Unionized workers typically bargain for a package of wages and health benefits — giving them a vested interest in containing health care costs. And some union members have more than just skin in the game; they also have a seat at the table when it comes to deciding on their health benefits. In this issue, we look at efforts led by unions and their partnering employers to curb the costs of health benefits by making primary care more accessible, promoting evidence-based care, and leveraging market power to curb escalating prices for prescription drugs.
As spending on health insurance benefits continues to outpace productivity gains, more and more employers are shifting costs onto their employees in the form of higher premium contributions, deductibles, and copayments. A recent Commonwealth Fund report found the most rapid increase in the “underinsured” rate — a measure assessing when people’s out-of-pocket health care costs are high relative to their income — since the Affordable Care Act occurred among Americans with employer-sponsored coverage, rising from 17 percent in 2010 to 28 percent in 2018.
In this issue of Transforming Care, we explore how a subset of the U.S. workforce, unionized labor, is partnering with employers to reduce health care costs. We explore strategies unions and employers have developed that go beyond cost-shifting to address the root causes of rising costs, including insufficient focus on prevention and primary care, poor care coordination and management of chronic conditions, inattention to evidence-based care, and escalating prices for prescription drugs and medical services.
Unions and Health Care: Leveraging a Workforce to Change Care Delivery
One of every 10 workers in the U.S. belongs to a union. Unions often bargain for or directly administer health care benefits on behalf of members. Perhaps as a result, unionized workers are more likely to have health benefits than nonunion workers; indeed, for careers like teaching, generous health and pension benefit packages are what entice people into fields where salaries are relatively modest.
Still, unions and their employers have been feeling the pinch of rising health care costs. In Contra Costa County in Northern California, for example, the per member per hour cost for the health benefits for one group of unionized workers is $17.41 — not only more than the state minimum wage but also an increase of 91 percent since 2004, according to Sara Flocks, policy coordinator for the California Labor Federation. “Health care is sucking up anything that could go toward an increase in take-home pay,” she says.
In recent years, America’s Agenda, an alliance of labor unions, businesses, health care providers, insurers, and pharmaceutical companies, has brokered partnerships between unions and employers interested in controlling spending on health benefits by changing how members receive their care. Many efforts focus on creating what the organization calls next-generation primary care. “For us, the issue of health care delivery reform isn’t ideological. It’s an engineering issue,” says Mark Blum, its executive director. “We need to redesign care delivery to address the cost drivers and promote smarter delivery design.”
Other efforts are led by union health plans, such as UNITE HERE HEALTH, an America’s Agenda member and Taft-Hartley plan covering 230,000 people (110,000 union members and their dependents). Taft-Hartley plans are paid for through trust funds established through collective bargaining between unions and a group of employers to provide health coverage for a large pool of unionized workers. In addition to managing benefits, UNITE HERE HEALTH provides resources to improve health outcomes. The fund has for example trained union members to lead workshops for their coworkers to help them learn how to better manage their chronic conditions.
Next-Generation Primary Care
Several unions have looked to the model of direct primary care, in which patients pay physicians a retainer that gives them access to most primary care services. The unions rely on capitated payments, financial incentives, or directly hire their own clinicians to establish clinics that can offer expanded hours, longer visits, and additional services, like health coaches. The New York Hotel and Motel Trades Council, which includes 33,000 unionized maids, bellhops, and other hotel workers, together with a coalition of their employers, the Hotel Association of New York City, have for seven decades operated clinics that provide this kind of advanced access and convenience. Each of the health centers (three in Manhattan, one in Brooklyn and one in Queens) charges no copayments for services and offers primary, behavioral health, specialty, optical, and dental care under one roof.
