Unions strongly support President Obama's health care reform,
which includes a plan for a government-run "public option" that
would crowd out private health insurance. Labor publicly argues
that the current health care system serves Americans poorly.
However, unions also have self-interested motives for promoting
government-run health care:
- The legislation includes a $10 billion bailout of union retiree
- Nationalized health care would lead to millions of new
dues-paying union members as government employees unionize more
frequently than private sector workers; and
- National health care would also reduce unionized companies'
However, unions do not support all health care reform plans.
When Senators proposed taxing health benefits to pay for health
care reform--a tax that would disproportionately fall on union
members--the labor movement threatened to derail the legislation.
Union support for health care reform is highly self-interested.
Unions Pushing for Government Health
Unions strongly support health care reform and have made
supporting a "public plan" that would lead to a government-run
single-payer system their top priority. In fact, after opponents
protested at town hall meetings this summer, the AFL-CIO spent $15
million to stage counter-demonstrations with union members.
Why has organized labor made government-dominated health care
such a priority? The AFL-CIO publicly argues that the "real-world
toll of soaring health care costs, lack of insurance and systemic
flaws in our health care system must come to an end." They
further state that their goal "is to win secure, high-quality
health care for all." Many union leaders and activists do
genuinely believe this. However, the labor movement has not spent
such large sums of money campaigning for health care reform out of
disinterested concern for the common good: Unions will benefit
immensely if the government takes over the health care system.
The most obvious benefit President Obama's health care plan
provides to organized labor is a $10 billion taxpayer bailout for
underfunded retiree health benefit plans. Many unions negotiate
benefit packages that allow workers to retire early and collect
health benefits until they qualify for Medicare. Many of these
plans they are underfunded because unions mismanaged them.
The healthcare legislation transfers $10 billion to these
accounts, in the form of a reinsurance program that pays most of
the cost of claims for workers in these plans. Like the GM and
Chrysler bailouts, the health care legislation requires all
taxpayers--including low income workers without retirement
plans--to pay for benefits for already well-compensated union
Government Health Care Facilitates
Government-dominated health care would transform union
organizing. Whether or not the government explicitly nationalizes
the health care industry, government funding and
government-dictated standards eliminate competition. Under health
care reform, unionized hospitals would not face a competitive
disadvantage because no competition would exist. All health care
workers would become quasi-public employees. Whatever costs unions
increased would be passed on to the taxpayer and not threaten union
members' jobs. For instance, taxpayers would cover the costs of
reduced productivity due to inflexible union work rules.
Prospective union members 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. While only 18 percent of
nurses belong to unions in the United States, 78 percent do in
Canada. A full 61 percent of all Canadian health
care workers belong to unions, well above the 11 percent in the
Given these figures, it is no wonder that the Service Employees
International Union supports government-dominated health care so
strongly. The SEIU represents health care workers. Under a
government-run health care system, the SEIU could easily organize
millions of new members who would then pay billions of dollars in
mandatory dues. For example, if unions organized nurses at the same
rate in America as they do under Canada's national health care
system, they would bring in two million new members paying roughly
$1.8 billion a year in dues. Whatever its effects on the overall quality
of health care, government health care would bring a financial
windfall to the labor movement.
Reduce Unions Competitive
Unions who do not represent health care workers will also
benefit from this law because it reduces competition. Unions
negotiate gold-plated health benefits for their members that raise
their employer's costs. Such expensive benefits, however, put
unionized firms at a competitive disadvantage.
However, if the government provided health care coverage through
insurance exchanges, then taxpayers--not consumers--would foot the
bill for health costs. This would reduce unionized companies
Unions Oppose Legislation They Must
Union support for health care reform does, however, have its
limits. In particular, organized labor does not support health care
reform for which it might have to help pay.
For example, Senate Democrats considered paying for the health
care reform through taxing employer-provided health benefits. Such
taxes would have fallen heavily on union members, since both
private and public sector unions have negotiated expensive health
When news reports leaked that the Senate was considering such
taxes the labor movement moved to quickly derail that idea. A
coalition of 30 major unions sent letters to the Senate expressing
their "strong opposition to any proposal that would pay for this
reform by altering the tax treatment of employer provided health
care." Behind the scenes Organized Labor made it
clear they opposed and would defeat any health reform that taxed
employer health benefits.
Organized labor supports health care reform only insofar as it
benefits unions and their members. Despite their public arguments
that the "real-world toll of soaring health care costs, lack of
insurance and systemic flaws in our health care system must come to
an end," the union movement will not sacrifice its own interests
"to win secure, high-quality health care for all."
A Financial Windfall for Unions
Unions claim that they support health care reform out of concern
for workers' well-being. Many union leaders genuinely do, but the
labor movement as a whole fights for government-run health care out
of self interest. The health care reform legislation includes a $10
billion bailout of underfunded union health plans. More
significantly, a government takeover of the health care sector
would ease union organizing by eliminating competition and turning
health care workers into quasi-public employees, as has happened in
Canada. Unions would collect billions of dollars of new dues from
millions of new workers. Government health care also reduces the
competitive disadvantage unionized companies face in the
Health care reform means a financial windfall for unions.
However, unions oppose health care reform for which they must pay.
Congress should not pass any "public plan" that would lead to the
government directly or indirectly controlling health insurance at
the behest of self-interested union lobbying.
James Sherk is Bradley Fellow in Labor Policy
in the Center for Data Analysis at The Heritage Foundation.