September 23, 2009 | Commentary on National Security and Defense
A government takeover of the health care industry would facilitate widespread union organizing of health care workers. Many studies show that collective bargaining makes health care more expensive. Consequently, health care reform that includes a government-run option would cost more than the Congressional Budget Office (CBO) and other analysts currently estimate.
The Heritage Foundation calculations estimate that greater unionization would raise the cost of hospital coverage by approximately $27 billion in 2013 and by $192 billion in the 2013-2018 period. Widespread unionization of the health care sector would make a government-run "public plan" much more expensive than currently advertised.
Unions Support Government-Run Health Insurance
Unions strongly support a "public plan" that would lead to a government-run single-payer system. In fact, after opponents protested at town hall meetings this summer, the AFL-CIO spent $15 million to stage counter-demonstrations with union members. Behind the scenes, organized labor-- and especially the Service Employees International Union (SEIU) -- has played a critical role. The SEIU particularly supports the public plan and has emerged as its strongest advocate.
A government-run public plan would lead many workers to the government plan because of an uneven playing field.As private plan participation drops, the public plan would lead to a government-run single payer health care and almost complete federal control of the health care sector. While many union members support a government-run "public plan" because they believe it would advance the common good, the union movement as a whole supports it out of self-interest. The SEIU represents health care workers, and government domination of the health care industry would facilitate unionizing that sector.
Unions Declining -- Except in Government
Union membership in the private sector has dropped sharply -- from 24 percent to 8 percent -- over the past generation. Union membership has fallen because unions put the companies they organize at a competitive disadvantage. Unionized firms have higher costs and less flexibility than non-union firms. Each year, employment in unionized firms shrinks by 3 percent while the number of jobs at non-union firms grows by 3 percent. Polls show that only one in 10 non-union workers want to organize.
This applies to health care as well. None of the unions that represent health care workers, including the SEIU, represent a large portion of employees in this sector. Only 12 percent of health care workers overall and 17 percent of hospital employees work under collective bargaining agreements. Health care is a large and growing sector of the economy -- and one of the few sectors to gain jobs during the recession -- but it remains largely non-union.
Union membership has stayed high in one sector of the economy: the government. Twenty-three percent of public-sector workers belonged to unions in 1974, and 37 percent did in 2008. Union density is five times higher in the public sector than the private sector because the government does not face competition or go bankrupt. So public-sector unions can demand generous concessions without costing their members their jobs, which makes government workers more inclined to unionize.
Government Health Care Facilitates Unionization
Government-dominated health care would transform union organizing. Whether or not the government explicitly nationalizes the health care industry, all health care workers would become quasi-public employees of the public plan. Whatever costs unions increased would be passed on to the taxpayers and patients and not threaten union members' jobs. Health care workers would know this and, as a result, become more likely to unionize. Every step toward government-run health insurance vastly simplifies the process of organizing new union members and keeping existing union members employed.
This is precisely what happened in Canada, a nation culturally and economically similar to the United States but with government-run single payer health care. A full 63 percent of all Canadian health care workers work under collective bargaining agreements, well above the 12 percent in the United States.
Raising Health Care Costs
While an influx of new members would benefit unions that organize health care workers such as the SEIU, collective bargaining makes health care more expensive. Unions attempt to raise the earnings of their members, which directly affects health care costs. Unions also indirectly increase costs by negotiating work rules that reduce productivity. For example, union contracts that require hiring more workers or making it difficult for hospitals to lay off poorly performing staff raise hospitals' total operating costs.
After Congress amended the National Labor Relations Act to cover health care workers in 1974, unions successfully organized many hospitals. Researchers examining the effects of these organizing drives found that collective bargaining raises hospitals' total costs of treating a patient by 4-9 percent.
The Congressional Budget Office (CBO) estimates that the health care reform bills being debated in Congress will cost more than $1 trillion over 10 years. However, this estimate implicitly assumes that union coverage remains unchanged under a government-run public plan. The experience of the U.S. public sector and the Canadian health care sector demonstrates that this will not happen.
Unionization Would Add Billions to Costs
Union activity would cause a public plan to raise health care costs by more than the CBO has estimated. Estimates show that the magnitude of these cost increases could be quite large. Assuming that the unionization rate in American hospitals would rise to the same level as the overall Canadian health care sector and that collective bargaining increases costs by 6 percent per admitted patient, then greater unionization would raise the cost of treating hospital patients by $27 billion in 2013 and $192 billion in the 2013-2018 period.
