ILR Press, Cornell University Press, 2000

 

Advocates of universal access to health care in the United States have long been frustrated and puzzled by the failure of organized labor to commit its resources to this struggle. Gottschalk’s carefully researched and well-written study clarifies many of the factors that explain this failure. In so doing it sheds light on the larger question of labor’s role in the postwar political economy of the United States.

 

The argument develops three interacting themes:

 

        1. The World War II decision to link health care benefits to employment gave union leaders a financial and administrative stake in the health care funds that paid the benefits. This created conflicts of interest within the labor movement that continue to limit labor’s support of a health care system providing uniform benefits, paid for by taxes, and regulated by government.       

       

        2.  Union members’ access to health care depended on the economic viability of unionized employers; this took priority over concern about access to care for others, whether employed or not, and remains the reason why those who organize campaigns to broaden access in the direction of comprehensive coverage could not count on labor’s full support.

 

        3. When efforts were made to universalize access, notably in the Clinton administration, labor believed it had no choice but to follow the president’s leadership even when the administration’s strategy was in difficulty; the political risk to Democratic control excluded the possibility of opposition. 

 

The Shadow Welfare State

The book is a study of the private-public mix that distinguishes social policy in the United States from other modern nations. The welfare laggard label applied to the United States in many cross–national studies overlooks the degree to which our system is “anchored in the private sector” (p. 1).  Enactment of Taft-Hartley in 1947 and Employment Retirement Income Security Act (ERISA) in 1974 consolidated the integration of much of labor into the model of employment-based, privately funded health care — Gottschalk’s “shadow welfare state.” The book is an in-depth analysis of this model’s achievements and limitations.

 

Benefit Funds

The development of these benefit funds  was especially important to unions in sectors like the building and metal trades, music and theater, and seasonal industries where workers find jobs with multiple employers and are often employed intermittently.  Employers provide the funds but unions manage the programs. From modest coverage in the early years these funds grew steadily. In 1992 an estimated 7,000 plans held assets exceeding $230 billion. They cover about ten million workers and twenty million family members. Of the 7,000 plans, 4,000 provide health and welfare benefits, the remainder pensions.

 

Some expected that problems posed by  increases in the costs of medical care and by economic difficulties in periods of recession  would move union leaders to support extension of government-funded programs, like Medicare. Three factors worked to blunt this shift:

First, the Taft-Hartley plans created a potential conflict of interest for organized labor because they catapulted some union officials into the insurance business.

Second, some labor leaders viewed the funds as an indispensable device to maintain important institutional ties and preserve a sense of cohesiveness and identity for union locals whose members are scattered across numerous work sites and localities. . . .  The third and most important factor . . . is that the funds helped spawn an important coincidence of interests between unions and large employers that run self-insured health plans and have multi-state operations (p. 51).

 

Union leaders in key positions opposed efforts to supplant or supplement these plans with government provision of health care.  Robert Georgine, the long time president of the AFL-CIO Building Trades Department also served as president of the Union Labor Life Insurance Company (ULLICO), reporting $438 million in revenues and assets of $2.1 billion. He cast the decisive vote that defeated a 1991 resolution in the AFL-CIO’s health care committee, chaired by John Sweeney, supporting a single payer program of health care for the United States modeled on the Canadian system (pp. 51–52).  While the single payer model had important supporters, strong and sustained divisions limited any serious labor commitment to the struggle for universal coverage. 

 

In a conservative era hostile to any major expansion of government, unions could protect and even expand benefits through direct negotiations with employers. Benefit funds served to strengthen members’ support of their union against employers’ attacks. Federal law exempted self-insured funds from state regulation, an attraction in states hostile to unions.

 

One troubling outcome of this model has been a balkanization of plans, with benefits, costs, and eligibility standards that vary widely, a “myriad of risk pools” (p.59).  Larger employers can use an experience rating to lower their administrative costs while smaller firms pay much higher costs under community rating systems. Carriers are free to deny coverage or to set prohibitively high rates for millions of workers in smaller nonunionized firms; labor has no stake or voice in this process.

