A strike last week by employees of Group Health Cooperative may be emblematic of a year when rising health insurance costs have contributed to a sluggish job market and tensions have mounted between workers and employers over increased healthcare cost-sharing.
Some 1,200 nurses, medical assistants, therapists and other workers represented by the Service Employees International Union Local 1199 NW staged a five-day walkout against the consumer-governed HMO after the two sides failed to reach a compromise over the cost of employee health benefits. The move was an unusual planned strike in which both sides knew when it would begin and end, deal or no deal.
Group Health, Seattle, says it needs to boost the amount its employees contribute for their health insurance in order to avoid having to increase patient fees and premiums for members. The union, however, argues the proposed increases are too high and would make coverage unaffordable for some employees.
The standoff is a prime example of the growing rift between employees and employers, which have been shifting a larger portion of their fast-rising benefits costs onto workers. In a recent survey of 120 companies and 1,000 employees, Towers Perrin found that 92% of employers see rising healthcare costs as a serious problem that must be addressed, while only 28% of workers feel it would be appropriate for them to accept additional cost increases.
A survey released last week by Mercer Human Resource Consulting found that if employers renewed their current medical plans with no changes, the average cost increase for 2005 would be nearly 13%. Overall, employers expect to bring their initial cost increase down three points, to an average increase of 9.6%, mostly by cost-shifting and changes in benefits.
"The clear trend among employers is to try to enlist employees as allies in the effort to control healthcare cost growth ... through changes in plan design," said Jim Foreman, a managing director at Towers Perrin. But "many employees just aren't buying it, in part because they've been largely shielded from the true cost of healthcare during the managed-care era and view rising costs as the company's problem."
The strike, which represented the first major labor disruption at Group Health in 15 years, followed more than a year of increasingly contentious contract negotiations between the 9,000-employee cooperative and the SEIU, the last two months of which were presided over by a federal mediator.
Group Health has proposed boosting copayments to $15, imposing deductibles and adopting a sliding scale for monthly premiums, ranging from 1% of base pay for individual coverage to 3% for family coverage. Under the new arrangement, a nurse who earns $69,000 a year would pay $60 a month in premiums for individual coverage, said Group Health spokeswoman Laura Query. An employee who earns $30,000 annually would pay $25 a month.
SEIU workers have a $5 copayment for doctor visits and prescriptions, but no premiums or deductibles. The union agreed to some in- creases, including doubling certain copayments and adding deductibles. But anything beyond those concessions would amount to a takeaway of benefits, said SEIU spokesman Carter Wright. "The proposed increases would quickly put affordable healthcare out of reach for many people," he said. "Some employees would suddenly have to pay $2,000 to $3,000 more a year just to maintain their family coverage."
In the past month, Wright added, the union has signed new contracts with two other area employers, Swedish Medical Center in Seattle, and Valley Medical Center in Renton, Wash., both of which retained zero-premium coverage for many workers.
Query, however, said all of Group Health's nonunion workers and some employees who belong to other unions already pay monthly premiums. Continuing to provide "virtually free" benefits for SEIU members is akin to asking their coworkers and Group Health customers to subsidize them.
"We think the SEIU's leadership is out of touch with the true costs of healthcare," Query said, adding that Group Health has also proposed pay raises of 9.5% to 24% under the contract that would, in most cases, offset the cost-sharing increases by thousands of dollars. "It's a matter of integrity. We think it's unfair to ask our members to pay more (for coverage) when a small group of our own employees aren't."
Industry observers say employers of every kind are asking workers to pay a growing share of their benefit costs. In a survey of 160 employers, Hewitt Associates found that employees are now paying an average of 23% of the premium for individual coverage, up from 21% last year. Meanwhile, 47% of employers now require a $15 copayment for a doctor visit, up from 24% in 2002.
But the SEIU stressed that the cooperative, which was formed in 1947 to provide affordable coverage and boasts healthy profit margins, should offer good benefits. Group Health posted pretax income of $155 million last year on revenue of $1.97 billion, representing an 8% margin, according to Standard & Poor's.
"With their roots as being a worker-friendly, family-conscious cooperative, they set a higher standard for themselves for the very beginning," Wright said.
No further talks were scheduled, but Query said Group Health has called the federal mediator to suggest a return to bargaining. The cooperative serves more than 540,000 people in Washington and northern Idaho.