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Wednesday, March 24, 2010

ObamaCare and Unions

Last November 7, the House of Representatives passed H.R. 3962, crafted by Speaker Nancy Pelosi and whimsically titled the Affordable Health Care for America Act (AHCAA). It was the House’s version of ObamaCare. American labor unions, whether representing government- or private-sector workers, enthusiastically endorsed the measure. Yet most unions have been effective at securing good health care benefits for their members, and they frequently cite this as a reason for workers to unionize. So why are they so eager for government to expand its role in American health care? The short answer, as illustrated by several provisions of the AHCAA, is that government-run health care would enable union bosses to capture large numbers of hitherto union-free workers into forced-dues subservience.

Increased government intervention in health care increases the number of health care workers who are, or who could be classified as, government employees. In a single-payer system all health care workers are government employees. When government increases its subsidies and regulation of nominally private health care facilities, they become much less private. Their employees derive more of their income from government and are subjected to government-dictated workplace rules. They become more and more like government employees. This gives government-employee unions grounds for trying to intrude where they do not belong. Politicians who receive organized pecuniary and in-kind election support from the unions are all too happy to comply.

Similarly, as individual private health care practitioners receive more of their income from taxpayers they become quasigovernment employees. At the behest of Andy Stern and his Service Employees International Union (SEIU), politicians in several states—including California, Illinois, Washington, and Missouri—are trying to classify home health care workers who are paid with taxpayer money as state government employees who may be unionized and forced to pay union dues. Home health care workers tend to disabled and chronically ill people, often senior citizens, in their homes rather than in health care facilities. Section 2589 of the AHCAA creates a “Personal Care Attendants Workforce Advisory Panel” on which labor unions are guaranteed representation. “Personal care attendants” is another name for home health care providers. Union representatives on this panel will inevitably push for forced unionization of such workers.

The conversion of private-sector workers into government workers benefits unions because government workers are easier for unions to capture than private-sector workers. The percent of government workers who are unionized far exceeds the corresponding percent in the private sector. In 2009 unionization in government was 37.6 percent while in the private sector it was only 7.3 percent. Moreover, government-employee unions now have more members than private-sector unions. In 2009 government-employee union members comprised 51 percent of all union members, although government workers were only 16.9 percent of all workers (

The principal reason unions are more successful among government workers than private-sector workers is that government-sector employers have no reason to resist unionization. They and the unions with which they “bargain” sit on the same side of the bargaining table. They each seek more and more money from taxpayers. Bureaucrats seek larger budgets for their agencies, and the unions are helpful in organizing support for those larger budgets. Government employees know their paychecks are determined by political clout, and they recognize the value of unions as effective lobbyists against the interests of taxpayers. For example, in Canada, which has a single-payer medical system, almost all registered nurses are government employees. Sixty-two percent of Canadian registered nurses are unionized. The corresponding figure in America in 2008 was 19.8 percent. In brief, ObamaCare would create more government employees; and since government employees are receptive to the blandishments of unions, unions support ObamaCare.

AHCAA also helps private-sector unions because it imposes health care costs on union-free employers who otherwise may not offer medical benefits to their employees. It is elementary economics: If your competitor has a cost advantage over you, you can either cut your costs or lobby government to increase your competitor’s costs. AHCAA does the latter through employer mandates and tax penalties imposed on employers who do not comply. Compensation includes wages and nonwage benefits such as health insurance. A union-free employer can tailor compensation packages to fit the preferences of individual employees. He thereby obtains the services of his employees at the lowest cost. Unionized employers with union contracts that require uniform health care benefits do not have that ability.

One might think that federal oversight of the myriad details of American health care would make the medical provisions of collective bargaining contracts irrelevant. Not so. Union-owned politicians are loath to do anything to make any of the games unions play irrelevant. Section 254 of the AHCAA provides that “Nothing in this [legislation] shall be construed to alter or supersede any statutory or other obligation to engage in collective bargaining over the terms or conditions of employment related to health care.” Section 424 guarantees that any union-negotiated health plan automatically meets “health care participation requirements.”

There are other ways that the AHCAA benefits unions. Section 111 creates a $10 billion trust fund to bail out unions and employers that now have unfunded health care liabilities to early retirees between 55 and 64. The United Auto Workers (UAW), General Motors, and Chrysler are among the big beneficiaries of this “reinsurance” scheme. The government and the UAW have already taken over General Motors and Chrysler, but AHCAA would throw even more taxpayer money at them. Section 110 prohibits any postretirement health care benefit reductions in the private sector. Taken seriously, this would make the accumulation of future unfunded health care liabilities illegal. Inasmuch as the federal government itself continues to accumulate trillions of dollars of unfunded liabilities in Social Security and Medicaid, this is shameful hypocrisy.

There are more goodies for unions sprinkled throughout the 2,016 pages of the AHCAA, but the subterfuge is clear. In a 2008 campaign speech before the SEIU, Barack Obama promised Andy Stern and his subjects that “Your agenda is my agenda” (note: audio begins immediately at high volume). Whatever else may be said about the president’s attempt to take over American health care, it is obvious that he is keeping that promise.

  • Charles Baird is a professor of economics emeritus at California State University at East Bay.

    He specializes in the law and economics of labor relations, a subject on which he has published several articles in refereed journals and numerous shorter pieces with FEE.