial negotiators to argue for lower wage settlements. Memorial’s wages are slightly lower than those at Rhode Island Hospital. A nurse with seven years experience at Memorial is hired at $23.65 an hour; but at Rhode Island, the comparable nurse gets $25.58. The better pay at Rhode Island Hospital more than offsets the current level of premium-sharing payments. But Brooks says the union, as a general principle, would prefer to have no premium-sharing. "Philosophically, we believe workers should have fully paid health insurance as part of the benefit package," he says, "as long as health insurance is employer-based." — Brian C. Jones

THE DATE IS SEARED in Bill McGowan’s memory — August 6, 1989. He had tickets to see the Boston Red Sox retire uniform number 8, worn for more than two decades by slugger Carl Yastrzemski. It’s also the day that McGowan’s union, the International Brotherhood of Electrical Workers (IBEW), began a strike against the NYNEX telephone company — now Verizon — which wanted workers to pay part of their health insurance premiums.

The strike began at midnight, with McGowan and hundreds of fellow union members on the picket line. Ten hours later, McGowan was racing to Fenway Park to see Yaz honored. It took another 16 weeks to end the strike, with the union successfully turning back the premium-sharing proposal. Last year, the IBEW faced a similar premium-sharing plan from Verizon. This time, negotiations went one month beyond the strike deadline. And while the union accepted a lower pay package than it wanted, it again warded off paying premium contributions.

In both cases, says McGowan, who is business manager of the 1100-member local, the long strike, then a lower wage pact, were worth the sacrifices. "Our whole argument is that cost-shifting premiums does not solve the inherent problems in health insurance," he says. "All it does is passes the burden from the employer to the employee."

The IBEW’s fierce resistance to paying health insurance premiums shows just how strongly some unions feel about the issue. And it helps explain the enormous challenge faced by the unions representing most of Rhode Island’s 15,300 state workers.

For the second year in a row, Republican Governor Donald L. Carcieri is proposing that state workers pay part of their health insurance premiums. While the idea was only a concept last year, Carcieri says he will order 2800 non-union workers to begin paying seven percent of their health insurance premiums as of July 1, while granting them two percent raises. Moreover, his proposed state budget is based on the assumption that union workers will have the same deal — even though negotiations for the majority of union contracts that expire June 30 haven’t gone beyond preliminary steps.

The governor says premium-sharing will save state government about $10.6 million, in a nearly $6 billion budget tuned so finely that there’s barely a surplus. This puts the union-friendly and largely Democratic General Assembly in the position of having to make up the money if it doesn’t back Carcieri on the premium issue. Further, the governor has a powerful ally on this issue: public opinion. As is the case throughout the nation, most local private sector workers already pay a portion of monthly health insurance premiums.

When Brown University political science professor Darrell M. West polled Rhode Islanders on the question last June, a stunning 78 percent of respondents agreed that state workers should pay part of their premiums. What’s more, 69 percent of the people polled who were also union members said state workers should pay a portion of their insurance.

"My sense is the general public doesn’t see a reason why state workers should be treated differently than they are in the private sector," West says.

But Carcieri’s plan would be a substantial blow to state workers’ pocketbooks.

Paying seven percent of their premiums will cost them $823 annually if they have family coverage, according to state Budget Office estimates. For some workers, that could wipe out all or most of the gains they would get from Carcieri’s proposed 2 percent pay hike. And low-paid workers would actually see a net pay cut.

A state worker would have to earn $41,125 a year to break even under the premium/wage proposal. It’s not clear how many state workers are at this threshold. The federal Bureau of Labor Statistics estimates that Rhode Island state workers earn on average $45,588, making them eighth highest paid among the 50 states.

Since budget estimates figure that the pay hike will total $21.4 million, it would seem many workers will come out ahead, give the estimate that premium-sharing will amount to $10.6 million. But many workers are below the break-even point.

The largest of the state workers’ unions, Council 94 of the American Federation of State, County, and Municipal Employees (AFSCME), has said that nearly three-fourths of its 5400 members average only $28,053 a year. At that level, a two percent wage hike would produce an extra $561 a year, so they would have a net loss of $262 after paying the $823 premium-share for family health coverage.

CARCIERI’S PLAN doesn’t stop at the seven percent premium-sharing level. He wants to boost the premium share for non-union workers to 11 percent next year, then to 15 percent the following year. That will add to the hit state workers have taken so far this year by going without a raise, making this the third time in the last 12 years that they’ve had zero-percent raises.

Thus, the question is what the unions will do about the premium-sharing proposal when they do sit down at the bargaining table with the Carcieri administration.

