What Medicare for all could mean for auto workers

As negotiators for the Detroit Three and United Auto Workers grapple over the swelling costs of health care, several leading Democratic presidential candidates are campaigning on proposals to dismantle the private health insurance system in the United States as it is known today.

"Medicare for all” is the pitch from Vermont Sen. Bernie Sanders, Massachusetts Sen. Elizabeth Warren and others, who must win Michigan and other auto-producing states to be assured a path to the White House in 2020. But low-cost private health insurance remains for many rank-and-file UAW members their most valued piece of compensation, despite the international union’s decades-long support for single-payer national health insurance.

Matt Moorhead, a General Motors Co. employee who recently transferred to the Lansing Grand River Assembly Plant from the idling Lordstown plant in Ohio, said the health care under the current UAW contract “allows a freedom that a lot of people in society don’t have.”

“It scares me that (some Democratic candidates) don’t know working-class people,” said the 47-year-old self-described liberal who voted for Hillary Clinton in 2016. “It scares me that Democrats turn people away by some of the things they say... My fear is they will lose votes from working-class families who are union.

“Government-run health care isn’t the way to do it,” Moorhead continued. “There are systems that run better. There needs to be government involvement, but there also needs be a free market, as well.”

Because it affects workers’ families and comes into play at times of crisis, health insurance is a "go-to-war" point of contention between auto workers and their employers, said Kristin Dziczek, vice president of industry, labor and economics at Ann Arbor’s Center for Automotive Research.

But several Democrats vying for the presidency at the end of July stood on the stage of Detroit’s Fox Theatre calling for the end of employer-provided insurance in favor of a government-run health plan funded by taxpayer dollars. They argue it will benefit union workers.

"Bernie Sanders' Medicare for All is supported by labor because it means union workers have more leverage for higher wages and more comprehensive coverage without any co-pays, premiums or deductibles,” Bill Neidhardt, a Sanders campaign spokesperson, said in an email. “Together, with the support of organized labor, we’re going to take on the greed of the drug companies and insurance companies to save the working class money."

Thirteen of the 19 remaining Democratic candidates have voiced support for Medicare for all. The front-runner, former Vice President Joe Biden, advocates for an expansion of the Affordable Care Act.

During the economic downturn, auto workers took concessions on wages and other perks, but leadership managed to minimize the impact on health-care coverage. Following years of record profits, workers now want to regain what they lost and maintain their low health-care costs. Medicare for all plays into that context, but it won't have an impact at the bargaining table, said Harley Shaiken, a professor at the University of California, Berkeley, who studies labor issues.

"Medicare for all is for congressional debate down the road; the contract will be signed and delivered," he said. "These are tough, demanding jobs physically. Health care is one of the most important issues in their lives. There's going to be strong pushback (to potential cuts)."

The average hourly cost of employer-provided health care for union workers across all industries over the past decade has risen on average from more than $4 to more than $6, according to the Bureau of Labor Statistics. The Detroit Three’s benefits cost roughly 150% more than the U.S. average, according to the Center for Automotive Research.

Ford Motor Co.’s UAW employees pay zero dollars in deductibles and monthly premiums, according to the Dearborn automaker’s negotiations fact guide. Their total contribution is 3% of all health-care costs compared to 33% in the greater auto and transportation sector. Workers' contributions at Fiat Chrysler Automobiles NV and GM are similar.

Ford, which employs the most hourly UAW members of the Detroit Three, estimates if health-care coverage remains the same, its annual expenses for active UAW hourly employees is expected to top $1 billion in 2020. The automaker forecasts an additional $3 per hour per employee will be added in health-care costs over the next contract period if the status quo is maintained.

As vehicle sales slow, trade wars threaten stability, and pressure to invest into the development of autonomous and electric vehicles revs up, automakers could look to pass more of the growing costs of health care onto their employees, Dziczek said.

“The companies would like to continue to control or manage those costs to an extent, and it’s hard to do," she said. "The company’s standing point is ‘We can’t keep paying a billion dollars a year for active-worker health care and have no breaks on this.’”

Calls from the UAW for government-sponsored coverage began with President Walter Reuther in the 1940s and '50s. Unsuccessful in recruiting the automakers' clout for support, he pushed aggressively for better health insurance at the negotiations table.

A UAW spokesman declined comment because of the ongoing labor talks. A resolution passed at the UAW special convention in March says the union will “resist cost-shifting,” support voluntary disease management programs and protect employer-provided coverage for spouses. It also reiterates it will “continue to work towards and support the establishment of a national health care system.” It notes there were 27.4 million uninsured Americans in 2017.

“This is why our ultimate goal remains a comprehensive, universal health care plan that will provide quality coverage for every person in the United States,” the resolution says. “Health care should be a right, not a privilege.”

That is why Jerome Dobson, a worker at FCA's Sterling Height Assembly Plant, is in favor of Medicare for all, even if it means he has to pay more in taxes or even lose some coverage from his employer.

"We're blessed right now that I have insurance," said the 65-year-old Detroit Democrat, who says he could support any of the top five leading Democratic candidates, even if they do not support a single-payer system. "I would like to see everybody covered."

GM said it does not have a public stance on a single-payer system. The Detroit automaker spends about $900 million for its 48,000 hourly employees and their 69,000 dependents covered under the employer-provided health-care program, spokeswoman Jeannine Ginivan said in a statement. FCA and Ford declined to comment.

In the past, the companies have supported the expansion of Canada’s national health insurance system. Also, in the 1980s after the former Chrysler Corp. received a bailout from U.S. taxpayers, the late Lee Iacocca, who was the company's CEO, voiced his support for a national health plan under which the government could place strict limits on medical costs.

For the automakers, it is about whether Medicare for all will decrease their costs, Dziczek said.

“It really depends on how Medicare for all is implemented,” she said. “Look across the border at Canada, where there is national health care, but there also is supplemental insurance that the car companies pay for Unifor members. That has a cost-per-hour, too. It’s not so big and ballooning because the government is picking up the cost, but car companies are paying higher taxes to cover that benefit for the country as a whole.”

Dziczek said automakers could decrease their costs by requiring that employees have a primary physician to reduce visits to emergency rooms and urgent care centers where treatment is more expensive.

“You want to make that routine, preventative condition management as low-cost and accessible as possible so that it doesn’t turn into big, expensive stuff,” Dziczek said. “Making people pay more out of their pocket doesn’t result in that necessarily.”

A proposal in the rejected temporary agreement with FCA in 2015 outlined a potential template for larger reforms, Dziczek said. Representing up to 900,000 unionized and salaried active workers and retirees from all three automakers, an independent co-op would have created economies of scale to gain leverage with insurance companies, hospitals and other health-care providers to get better care at more affordable rates. The co-op idea, however, did not make it into the final contract.

“Really tackling the growing cost of health care will be requiring big changes to how the companies and union structure that benefit or involve major public policy change,” Dziczek said. “The companies and union can’t change the transparency of pricing, that’s beyond their control to manage.

“It is very difficult to say making people pay personally is going to make them better consumers. What is going to make people better consumers is greater transparency in health-care costs, to be able to shop.”

Staff Writer Kalea Hall contributed.

bnoble@detroitnews.com