Published on Wednesday, December 28, 2005 by the New York Times
Big Labor's Big Secret
by Robert Fitch
As most Americans are aware, our auto industry is in a crisis.
Workers' wages are falling, and hundreds of thousands of jobs are being sent offshore. America's largest parts supplier, Delphi, filed for bankruptcy protection, and General Motors, Delphi's main customer, may too, if a threatened United Auto Workers strike occurs next month. Meanwhile, Ford and its main parts supplier, Visteon, seem to be skidding down the same road.
How did we get here? There are many causes: poor car designs, high pension costs, increased foreign competition. But much of it comes down to the overwhelming health insurance costs borne by the auto makers. This is why the union's president, Ron Gettelfinger, has urged Congress to enact sweeping health insurance reforms.
If the government paid everyone's health insurance bills, as those in Canada and most of Europe do, Detroit's Big Three could save at least $1,300 per vehicle. Profitability would return. With deeper pockets, the auto makers could afford to pay their suppliers. Communities would be spared layoffs.
Of course, there are a lot of other compelling reasons to support a single-payer plan besides helping the auto industry. Although it is by far the most costly in the world, our health care system still leaves 43 million people uncovered. The latest World Health Organization rankings listed America's system 33rd, below Costa Rica and only two notches above Cuba.
Most advocates of universal health care focus on the opposition of Republicans and insurance companies. But perhaps the most important factor keeping an overhaul off the national agenda is one that few Democrats acknowledge: most of Mr. Gettelfinger's fellow labor leaders don't support a single-payer system either.
The reason comes down to simple self-interest. The United Auto Workers is one of the few private-sector unions that doesn't run its own health plan. Rather, most have created huge companies to administer their workers' plans, giving them a large and often corrupt stake in the current system.
Opposition to a national health care plan is as much a part of the American trade union tradition as the picket line. It goes back to Samuel Gompers, the founder of the American Federation of Labor, who railed at early Congressional efforts to pass a law mandating employer coverage as Britain had done, which he said had "taken much of the virility out of the British unions."
This line of thinking led to the notorious decision in 1991 by the A.F.L.-C.I.O.'s health care committee to reject a proposal that the federation support a single-payer plan. The majority said a national system simply had no chance in Congress, but others saw a conflict of interest: government-supplied health care would put union-run plans out of business.
The deciding vote was cast by Robert Georgine, chief executive of Ullico, a huge insurance provider created by the unions. A decade later, Mr. Georgine, who was paid $3 million a year by Ullico, and several other company directors - all heads of major A.F.L.-C.I.O. unions - were investigated by a federal panel for insider trading involving Ullico stock. Mr. Georgine and several directors resigned, and this year he agreed to pay back $13 million to the company.
Let's face it: union-administered health insurance funds provide irresistible opportunities for labor leaders. First there's patronage: hiring friends and relatives. Then there are the conventions, junkets and retreats provided by the plans and the providers. And for those willing to cross the line of legality, there's the chance to take kickbacks from health care vendors.
Many officials are charged, but few go to prison, even when money allegedly winds up in Mafia hands. Last month federal prosecutors lost a criminal case in Brooklyn in which they charged that the Genovese crime family leaned on two International Longshoremen's Association local presidents to, among other things, choose a favored health vendor.
Evidently, the jury was convinced by the defense's argument that the union leaders were under duress. Even Lawrence Ricci, the principal accused Genovese figure, was acquitted, although he disappeared during the trial and never testified. (His body was found last month in the trunk of a car in Union, N.J.)
Despite shrinking membership, organized labor still has enough money and muscle to get behind a campaign for national health insurance. Last month, public-sector unions in California came up with tens of millions of dollars in a successful campaign to defeat a ballot measure that challenged their right to use union dues for political purposes.
The problem is getting American unions to fight for common concerns as opposed to narrow institutional interests. It may just be that a broad-scale union overhaul will have to precede one in American health care.
© 2005 New York Times