Senate Health Care Bill: A Step in the Wrong Direction

An analysis by the Labor Campaign for Single Payer

In a last-minute flurry of pork barrel deals and capitulation to powerful corporate interests, the U. S. Senate finally passed its version of health care reform on December 24. The bill was roundly condemned by nearly every labor organization in the country.

“The health care bill being considered by the U. S. Senate is inadequate and too tilted toward the insurance industry,” said AFL-CIO President Richard Trumka. Karen Higgins, RN, co-president of the 150,000-member National Nurses Union, concurred: “Sadly, we have ended up with legislation that fails to meet the test of true health care reform...further locking into place a system that entrenches the chokehold of the profit-making insurance giants on our health.”

The bill requires that all Americans under 65 with incomes greater than 133 percent of the federal poverty level must be covered by private insurance either through their employer or by purchasing it through a state-based purchasing pool. It provides graduated tax credits to offset some of the costs of purchasing private insurance for those with incomes up to 400 percent of the federal poverty level. It sets no effective cost controls or reasonable limits on co-pays and deductibles. A family of four earning $54,000 per year, for example, could spend up to $9,000 in a year on insurance and medical expenses.

Despite an elaborate and complex system of subsidies and mandates, the bill’s own sponsors concede that it will still leave 24 million people uninsured when it is fully effective in 2014. These numbers will surely increase as employers use the bill as an excuse to end their employer-provided insurance benefits and costs of coverage continue to increase at two to three times the rate of increase in working people’s incomes.

Pork and Gravy

The fine art of political extortion was on full display in the days leading up to the vote as several Senators extracted major pork barrel concessions in exchange for their support. These included the “Louisiana Purchase” ($100 million in extra Medicaid funding requested by Senator Landrieu), the “Cornhusker Kickback” (a complete exemption from Nebraska’s payments into enhanced Medicaid benefits won by Senator Ben Nelson) and the “Montana Handout” (whereby Senator Baucus, after closing the door to any expansion of Medicare access everywhere else in America, won automatic Medicare eligibility for the unfortunate asbestos-exposed citizens of Libby, Montana).

Senator Ben Nelson also led the charge to insert anti-abortion language into the final draft. The language will allow individual states to prohibit abortion coverage in all plans which are offered through their insurance exchange. This provision will ensure that the health care debate will be hijacked by the divisive abortion issue for years to come.

Not satisfied with a deal that will require nearly every American under 65 to purchase its defective products, the for-profit insurance industry, working through corporate flacks like Baucus and Connecticut’s Joe Lieberman, got a generous portion of last-minute gravy. They were able to remove every semblance of a public option, including a proposal that would have allowed some Americans over the age of 55 to buy into Medicare. Insurance companies will also be allowed to continue to charge more based on age, rescind policies after they have been written, cherry-pick new customers, and limit payments for catastrophic illness. Nothing will stop them from refusing to allow policyholders to choose their own doctors or hospitals.

The Senate rejected the House provision that would have made insurance companies subject to the same antitrust regulations that all other private corporations are held to, and the bill gives them the right, for the first time, to sell policies across state lines. This will surely set up a “race to the bottom” as cut-rate plans are offered from low-regulation states.

Other segments of the for-profit health care industry also jumped on the gravy train. The drug industry, for example, won 12 years of patent protection for certain classes of drugs (many of which were developed using public funds). And the Senate rejected a proposal from Senator Frank Lautenberg of New Jersey to allow the re-importation of prescription drugs from Canada.

Labor’s Stake

This past September, the AFL-CIO unanimously passed a resolution in support of the “Social Insurance Model of Health Care Reform” at its Pittsburgh convention. The resolution called for a single-payer Medicare for All system that would establish health care as a birthright for all in America.

In addition, the resolution stated that, until we have achieved this goal, “Reform must not diminish the hard-fought benefits currently enjoyed by our members, their families and union retirees.”

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The Senate Bill fails to meet both of these standards. It does nothing to remove health care from the bargaining table at a time when it is becoming nearly impossible to maintain adequate coverage for active and retired members and their families. In fact, many of the provisions of the Senate Bill will actually make it more difficult for unions to continue to negotiate health care benefits at the bargaining table. These provisions include:

  • The notorious 40 percent excise tax on “high-value” plans, which will affect up to 20 percent of union-negotiated plans when implemented in 2014 and nearly 100 percent of the plans by 2025. It will provide powerful incentives for employers to reduce benefits and shift costs on to workers’ backs.
  • A wholly inadequate employer mandate. Employers who do not provide insurance will pay a fee of only $750 per year per employee, and that only if lack of employer coverage triggers subsidies under the individual mandate. The mandate will do little to level the playing field between union and non-union employers, and the small size of the fee will give many employers an incentive to jettison their coverage altogether.
  • The anti-abortion restrictions, which will affect many union-negotiated plans and will limit unions’ ability to negotiate reproductive health benefits for their members.
  • The requirement that insurance plans in the exchanges pay a minimum of 60 percent of an enrollee’s health care costs per year. This low minimum will undermine the standards established by nearly all union-negotiated plans, setting a new benchmark for employers in bargaining.

What Next?

The Senate bill now goes to a reconciliation process with the House version passed in November. It is expected that a final version will be voted on in both houses and signed by the President before the State of the Union address in late January. Many in the labor movement will stake their hopes that the Senate version will be radically improved in the conference committee. But it is important to point out that while the House version does not tax medical benefits, contains a symbolic public option, and omits the more egregious pork and corporate giveaways of the Senate bill, both bills are similar in basic outline and design. Further, the Obama administration has already indicated that the President is prepared to sign a bill similar to the Senate version, thus undercutting the negotiating position of the House sponsors.

The debate will then center on whether the final bill is “better than nothing” or “does more harm than good.” Those in the first camp will argue that defeat of the bill will set the cause of health care reform back many years and will undermine the entire legislative agenda of the Obama administration, especially hopes for labor law reform. They have stated that, like Social Security, the original bill is flawed and limited but that it will provide a structure that can be slowly improved upon over the future.

Those in the “more harm than good” camp are urging the defeat of the Senate bill and an immediate consideration of an expanded and improved Medicare for All program. Dr. David Himmelstein, co-founder of Physicians for a National Health Program, rejects the comparisons to Social Security. Rather, he says, “It’s more like Roosevelt agreeing to turn over the Social Security system to Goldman Sachs.”

One thing is certain: whatever the final outcome of this legislative process, the fight to establish health care as a fundamental human right will still lie before us. Senator Bernie Sanders, in his speech to the Senate after Republican obstructionism prompted the withdrawal of his single-payer amendment, spoke to the future of our movement:

“The day will come when the United States Congress will have the courage to stand up to the private insurance companies and the drug companies and the medical equipment suppliers and all of those who profit and make billions of dollars every year off of human sickness. And on that day, the United States Congress will finally proclaim that health care is a right of all people, not just a privilege.”

National Labor Conference

The Labor Campaign for Single Payer is inviting representatives of all labor organizations that support single-payer Medicare for All health care reform to a national labor meeting to be held at the National Labor College near Washington, D.C. on March 5-7. The meeting will be an opportunity to sum up our experiences over the past year and to chart a course for the future of our movement.

We will discuss ways of fully implementing the AFL-CIO Resolution on the Social Insurance Model for Health Care Reform and of renewing the historic mission of the labor movement to guarantee health care for all in America. We have accomplished much in the past year. We must build upon these accomplishments to help ensure that the day in Senator Sanders’ vision will surely come.

Find more information on the March conference here.


Mark Dudzic works for the Labor Campaign for Single-Payer.