Skip to content

Labor Leaders Wary As Democratic Allies Weigh Health Reform Proposals

This should be labor’s big moment: a Democratic White House and Congress poised to overhaul the nation’s health care system. But despite spending more than $113 million to help elect their ideological allies last November, unions are having a challenging time getting their way on Capitol Hill.

Most of the major unions back Democratic goals to crack down on the insurance industry, make medical care more affordable and cover the 46 million uninsured Americans. But labor leaders are alarmed at proposals to tax employer-provided benefits and worried that Democrats might not be committed to including a strong public insurance plan to compete with private insurers. They also fear that Congress may not require employers to contribute financially to the new system.

The potential for acrimony was foreshadowed last month, when a group of unions ran advertisements against Sen. Ron Wyden, D-Ore., who proposed completely eliminating the tax break for employer-provided health benefits. Congressional concern about blowback from labor was evident this week, when Max Baucus, D-Mont., the chairman of the Senate Finance Committee, said that lawmakers might not tax union-negotiated health benefits until those existing contracts expire.

“We at this moment are not contemplating any concessions, but we are realistic that anytime you start any piece of legislation or any negotiation, for anybody to say you have to get 100 percent of what you want is unrealistic,” said Dennis Rivera, who is heading the Service Employees International Union’s political campaign to change the system. “It’s a compromise.”

Labor leaders aren’t saying where precisely they’d compromise, but they are unlikely to try to kill overhaul legislation even if it has unpalatable elements. Unions are still scarred by memories of how easily opponents of President Clinton’s proposal were able to demonize it, and consider the current system, built around employer coverage, so broken that change is essential. Politically, unions can’t afford Congress and President Barack Obama to be blemished by a humiliating defeat, since they want Democratic support for long-sought changes in labor laws that would make organizing easier.

Labor Leaders Wary As Democratic Allies Weigh Health Reform Proposals

On its website, American Federation of State, County and Municipal Employees (AFSCME) provides sample advocacy ads.

“They get that if Democrats fail, last time we got Gingrich, this time we could get Limbaugh,” said Len Nichols, director of the health policy program at the New America Foundation.

“I think a lot of people learned important lessons from 1994. They [unions] are coming at this from a much more sophisticated, much more nuanced, and maybe a much more willing to compromise mode than they were before.”

But if Democrats stray too far from labor’s preferences, they risk alienating rank-and-file workers who have been organized to help build public support beyond the Beltway, says Jacob Hacker, co-director of the Berkeley Center on Health, Economic & Family Security, part of the University of California.

JoAnn Volk, a lobbyist for the AFL-CIO, said: “The stronger the package is, the easier it is to jazz the grass roots to help get this passed.”

Unions have created a formidable political machine for the battle on health care-one which they have already begun to deploy to support their positions and undercut those they oppose. They say they are ready to spend $80 million.

Inside a downtown Washington office building, the first floor of SEIU’s headquarters has all the apparatus and décor of a modern political campaign. There are TVs and computers for young workers to keep daily watch for new attacks from the opposition. A sign on the wall left over from last year’s presidential race, offering a mock slogan for John McCain -“putting moms last” – is a reminder of the role the union played in helping elect Obama.

Taxing health benefits touches the most sensitive union nerve, which is why labor leaders are so focused on the Senate Finance Committee. Baucus, the chairman, favors the option as a way to help pay for legislation, which could cost from $1 trillion to $1.5 trillion over 10 years. During last year’s presidential campaign, Obama opposed such a tax, but Congress’ Joint Committee on Taxation has offered Baucus’ panel a variety of ways to limit the tax exclusion on these benefits, which would bring in between $161 billion and $1.2 trillion over a decade.

Labor Leaders Wary As Democratic Allies Weigh Health Reform Proposals
Health Care for America Now is running TV ads in six states (Pennsylvania, Arkansas, Nebraska, Oregon, Indiana and Delaware) to pressure senators to support a public plan option in any health reform bill.

The tax would hit labor particularly hard: Three out of four union workers outside government hold health insurance through their employers, while only half of non-union workers do, and union plans tend to be richer. Unions say workers have accepted lower wages to get or keep better health care packages.

“In many of our locals, teachers and other school employees have given up raises to try to keep the benefits they have,” said Bill Raabe, director of collective bargaining and member advocacy at the National Education Association.

Unions are also fighting to protect another top priority, a government-run insurance plan to compete with private insurers, from being omitted or watered down by Democrats seeking GOP support. All but one Republican on the Senate Finance Committee signed onto a letter to Obama opposing the “public plan,” which the president backs. Health Care for America Now, an advocacy group partially funded and directed by unions, has been running advertisements in favor of the public plan in Arkansas, Delaware, Indiana, Iowa, Maine, Nebraska, Oregon and Pennsylvania.

Barbara Coufal, a lobbyist for the American Federation of State, County and Municipal Employees, wants a public insurer “competing with the private plans and forcing them to be more efficient and be innovative.”

Labor also worries Congress might not require employers to help fund coverage even if lawmakers require individuals to obtain insurance. Business groups oppose a “pay or play” requirement that companies pay into a government fund if they don’t provide health coverage to workers. Unions want an employer mandate both on principle and to level a playing field in which some employers provide no coverage. Obama, however, has told lawmakers he is reluctant to require small businesses to offer insurance.

All unions aren’t on the same page. The California Nurses Association, for instance, favors abolishing the entire system of private insurance in favor of a “single-payer” system. SEIU’s leaders are less invested than some of the industrial unions in shoring up the employer-provided insurance system, in part because fewer of SEIU’s lower-wage workers are offered coverage now. Still, so far the nation’s major union organizations have avoided any substantial public rifts over health care-no small feat since labor underwent a major civil war in 2005 when seven unions seceded from the AFL-CIO, the traditional labor federation umbrella group.

Both together and separately, the unions have established a broad grassroots network to help rally support around the country, particularly in the districts of lawmakers on key congressional committees in Congress. SEIU has people in 18 states, and AFSCME’s national office has hired 20 organizers.

Labor is delegating much of the heavy lifting to Health Care for America Now, which has organizers in 46 states and is tailoring their campaigns to appeal to individual lawmakers. In Maine, for instance, the group is focusing on organizing small businesses because, as the group’s blog explained, Republican Sen. “Olympia Snowe in Maine cares a lot about small business.” Unions are not ruling out harsh ads like the one they ran against Wyden in Oregon.

“We would prefer to be positive and have a message that rallies people around Congress,” said Coufal, the AFSCME lobbyist, “but we may find we have another situation like that one where we have to speak more loudly.”

Related Topics

The Health Law