“Why in the hell would we want any healthcare reform with a big explosive device built in the middle?” demands Chris Townsend, the national political director of the United Electrical union workers for the past 17 years.
As perhaps the nation’s most consistently left-wing union, it is no surprise the UE has long been a strong supporter of a single-payer, “Medicare for all” system that eliminates the central role of private for-profit insurers.
But now the UE and other more traditional unions are recognizing that the Democrats’ various health plans contain elements union members will find very hard to swallow. “These plans are the product of weak, corrupt Democrats trying to have it both ways,” says Townsend, voicing openly what other union leaders are concluding quietly.
If the Right plays this revolt effectively, Townsend believes, it could be channeled into a pseudo-populist right-wing direction that will revitalize the divided and rudderless Republicans.
The present direction of Democratic reform is much worse than anything Townsend or fellow union lobbyists imagined in their worst nightmares, he says. Healthcare will remain unaffordable and employers will see an opportunity to dump those already insured.
At the same time, as former Cigna executive and now leading industry critic Wendell Potter has warned, a popular revolt could be triggered by the combination of high premiums (and other costs) with an individual mandate to buy the defective and unreliable product of private health.
While much recent public debate has been fixated on the public option question, the various Democratic bills — especially the Senate Finance Committee version — contain some potentially dangerous provisions that have received very little attention:
Incentive to jettison the insured: The present system gives employers plenty of motive to dump the burden of paying for health insurance whenever possible and not prohibited by either a union contract or the prospect of a mass exodus of employees at a large firm.
The benchmark 2009 Employer Health Benefits Survey released by the Kaiser Family Foundation and the Health Research & Educational Trust (HRET) reported, “Premiums for employer-sponsored health insurance rose to $13,375 annually for family coverage this year — with employees on average paying $3,515 and employers paying $9,860.”
Under the Democrats’ various proposals, the penalty for failing to provide health insurance is relatively minimal, Townsend notes. In exchange for jettisoning a responsibility of nearly $10,000 a year per worker and family, “One proposal would impose a fine as low as low as $300 per employee if you dumped them and another one had a penalty of up to $750.”
This may prove attractive to many employers, despite the much-repeated argument that employers now recognize the savings that they will enjoy from a reformed health system, U.S. corporations have been “remarkably successful at shifting health-care costs onto employees, their families, and other individuals,” notes Professor Marie Gottschalk — a success that also dampens corporate America’s self-interest in enacting health-care reform.
Many employers are dropping coverage of their employees, skidding from about 75 percent in 1992 – 93 period to 64 percent in 2000 and then again falling to 60 percent in 2006. As Townsend bluntly outs it, “A lot of employers will put up with a lot to get out from under the obligation of paying for insurance. People will realize, ‘If my employer can dump me and has a few hundred dollar penalty, they will do it.””
Taxation of ‘Cadillac’ plans for union workers: Rather than providing $200 billion toward reform by taxing the super-rich, the Senate Finance Committee headed by Max Baucus is including provisions for taxing “Cadillac” insurance plans that provide “generous” benefits. The definition of a Cadillac’ plan remains to be seen,” notes Townsend. “It isn’t necessarily insurance plans for CEOs that cost $50,000 a year and cover cosmetic surgery.”
At this point, it’s unclear whether the employer or worker would be taxed. “It could turn out that they tax employer and you both,” he say, adding:
With this approach, you’re not getting at excessive insurance benefits. You’re attacking the benefits of workers who live in a high-cost area [e.g., southeastern Wisconsin is about 30% above the national average] and who aren’t getting extravagant coverage.
While the details aren’t finalized, the Senate Finance version of the tax would reach as low as $8,000 for an individual or $21,000 for a family. As Harold Meyerson correctly observed, this is more of a tax on Chevy-scale benefits than Cadillac-level coverage
Moreover, unions surrendered potential wage increases and other benefits in exchange for better healthcare benefits. The taxing of so-called “Cadillac” plans would negate these sacrifices. This practice has become especially widespread as premium increases have soared 131% in the last decade, forcing workers to give up a large share of pay hikes.
“This taxation of benefits is looming larger and larger is taxation of benefits, and would absolutely be a catastrophic disaster for the Democrats,” Townsend warns. This feature is bound to turn more and more people against health reform when they find out about it. “The Democrats are planting a time bomb a lot of labor people don’t want to deal with.”
Unaffordable healthcare: The Democrats’ various health plans would establish national health insurance exchanges under which the unemployed could select from a menu of insurance choices including a multi-tiered standard set of benefits in the Senate Finance Committee plan. As health-policy analyst Maggie Mahar points out, the Senate Finance plan “means a 56-year-old couple with income of $60,000 could wind up paying premiums of $7,800, plus out-of-pocket expenses for coverage that’s worth 25 percent less than the top-of-the-line “gold plan.” (Couples earning more than $43,710 don’t qualify for subsidies.)”
Another example from the Senate Finance plan: a family of four making $54,000 would face a daunting deductible of $5,000 on top of premiums of $5,300. (Washington Post, Sept. 23, 2009, graphic no longer available on-line). In other words, the family would shell out $10,300 annually – until the next premium increase. (Meanwhile, their neighbors with insurer-provided insurance — assuming that they’re paying the average out-of-pocket payments — would be shelling out a comparatively low $3,515 (low only by warped US standards, of course).
Inside the cocoon of the Capitol building, $10,300 in annual medical payment might seem eminently reasonable. But when Chris Townsend runs these figures past people outside the world of Congress, he gets a vastly different response. “
Show these to any normal person, even if they’re sympathetic to health reform, and they find it beyond belief,” Townsend says. “I’ve shown these numbers to people about 10 times, and first they wait for you to tell them they’ve misunderstood. But then they get it, and then you see all their interest in healthcare reform drain out of their bodies.
Those failing to buy private insurance (a relatively small slice of the uninsured would be able to choose the public option, which is being increasingly re-shaped to resemble private plans.) would be fined. This would really give the tea-baggers much of the ammunition that they have been lacking up until now
The political consequences for the Democrats could be devastating. Public disenchantment about the healthcare plan may finally provide the Right with a reasonable set of issues on which to justify their constantly-seething rage.
Instead of foaming on about the badly-contrived fictions of “death panels”, “pulling the plug on Grandma,” Obama’s “socialism” and other incoherence, the Right – spurred on by FOX, Limbaugh, and Glenn Beck– would be able to point to genuine grievances about still-unaffordable care and government fines for the uninsured.
If America’s Right has been ferocious up until now while lacking both coherent issues and any base outside a limited corps of middle-class True Believers, wait until they get to work on a badly-botched healthcare reform plan.
The Democrats were severely punished in 1994 for failing to enact healthcare reform as promised, coupled with Bill Clinton’s “success” with the job-exporting NAFTA deal driving working-class voters away from the polls. “Remember the backlash we saw 15 years ago?” Townsend asks.
This time around, passage of the kind of “reform” now in the congressional pipeline could similarly disillusion the Democrats’ voting base who were promised “change you can believe in.”
The Democrats’ cozy alliance with their contributors among the health insurers and drug manufacturers has been an unusually constant staple of news coverage, and working people are likely to see an immensely disappointing version reform as a blatant capitulation to these unpopular forces.
“A public revolt would be inevitable,” predicts Townsend glumly.