The newest facility, Brooklyn Health Center, which opened in 2017, uses technology and smart design to achieve efficiencies. Patients go directly to treatment rooms, where video screens greet them and display their medical records. Clinicians work in a shared space according to pods organized by disease state or population: primary care clinicians, endocrinologists, ophthalmologists, and podiatrists help those with diabetes, for example, while ob-gyns, pediatricians, and family practitioners treat pregnant women, kids, and families. The layout has proved more efficient for providers as well as patients — in a trial of it, physicians were able to see 3.5 patients per hour compared to 2.7 per hour with a layout that didn’t facilitate communication. “Everything is teed up for the clinicians; everybody is working in this communicative space; they don’t have to spend time looking for another doctor, tracking down paperwork or lab results,” says Robert Greenspan, M.D., CEO of New York Hotel and Motel Trades Council and the Hotel Association of New York City Employee Benefit Funds.
This approach has kept the costs of providing care and wellness services to about $13,000 per family a year. Typical costs can be double that in New York, according to Blum. Some of the savings arise from low utilization of emergency departments (even though members have only a $5 copayment for using them), Greenspan says. The union also achieves savings by negotiating directly with pharmaceutical companies to purchase drugs, with discounts based on an agreement to offer a single drug in each class. The drugs are dispensed from on-site pharmacies that enable the health centers to track medication compliance and relay information to clinicians and care coordinators.
Spreading the Next-Generation Primary Care Model
This approach has spread beyond New York and the hotel industry. In 2015, a local chapter of the United Food and Commercial Workers (UFCW) union partnered with JBS, a large meat processor, to open primary care clinics for members working in Iowa, Minnesota, Nebraska, Pennsylvania, and Texas facilities. Mark Lauritsen, UFCW Food Processing, Packing and Manufacturing division director, pitched the clinics to JBS as a way to attract and retain workers, in addition to controlling costs. Meat processing can be difficult and dangerous, and employers compete for workers in a tight labor market.
The clinics offer extended hours and same- or next-day appointments and there are no copayments for most services. Both have been key to attracting patients as JBS employees are often reluctant to take time off to go to the doctor, since missing a shift means losing wages, according to Cliff Robertson, M.D., M.B.A., CEO of the Nebraska/Southwest Iowa Division of Catholic Health Initiatives, which staffs the clinics. “We and the employer offered education to help people understand we’re here for them, it’s free, and it’s not a bad thing if you have a medical problem and are coming to us,” he says. “Your employer wants you to be healthy.”
In Nebraska, the approach has reduced health care spending by between 5 percent and 15 percent annually, mainly by encouraging people to visit the clinics rather than urgent care centers or emergency departments, Robertson says. (The savings to date may be lower than in New York’s clinics because the clinics are newer, and because they do not offer specialist care or negotiate pharmacy prices.) These savings have meant salary increases for workers, according to Lauritsen. “Six or seven years ago the hourly wage increases would be 50 cents at ratification. We just finished a round of negotiations. The increases ranged from $1.10 to $3.85,” he says.
UFCW has also partnered with Cargill, the largest privately held company in the U.S. in terms of revenue, to establish primary care centers for workers at the company’s Texas and Colorado meat processing plants.
The success of clinics prompted some of the nation’s largest unions, the United Autoworkers and UFCW, to create their own company, known as SolidaritUS Health, to spread the model. It now runs clinics for employees of Spirit AeroSystems, which makes airplane fuselages in Kansas, Oklahoma, and North Carolina.
We wanted to reform primary care so that patients aren’t being jockeyed around a complicated system of specialists and hospitals and other providers and could have, in a word, concierge care.
Former Congressman Dick Gephardt
Patients can make same-day or after-hours appointments, pay no copayments or deductibles, and call or video chat with their physicians. Notably, both unionized workers and Spirit managers attend the clinics and serve together on a health committee to make decisions about services — making clear that the clinics are not just cost-cutting gambits, says former Congressman Dick Gephardt, chairman and cofounder of SolidaritUS Health and a board member of both Spirit AeroSystems and America’s Agenda. “If we can make this work in Oklahoma, we will seek to expand it elsewhere,” Gephardt says. “There is great demand for better access to care and a meaningful relationship with your doctor.”
