Fall 2002
Volume 109 - No. 3
Fall 2002
Volume 109 - No. 3
BLE Focus
Health & Welfare
The rising costs of health care in the U.S. are making BLE's national contract talks difficult. These costs are increasing at rapid rates and the subject of sharing these costs with the carriers is being negotiated.
The high cost of good medicine
Nearly every day, the news media trumpets the skyrocketing costs of health care. They talk about things like the hidden costs of doctor visits, high costs of miracle drugs, high malpractice verdicts and hospitals scamming patients out of money. The news media and politicians promise to get to the bottom of these problems in a three minute segment and solve all of the world's healthcare woes, but they never do. These problems continue to impact each and every one of us.
Health care costs are increasing for everyone, including railroad employees. These costs are currently the subject of contentious negotiations between labor organizations and the rail carriers. As always, the carriers want the employees to pay more out of their own pockets.
In order to understand the scope of the dilemma facing railroads and their workers, it is necessary to understand the problem in general. Yes, medical costs are skyrocketing, but so is the lifespan of the average North American. Better health care means a longer life for many of us, but good care costs money.
However, we, in the U.S. look at countries such as Canada, Sweden and Italy and wish for a system more like theirs. There are problems with our system, but the healthcare system, for those who have healthcare coverage, works. It may be expensive but it saves lives. In the U.S., you do not have to sit on a waiting list for lifesaving treatments, while in many countries with socialized medicine, you can spend valuable time simply waiting for care.
Prescription drugs are usually cited by the media for being the sole contributor to the rising cost of healthcare, and this is a semi-truthful statement. The cost of prescription drugs has increased. However, the largest increase in costs last year for railroad workers were generated by doctor and hospital visits. Additionally, prescription drugs often take the place of more invasive procedures. Doctors often turn to prescriptions before ordering additional (and more expensive) tests or exploratory procedures.
The plan that covers railroad workers is a self-funded plan. (A self funded or self-insured plan is one in which employers directly assume the costs of insuring their workers.) Railroad workers, like all citizens, are facing the rising costs of healthcare. The BLE and other members of the Cooperating Rail Labor Organizations (CRLO) are currently negotiating ways to pay the costs.
As with the rest of the population, the railroad workforce is graying. An increase in employee age leads to an increase in costs. Attrition is eliminating many of the older workers from the ranks, but younger workers are not entering the workforce as quickly as they did 40 years ago. This leads to an older average age for employees. Additionally, the railroad workforce is typically male. Men, on average, do not seek medical care at high rates until they reach the 45-50 year age range. As more railroad workers reach this age group, the costs for the self-funded plan are quickly increasing.
These demographic changes, in addition to the increasing general healthcare costs, have lead to double-digit percentage increases in costs over the past five years. The expected increase in cost for this year is 13.2 percent, as recommended by United Healthcare.
How to pay for these increases
As was stated before, good care costs money, so how do we pay for it? There are three schools of thought regarding the way to pay for the rising costs without passing increased costs on to the employer (all of which pass the costs on to the employees):
Each of these would offset the costs, but at a higher cost to the beneficiaries of the plan - you.
The rail carriers want to finish the deal on health and welfare before moving on to other issues, but it has been a sticking point in the negotiations. They wanted to take the issue to binding arbitration, but the BLE and the other rail labor organizations bargaining through the CRLO have thus far refused. Health and welfare benefits have become expensive for the carriers and they want to get a deal done - preferably one that passes the increased costs on to the employees.
The BLE has always taken the position that the employees have paid for part of the cost increases with wage concessions at the bargaining table, but this is not good enough for the carriers this time. The carriers, as well as the BLE, know that there are three ways to pay for the problem of increased costs, either the carriers pay more, the employees pay more or the plan design is changed. The carriers are no longer willing to just share in the percentage of increase with the employees. Their goal is to have the employees pay for a percentage of the total premiums. This is a sticking point of the negotiations.
It is interesting to note, however, that the railroad industry is one of the last five percent of industries in the U.S. where employees do not pay through a monthly contribution for a portion of their healthcare coverage out of pocket.
The BLE has continued to negotiate under the auspices of the CRLO, but negotiations have stalled. Several other organizations, the UTU, BMWE, the Boilermakers, IBB and the TCU, have branched out on their own and reached deals with the carriers. The BMWE's deal includes provisions for the employees to use up to one-half of their cost of living increases to pay for one-half of the premium increased. It was ratified by BMWE members. The Boilermakers IBB have a stand-by agreement with the carriers and the UTU have a proposed arbitration agreement. The TCU's deal is also going to arbitration for two issues - the amount and timing of wage increases and also employee contribution to health and welfare.
Where does the BLE go from here?
The options left to the BLE are to accept the offer of binding arbitration, enter into a stand-by agreement - to accept the results of some other organizations arbitration or make our own deal - which could be accepted as a pattern for the industry.
The Negotiating committee is committed to finding a solution that will maintain the level of benefits our members have grown to expect with employee contributions being kept at a minimum, through either increased deductibles and/or co-pays, direct contributions or plan design changes.
According to the "State of Working America 2002-2003," a study done by the Economic Policy Institute, union workers pay less towards their health care. Union members deductibles average $200 a year compared with $300 typically paid by non-union workers.
© 2002 Brotherhood of Locomotive Engineers