These figures are inexact estimates based on assumptions. If current union density in hospitals doubled to 34 percent, then hospital costs would rise by $71 billion over the 2013-2018 period. If union density rises to the 63 percent level of the Canadian public sector, then 2013-2018 costs would rise to $240 billion.
While these figures are approximate estimates, th
Barack Obama's Gallup approval rating of 52 percent may well be lower at this stage of his presidency than any US leader in recent times with the exception of Bill Clinton. But he is still worshipped with messiah-like adoration at the United Nations, and is considerably more popular with many of the 192 members of the UN than he is with the American people.
The latest Pew Global Attitudes Survey of international confidence in Obama's leadership on foreign affairs shows strikingly high approval levels for the president in many parts of the world -- 94 percent in Kenya, 93 percent in Germany, 88 percent in Canada and Nigeria, 77 percent in India, 76 percent in Brazil, 71 percent in Indonesia, and 62 percent in China for example. The Pew survey of 21 countries reveals an average level of 71 percent support for President Obama, compared to just 17 percent for George W. Bush in 2008.
As the figures indicate, Barack Obama is highly likely to receive a warm reception when he addresses the United Nations General Assembly today, whereas his predecessor in the White House was greeted with undisguised contempt and stony silence.
It is not hard to see why a standing ovation awaits the president at Turtle Bay. Obama's popularity at the UN boils down essentially to his willingness to downplay American global power. He is the first American president who has made an art form out of apologizing for the United States, which he has done on numerous occasions on foreign soil, from Strasbourg to Cairo. The Obama mantra appears to be -- ask not what your country can do for you, but what you can do to atone for your country. This is a message that goes down very well in a world that is still seething with anti-Americanism.
It is natural that much of the UN will embrace an American president who declines to offer strong American leadership. A president who engages dictators like Mahmoud Ahmadinejad and Hugo Chavez will naturally gain respect from the leaders of the more than 100 members of the United Nations who are currently designated as "partly free" or "not free" by respected watchdog Freedom House.
The UN is not a club of democracies -- who still remain a minority within its membership -- it is a vast melting pot of free societies, socialist regimes and outright tyrannies. Obama's clear lack of interest in human rights issues is a big seller at the UN, where at least half its members have poor human rights records.
The president scores highly at the UN for refusing to project American values and military might on the world stage, with rare exceptions like the war against the Taliban. His appeasement of Iran, his bullying of Israel, his surrender to Moscow, his call for a nuclear free world, his siding with Marxists in Honduras, his talk of a climate change deal, have all won him plaudits in the large number of UN member states where US foreign policy has traditionally been viewed with contempt.
Simply put, Barack Obama is loved at the UN because he largely fails to advance real American leadership. This is a dangerous strategy of decline that will weaken US power and make her far more vulnerable to attack.
As we saw last week with his shameful surrender to Moscow over missile defence, the president is perfectly happy to undermine America's allies and gut its strategic defences while currying favour with enemies and strategic competitors. The missile defence debacle is rightly viewed as a betrayal by the Poles and the Czechs, and Washington has clearly give the impression that it cares little about those who have bravely stood shoulder to shoulder with their US allies in Iraq, Afghanistan and the wider war on terror.
The Obama administration is now overseeing and implementing the biggest decline in American global power since Jimmy Carter. Unfortunately it may well take another generation for the United States to recover.
Nile Gardiner is Director of the Margaret Thatcher Centre for Freedom at the Heritage Foundation in Washington, DC.ey show that any significant increase in union organizing in the health care industry -- which the public plan would lead to -- would raise the cost of health care by tens of billions of dollars. These costs would add to either the cost of the premiums for the public plan or to taxpayer costs and thus the deficit. The CBO has not accounted for this probability in their cost estimates. Thus, a public plan will cost much more than Members of Congress have claimed.
Unions will make any health care reform that includes a government-run "public plan" more expensive than the CBO estimates. A public plan would turn health care workers into quasi-public employees, making them more likely to unionize. More unionized health care workers would translate into tens of billions of dollars in higher health care costs. These costs would either raise the cost of health insurance premiums or increase the deficit. Congress should make decisions about health care reform on the basis of its true cost
James Sherk is Bradley Fellow in Labor Policy in the Center for Data Analysis at The Heritage Foundation.
First appeared in the The Telegraph