Unions and their employers have taken many tacks to discourage people from using emergency departments as their usual source of care. In 2017 in Las Vegas, the Culinary Health Fund, a Taft-Hartley plan managed in collaboration with nearly all of the strip’s major hotels, opened a health center offering primary care, dental and vision services, and a pharmacy for 130,000 union members and their dependents. The Culinary Health Fund’s size has also enabled it to contract with a range of specialists — including cardiologists, radiologists, and behavioral health providers — to provide care to members through capitated arrangements.
The new health center includes an urgent care clinic that is open 24/7 and staffed with board-certified emergency medicine physicians — a key part of its strategy to engage people in care. “People want to get care when they want it,” says Kathy Silver, president of the Culinary Health Fund. “And this is a 24-hour town, and many of our members have unusual work schedules, so it’s not always easy for them to make appointments.” Since opening the urgent care clinic two years ago, emergency department use among plan members has dropped about 15 percent. “Often what will happen is that members will come in to urgent care for a routine matter,” says Silver. “Urgent care staff will help them make an appointment with a primary care clinician and tell them how important it is to establish that relationship.”
Plans leaders have learned it is important to give members options. Eight years ago, the Culinary Health Fund worked with Iora Health to set up a dedicated clinic to offer primary care, health coaching, and additional supports for union members who accrued high costs because of their complex and/or unmanaged conditions. The fund invited about 6,000 members to join, but only 1,000 did so, perhaps because they didn’t want to have to change doctors. “Even though we made it easy as possible, with walk-ins and no copayments, people didn’t gravitate to it,” says Silver. “When we built our new center, we put a focus on giving people the ability to have episodic care. Of course, our end goal is to have everyone develop a relationship with a primary care physician, but we recognize that can take time and education.”
Promoting Evidence-Based Care
The local union of the International Brotherhood of Electrical Workers (IBEW) in San Diego has been able to control health benefit costs by steering its 7,000 members and dependents toward appropriate, evidence-based treatment. Nearly all (about 98 percent) of members have opted into the plan’s preferred provider organization, which selects clinicians based on publicly available performance measures, including data on rates of health care acquired–infections and C-sections.
Union members also have access to the “Best Doctors” service from Teladoc Health, which uses data analysis and medical experts to review diagnoses and treatment plans for complex cases. Ken Stuart, administrative manager for IBEW’s Health and Welfare Trust, calls it “the greatest single cost-containment program to the benefit of both the plan and participant.”
Best Doctors’ services range from answering medical questions about surgeries and recommending local specialists to performing a full review of someone’s medical records, lab results and imaging, and recommended treatment using teams of medical experts. When reviewing cases where surgery has been recommended, the experts recommend treatment that avoids surgery 38 percent of the time. Overall, 45 percent of diagnoses and 79 percent of treatment plans are modified or changed after review.
At IBEW, any covered participant can use these services, free of charge. And anyone planning to undergo certain elective procedures — those for which Best Doctors’ reviews have frequently led to different diagnoses or recommendations — has all of their out-of-pocket costs waived, no matter how they choose to proceed, if they agree to a review beforehand. “If they undergo the review process, that procedure won’t cost them a penny,” says Stuart. “The idea is to get it right. We are not looking to pay the least. We want to pay a reasonable amount for optimal outcomes.” Best Doctors’ expert oversight of diagnoses and recommended treatment plans have generated a four-to-one return, primarily from reductions in the number of unnecessary, avoidable, or duplicative medical procedures, according to Stuart.
Controlling Pharmacy Costs
In New Jersey, public-sector unions — the state chapter of the Communication Workers of America, which includes telecommunications workers, media professionals, social service workers, and others employed by state and local governments and the New Jersey Education Association — have been working with the state to find ways to control costs of health care for more than 750,000 union members.
