Health insurance remains one of the most important benefits for union construction workers, but as costs continue to spiral, more collective bargaining agreements must tilt money to health and welfare benefit funds than to workers take-home pay. In some cases, these increases now outstripor replacewage gains.
Labor leaders, management representatives, union business agents and rank-and-file members all agree that the problem is escalating out of control. But among construction crafts, opinions differ on how to fix, or even address, runaway costs. Many are seeking ways to boost their buying power. "It overshadows everything else in collective bargaining," says Stephen F. Kelly, plumbers union assistant general president.
For nearly 15,000 workers in the 12 Southern California locals that make up the plumbers unions District Council 16, increases under the current five-year pact that would have gone to wages were shifted to health and welfare and pension funds, leaving paychecks stagnant. "It took every cent to buy health and welfare benefits," says Sid C. Stolper, the Los Angeles-based councils business manager. "Its been real tough, and we dont see any light at the end of the tunnel."
When the councils third-year contract changes took effect in July, the $1.25-per-hour increase was earmarked for health and welfare for the first six months. In January 2006, 50¢ of that hike will shift to the pension fund. This frontloading practice allows the health and welfare fund to accrue more interest and build reserves faster, says Stolper. He worries that, if current cost projections hold, the councils $74 million in reserves will start eroding in January. Costs have risen about 20% a year and may surpass hourly contributions. "Its frightening stuff," he admits.
Members were not happy about going without a raise in their paychecks, but they accepted the allocation. The tax advantages of putting the increase into benefits was a "more efficient" way to use the money, says Stolper.
|Discount. Painters Williams (center) hopes a national medical plan will lower members costs.|
Painters union General President James A. Williams has set his sights on implementing a national health and welfare core benefits plan for about 5,000 active members by January. The need is evident, he says, pointing to a union estimate that about 75% of collective bargaining increases over the past six years have gone to health and welfare benefits. "We hope to reduce the premium that the international pays by negotiating in volume," says Williams. The union is seeking proposals from several insurers. Bids, including costs for extra insurance riders, are due in November.
Over time, Williams expects the national plan to cover every member in the painters 33 U.S. district councils who opts in, plus all of the unions employees. He also believes a national plan will take the politics out of the district councils. Officials "can spend more time on organizing instead of going to health and welfare meetings," William says. With one plan, millions of dollars in professional fees will be saved, he says. "Every time a district council has to write a letter because a benefit wasnt paid, it costs," he adds.
The carpenters union is moving to contain costs by merging health and welfare funds. Two years ago, the carpenters counted more than 130 health and welfare funds in the U.S. and Canada. Today, there are 112 in the unions 43 regional councils. With rising costs, it is becoming more difficult just to maintain the same level of benefits, says John J. Simmons, assistant to the executive secretary-treasurer at the Empire State Regional Council of Carpenters in Oswego, N.Y. Ray Graham, a member of carpenters Local 713 in Hayward, Calif., notes that of the $1-per-hour increase he received effective July 1, all but 5¢ went to health and welfare.
At the carpenters 39th convention in Las Vegas last month, President Douglas J. McCarron told delegates: "It is essential that councils merge funds. With one health and welfare trust per council, we can cut overhead and increase our buying power." Union sources say that 14 councils now have one health and welfare fund. With 98 funds in the remaining 29 councils, more mergers are expected.
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The carpenters also are seeking bids for a national prescription drug program that would boost purchasing power. Once a provider is selected this fall, the union plans to market the program to the largest health and welfare fund in each of its 34 U.S. councils. Union officials say that program will reach about 213,000 members or 64% of overall participants and two-thirds of its insured. The savings should be "eye-opening," says Simmons.
The sheet metal workers union also has signed up a national pharmacy benefit management firm to provide services for its 150,000 members. The roofers union has a national health care plan for the dozen or so locals it counts with less than 200 members each.
But laborers union President Terence M. OSullivan says negotiating strength lies in numbers bigger than any one unions membership. He suggests that the AFL-CIOs Building and Construction Trades Dept., or some other multi-craft entity within labors ranks, band together to offer health benefits. "Consolidation is not a bad thing," he says.
OSullivan believes that if coverage of drug or major medical costs in three individual crafts in the same building trades council were studied, they would be very similar. But each union negotiates those benefits separately,
he notes. "I have to believe that if we could develop health care cooperatives, [there would be] greater economies of scale," OSullivan says. "Whats working against us are the numbers."
OSullivan says that "this is something the building trades can and should look at." He says it makes sense to pursue it at the BCTD level, rather than through the AFL-CIO, because construction unions have similarities and work side by side. Health and welfare must be competitive, or workers will gravitate to the union with the best benefits, OSullivan says.
The laborers chief envisions a pilot program, perhaps run through a state or local building trades council and patterned after a health care cooperative in Alaska that a number of construction crafts and others participate in. "Those kind of models, we need to start looking at," he says. OSullivan also expects to make changes within his own union, directing each of the laborers eight U.S. regions to consider pilot programs that might combine benefits across multiple trades.
Unions, like contractors, need to improve efficiencies in how medical costs are handled. "They have to refocus attention on health care plan management," says Frank McArdle, executive director of the General Contractors Association of New York and a board member of the laborers health and safety fund. "You cant simply be a billpayer."
OSullivan admits that "health care has been an issue, but not a priority. It has to be a priority." If the building trades are not receptive, OSullivan says he will explore similar plans with outside groups such as the National Heavy & Highway Alliance or the Change to Win Coalition. The alliance includes seven construction unions, among them the carpenters and teamsters, which no longer are affiliated with BCTD. Those two unions, along with the laborers and four non-construction unions, are coalition members.
OSullivan and Stolper also think a federal fix is needed. They worry that the rising number of uninsured workers is putting pressure on emergency services and costs. "Its spiraling out of control," says Stolper. But Congress has been unable to make progress in tackling the health care or insurance issue.
"If we dont come up with some kind of solution, workers may soon have to choose between paying rent, buying food and putting gas in their cars or paying for health insurance," says Stolper.