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Adversaries' Common Foe: Rising Health Costs

March 03, 2004|Peter J. Hurtgen

For 141 days, the Southern California grocery store lockout and strike brought into full relief the pressures of healthcare insurance on employers and unions. As head of the U.S. government agency responsible for mediating labor disputes, I can tell you that it's the single issue most likely to cause friction between workers and companies all over the country in the coming months.

In 46% of the more than 6,000 cases handled by the Federal Mediation and Conciliation Service last year, that issue was on the bargaining table. It surpassed even wages and job security as the top concern, and by all accounts that's not changing.

Both sides are being squeezed as healthcare costs rise by double digits. According to the Bureau of National Affairs, 40% of employers plan to increase current employee premium contributions, and 44% will increase co-payments and deductibles in 2004.

As for employers, providing healthcare benefits is a cost of doing business in the United States that isn't borne by many competitors. In Western Europe, for example, healthcare insurance is provided by governments. That means the rising costs threaten the ability of American industry to compete in a global economy.

Identifying creative solutions to the healthcare problem is not as easy as identifying its source. Costs are rising because of new medical treatments, new drugs and higher hospital operating expenses. In large part, then, health coverage costs more because of higher-quality care. Such factors are beyond the control of companies, employees or the unions that represent them.

While the quest for a national solution to healthcare costs goes on, collective bargaining can allow employees and employers together to fashion answers. During the supermarket strike in Southern California, there were many other negotiations across the country in which labor and management resolved their differences without a work stoppage.

The solutions are there. Undeniably, they involve hard choices for all parties, which underlines this fact: Teamwork is the key to both sides' survival. Unions and employees must understand the significance of rising healthcare costs for employers, and employers must appreciate their impact on employees.

In the global economy in which U.S. businesses must compete, labor and management are more likely to survive as allies than as adversaries.

Peter J. Hurtgen, head of the Federal Mediation and Conciliation Service, mediated the Southern California supermarket negotiations.

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