In addition to creating primary care clinics along the lines of those in New York, Las Vegas, and elsewhere, the partnership has sought to reduce the costs of providing prescription drugs. “Prescription drug costs were going up by double digits every year,” says Hetty Rosenstein, New Jersey director of the Communication Workers of America. “And you couldn’t even track what was causing it.” With guidance from America’s Agenda, the unions persuaded the state to implement a “reverse auction” for pharmacy benefits: instead of receiving proposals from pharmacy benefit managers (PBMs), each with its own complex and often opaque pricing scheme that can make comparisons difficult, the state invited PBMs to bid for its business in real time in an online auction, similar to eBay.
The auction, which relied on Truveris software, forced PBMs to clearly define their drug formularies and compete with each other on price, enabling the state to secure a PBM contract that came in 10 percent below projections. In 2018, New Jersey announced it will save $1.5 billion over three years, with further savings possible due to the software’s real-time audits of pharmacy claims, which can flag errors and overcharges. New Jersey Governor Phil Murphy is looking to expand this approach to Medicaid, according to Rosenstein.
Unions’ experiences in partnering with their employers to control health care costs offer lessons for other employers, health plans, and the broader health care system.
Health care services need to be offered how, when, and where people want them. This is particularly important for those who do not have flexibility in their work schedules. “If you are a teacher, bus driver, secretary, or a custodian in school, when you have a doctor’s appointment typically you have to take the day off,” says Kevin Kelleher, director of research and economic services at the New Jersey Education Association, the teachers’ union. Having convenient locations, after-hours visits, telemedicine, or other easy ways to reach your doctor are key to engaging people, he says.
The success of these union-led solutions has to do with the fact that the employer has a highly motivated and well-organized partner to mobilize. You can't just change care delivery, you also have to mobilize patients to engage in the transformed care model.
It takes time to build trusting relationships between patients and their clinicians. Union members tend to stay in their jobs for years. “We may know their grandparents and have delivered their parents,” says Greenspan of patients at New York City’s Hotel Trades Council and Hotel Association of New York City health centers, where clinicians leverage long-term relationships to encourage behavior changes. Its newest facility, Brooklyn Health Center, seeks to promote wellness by offering free fitness and cooking classes, for example. To date, they’ve had success in encouraging people to quit smoking — achieving high quit rates (39.7% of smokers had stopped at 6 months; 30.2% were no longer smoking at 18 months). “We put patients’ smoking status on the banner of their electronic health records,” says Greenspan. “Then doctors, dentists, therapists, and pharmacists encourage smokers to try tobacco cessation programs in a variety of ways. If we’re going to try to change behavior, 20 minutes with your doctor is not going to do it.”
Partnerships among employers, and with health care providers, are needed to make impactful changes in the health insurance marketplace. The efforts that have gained most traction to date have involved unions pooling their members and working with several different employers across an industry — generating the critical mass to gain leverage.
In some regions, unions’ efforts to reform health care delivery and payment have been embraced by partners outside of the unionized sector. In Kentucky, for example, an effort initiated by the United Auto Workers and Ford Motor Company has brought on board health plans, other employers, health care organizations, pharmaceutical companies, government agencies, and research organizations. The Kentuckiana Health Collaborative is using performance measurement to drive improvements in preventive care and chronic disease management and has been working to align employers around common value-based purchasing efforts, as well as convening community conversations about issues like the opioid epidemic, for example.
While union-led efforts to control health care costs have increased access to care and reduced health care utilization, it remains to be seen whether they will improve workers’ health in the long run. But it’s better than protracted labor disputes, says Ivana Krajcinovic, senior director of healthcare delivery at UNITE HERE HEALTH. “A lot of the time in collective bargaining, parties are struggling to find another 25 cents that will just go to pay for health benefits,” she says. “Trying to improve access to care and teach people how to manage their health can be a win–win: if you can improve quality you can drive down costs.”