 

The Changing Labor-Management Relationship     

Even as the postwar social contract began to come apart, especially in the aftermath of the Reagan election and the undeclared war on labor by employers, many union leaders still subscribed to the belief that the United States had moved beyond the era of struggle to tame capital’s excesses and to legitimate the rights of workers to organize. This view reflects visions of social justice developed in the papal social encyclicals, to which John Sweeney subscribes, as did some of his catholic predecessors.  In the modern era, according to this vision, labor and capital shared a vision of coexistence that Gottschalk calls “American-style corporatism” (p. 89).  Its most prominent advocate was John Dunlop; he argued that labor had achieved security, capital had accepted labor’s legitimacy, and therefore there were no longer issues so divisive that they could not be negotiated and resolved. [1] The private forums that he organized after his tenure as Secretary of Labor in the Ford administration, in which leaders from labor and business participated, were intended to promote and facilitate these discussions.

 

Labor leaders may have believed that they were equal partners, but in reality the enhanced power of capital and the growing strength of political conservatism consigned labor to the role of junior partner. Gottschalk documents in detail the many instances in which union leaders echoed the views of their senior corporate partners, often in the face of evidence that pointed to other policy choices. In the 1990s debate on the Clinton health plan proposal, labor argued that business needed relief from the burdensome cost of health care provision, but in fact two-thirds of private expenditures were borne by individuals and families, only one-third by business (p.123).  Union leaders echoed the claim that American industry’s ability to compete in the global economy was weakened by the burden of health care costs, a view not sustained by close examination of both international and domestic factors determining corporate profitability (pp.131–36). 

 

Labor and the Democratic Party

Gottshalk helps us understand the constraints on labor’s choices that came—as they still do—from refusal to jeopardize the political standing of elected Democratic presidents. When the Clintons built their plan on the foundation of employer mandate, echoing Nixon’s earlier focus, labor dutifully fell in line even though major changes had greatly eroded the stability of employer-employee relationships. Unions like the United Auto Workers (UAW), American Federation of State, County, and Municipal Employees (AFSCME), International Ladies’ Garment Workers’ Union (ILGWU), Communications Workers of America (CWA), and others, which in the past had advocated a single payer model and had abandoned Dunlop’s vision of cooperation,  in the end returned to the Democratic fold ready to support the Clinton approach. When Clinton moved the Democratic Party to the right in his campaign to preempt the middle ground, his union supporters did not think they could break with him at the risk of losing a precarious political advantage.

 

Labor and the American Political Economy

Gottschalk’s larger theme is that labor suffers from “a highly selective understanding of the U.S. political economy, one that contrasted sharply with the case labor tried to make in other policy realms” (p. 114), like the struggle over North American Free Trade Agreement (NAFTA), and fast-track trade negotiations in which labor was clear about where its interests lay and the identity and interests of its corporate adversaries. This tells only part of the story. Struggles over situs picketing, trade controls, limits on organizing, and collective bargaining are straightforward, unambiguous matters of institutional survival and self-interest. By contrast, the struggle over health care policy choices involves historical and ideological forces that have long contended for dominance in shaping the nation’s view of the scope and limits of the national government, and the role and power of organized labor.  Her brief discussion of how Newt Gingrich was able to move to the mainstream “what were considered fringe ideas circa the 1970s” (p. 166) hints at but fails to develop the argument or to root it in prewar as well as postwar history.

 

In this struggle corporate interests have mobilized impressive financial, intellectual, and political resources in a campaign to persuade the American people that it is necessary to make government subordinate to the private market and its instrument, the private corporation. For them the achievements of the New Deal and the postwar vision of mutual acceptance of the role of labor and capital remain bones in the throat. Their success was symbolized in Reagan’s dictum that “government is not the solution; government is the problem.”  Clinton’s statement that “the era of big government is over” marked its bipartisan consolidation.

 

This remains the central barrier to any effort to put in place a tax-based system of health care with government oversight. Its power is the reason why labor cannot expect to prevail in any effort to create an American version of the Canadian single payer model of health care provision. Even when the polls showed significant public support, the labor strategists believed that they could not overcome the opposition. As the sophisticated advertising campaign in opposition to the Clinton plan illustrated, business, insurance, and financial interests were determined not to permit a market that generates more than one trillion dollars annually to be subject to even modest public control.