The issue is so sensitive that despite repeated requests, no Council 94 official would speak to the Phoenix about the matter, nor, for that matter, would the state AFL-CIO, the umbrella labor group for which government workers are a key constituency.

A hint, however, comes from some individual unions, such as the Brotherhood of Correctional Officers, which represents prison guards, and, the National Education Association-Rhode Island, the big teachers’ union that also represents 1800 state workers.

Both unions say they are opposed in principle to premium-sharing, although the guards’ union declines to even say whether Carcieri’s negotiators are proposing the same premium-sharing deal proposed for non-union workers. As for the NEA, "We do in no way want premium-sharing," says executive director Robert A. Walsh Jr., but the union would be happy to discuss the components of the health plan itself, such as how prescription benefits are allocated.

State workers already pay some out-of-pocket costs — such as co-payments for doctors’ office visits and drug purchases — about $400 a year per employee, according to a study commissioned by the administration last year. Still, premiums remain the major cost for employers, and there is no question about how hard they’ve been hit by rising prices, prompting most of them to transfer part of the cost to their workers.

Despite the widespread practice, a question remains: how fair is premium-sharing? Is it simply another form of a pay cut for workers, with employers saving money at their workers’ expense? Or are there positive benefits for the health-care system, such as slowing the relentless increase in premiums?

THOSE WHO FAVOR workers shouldering part of health-care costs contend that when employees get "free" health-care, they don’t pay attention to price. But that when have a stake in the expenses, they are encouraged to be more careful in how they use medical services.

"Against the current backdrop of rapidly rising health-care, having workers contribute toward some share of premiums toward health-care coverage may not be bad, and may be helpful getting them engaged in trying to economize," says Alwyn Cassil, a spokeswoman for the Center for Studying Health System Change, a Washington, DC, research group.

But Cassil says too-steep premium sharing can backfire if it encourages some workers to drop their health insurance. Not only do those workers lack access to proper health-care, they still may seek free care in an emergency room, which, in turn, drives up costs for hospitals, and eventually, for the insurance companies that pay the bills.

Locally, Paul E. Martineau, president of The Employers Association, which advises businesses on personnel issues, supports the idea that everyone should pay something, so they will be more frugal health-care consumers. "People in business generally believe that employers should never pay 100 percent," he says, "because it impacts the way people view plans and make expensive choices, when less expensive choices would have been equally beneficial."

But other experts say premium-sharing sometimes gets confused with "cost-sharing," the practice of having patients pay user fees, such as co-payments for doctors’ office visits and prescription drug purchases. Studies have shown that having to pay some of those bills can influence health-care use. Cassil says she knows of no national studies that show premium-sharing itself curbs health-care usage, and calls to other national organizations familiar with health-care economics turned up no studies indicating that premium-sharing has helped reform health-care.

To the contrary, despite the growth of premium-sharing over the past several decades, the available figures seem to show that health insurance prices have climbed despite premium-sharing.

One of the most widely cited studies of insurance costs is an annual survey by the Kaiser Family Foundation and the Health Research and Educational Trust that queries employers about health insurance costs. The Kaiser survey shows insurance costs have skyrocketed — far outstripping the rate of pay increases and inflation in all but one of the last 15 years. Here’s what happened in just the last three years:

• During 2001, premiums jumped 10.9 percent, while workers’ earnings went up 4.1 percent.

• In 2002, premiums were up 12.9 percent, while workers’ pay gained 3.2 percent.

• And last year, premiums leaped 13.9 percent — the biggest jump in 14 years. Workers’ pay went up 3.1 percent.

The Kaiser survey found two trends in terms of premium-sharing:

One is that the percentage of the total premium paid by workers has stayed about even for the past 15 years. It’s dipped some years, and risen in others. Currently, workers choosing family coverage pay about 27 percent of the premiums, while worker-only health plan contributions are about 16 percent of the premium.

But secondly, when it comes to actual dollars, the workers’ contributions to family coverage have climbed steadily, with family plan workers in 1988 paying $52 a month, but in 2003, about $201 a month, or $2412 a year. (Single worker coverage has stayed steadier and is now about $42 a month.)

Joel H. Cooper, a principal of Benefits Unlimited, a Cranston insurance brokerage with about 500 corporate customers, doesn’t fault employers for charging workers a share of premiums as these costs spiraled up. "I think employers were forced to do it — they had to do something," he says. But Cooper believes that premium-sharing itself does little to restrain overall costs.

"In asking employees to pay, you are certainly cost-shifting and saving the state or employers money," he says. "But it doesn’t necessarily attack the problem."