[A-List] US legitimation crisis: health care

["Michael Keaney" <michael.keaney@xxxxxx>]

Workers feeling sick over rising healthcare costs
By Christopher Bowe and Andrew Hill in New York
Financial Times; Jan 14, 2003

Corporate America will be watching closely today as General Electric suffers
its first strike in more than 30 years.

The two-day dispute is over employee healthcare benefits - an increasingly
contentious issue as employers ask their workers to shoulder more of the
cost of benefits.

Employers bear the brunt of paying for health and drug insurance for
Americans and their families. Spending on health rose 9 per cent in 2001 to
$1,400bn (£870bn), or about 13.5 per cent of gross domestic product. That
figure is expected to rise to $2,600bn a year by 2010.

This year, employees are likely to pay 25 per cent of their health insurance
premiums offered as an employment benefit, according to UBS Warburg. That
has increased from 17.5 per cent in 2001.

Labour groups see the battle over healthcare being refought many times as US
health costs, and insurance for employees, continue to rise.

"In every set of negotiations this year, we expect healthcare to be a major
issue," says Rick Bank, director at the centre for collective bargaining for
the AFL-CIO, the largest US labour federation.

Companies negotiating new contracts and potentially facing the issue this
year include the "big three" car groups, General Motors, Ford, and
DaimlerChrysler; Delphi, the largest car parts maker; communications groups
Lucent Technologies, Verizon and Qwest; and tyremakers such as Goodyear and
Bridgestone/Firestone.

Bill Conaty, General Electric vice-president for human resources, yesterday
described rising healthcare costs as "a national issue".

He said it was "difficult for businesses to stay globally competitive while
sustaining . .. double-digit percentage increases", although he added that
the dispute was not expected to hurt the conglomerate's first quarter
results.

In total, GE expects 17,500 workers from the International Union of
Electrical-Communications Workers of America, the union co-ordinating the
action at GE, and another union, the United Electrical, Radio and Machine
Workers of America, to strike.

The IUECWA claims the action will affect 48 sites in 23 states, although the
union's 14,000 members at General Electric represent only 5 per cent of the
group's worldwide workforce. Lauren Asplen of the IUE-CWA says: "If nothing
else, what we've accomplished is that this [strike decision] has really
brought the whole issue of healthcare to the forefront."

The union is angry at GE's decision to increase the amount that workers and
pensioners covered by the group's managed care plan have to pay towards
healthcare costs.

GE says the co-payments have increased by an average of $200 per employee,
whereas the average cost of healthcare borne by GE has risen by 40 per cent,
or $2,350 per employee, since 1999. The union puts the average increase in
out-of-pocket costs at $300-$400 per worker and says total healthcare costs
are lower as a proportion of GE's profit.

Negotiators expect more and more US companies to hold a firm line on the
issues as uncertainties surrounding their businesses mount.

Worries about an economic recovery, the effects of a potential war over Iraq
and costs to maintain large pension funds are all combining to push
management to find ways to cut costs.

The issue of pension funds and healthcare costs for retirees - so-called
legacy costs - has already hurt the US steel industry. Companies say they
need to ask employees to share the burden in order to save jobs.

But unions see health benefits as one of the main benefits they help to
secure for their members. They see maintaining them as being as important as
wage negotiations. "You'll see strikes in major sets of bargaining this year
if employees push too hard on this one," says one AFL-CIO negotiator.