 

Gottshalk’s evidence clarifies how labor’s stake in the benefit fund system predisposed many union leaders to oppose any diminution of that domain. But thoughtful planning could find ways to protect these programs and use them to meet other important needs facing workers and their families—affordable housing and other components of the “social wage”—while a system of universal coverage was developed and deployed. Canada’s medicare program began in one province and only became national in scope over a period of years.

 

Future Prospects

Gottschalk correctly argues that embedding the health care debate in the broader framework of public policy enables us to “wrest the issue of health policy away from the health-care experts” (p. 164) and to redefine it in political terms as a sector whose size and scope gives it a key role in the restructuring of the economy and the transformation of work (pp.164–65). She remains hopeful that the seeds of renewal of labor’s vision and strength, both seriously eroded, “may come from within” (p. 167).

 

The evidence in support of such a vision is scarce.  Labor faces major challenges but it’s not clear that this generation of union leaders is up to the task.  Internal union life, with a few exceptions, is largely devoid of serious discussion and open debate about how labor should understand the world and the nation. Contests for office are the exception, especially at the level of the national union. Labor’s voices and values, and the lives and concerns of working people, are largely invisible and inaudible in the national media. Only a handful of national publications still employ a full-time labor reporter.  Divisions within the AFL-CIO have been deepened by the autonomy of major affiliates; jurisdictions are outmoded by the pace and scope of change in the corporate landscape.  The AFL-CIO lacks the power or the resources to unify member unions that cherish their independence. Its leaders can persuade but cannot act in their names.

 

Labor still has many leaders without distinction or vision. The labor movement was weakened internally by cold war divisions, bereft of the stimulus of those who built the industrial labor movement.  The rigidly ideological world views of its leaders severely limited their ability to work with broadly based social movements, including the advocates of universal access to health care. It was only after John Sweeney’s 1995 election as AFL-CIO president that this picture began to change, but progress remains limited and prospects uncertain.

 

In 1997 AFL-CIO President Sweeney welcomed the prospect of a renewed relationship with writers, artists, and academics for whom an effective labor movement is central to the fostering of a vision of social justice. By 2001 that effort had virtually disappeared. Academics teach and write about labor’s past, present, and future, but there is little evidence that this work matters in shaping union strategy. Unlike other national labor movements, ours lacks centers for strategic analysis, the equivalent to the military’s war college or, more important, the intellectual resources at the disposal of business interests. In the 2001 election for mayor of New York, historically a strong union center, each major union went is own way with no semblance of a strategic vision or a coherent strategy. In the aftermath of the tragic destruction of the city’s financial core, strategic decisions about the reconstruction of the destroyed heart of lower Manhattan proceed with virtually no labor participation.

 

In New York, Service Employees International Union Local 1199, the largest and strongest union of health care workers, focuses on securing a flow of state funds that will protect the hospitals in which its members work. Local 1199, which had long insisted that Blue Cross not be permitted to convert to profit making without firm guarantees that the state’s poor would be assured of financial access to care, dropped its opposition in return for assurance that the proceeds of the conversion, estimated at $1 billion, would be used to protect the city’s hospitals against anticipated financial difficulties. 1199 used its influence to promote programs to expand health care protection for children and families and to protect Medicaid against projected cuts.  But, on balance, the union’s priority remains to protect the jobs and financial security of its members.

 

Conclusion     

The costs of failure to ensure good and affordable care for everyone are formidable. Our system provides cutting-edge care for some, total and costly neglect for others, in particular those at the margin of the economy and the labor force for whom health care means a visit to the nearest emergency room when illness is too painful to endure. But even for those who have long been able to see good doctors, benefit from state-of-the-art technology, and find relief in modern pharmaceuticals, the pressures mount to shift the financial burden to the individual and family, accept higher initial payments and deductibles, pay higher out-of-pocket costs, limit the number of patient visits, forego preventive care,  and constrain  access to care of those at highest risk.

 

As yet there is little evidence that labor’s strength, where it remains, is engaged in resisting these measures. The long cherished promise and hope—for a labor movement that can elevate the values of solidarity and justice to places of honor and power in American life, humanize the workplace, curb corporate abuse of power, and empower the federal government as a central instrument to ensure that decency, security, and opportunity are honored and realized in our national politics—remains unfulfilled.