Bargaining Health Benefits in the Workplace: An Inside View

I n early 1999, as a professor of health economics and a union representative at a major university, I served on a health benefits bargaining committee, preparing for formal contract negotiations to begin that summer. The committee had an “issue‐based” bargaining format and consisted of faculty union representatives and members of the university administration. They were asked to submit a report that the bargainers could use in the formal negotiations. Both the union representatives and the members of the university administration hoped that the committee could prepare the bargainers well enough so that they would not have to settle health care issues using last‐minute compromises and ad hoc formulas. This article examines the process of writing this report and its results. Negotiating health care coverage in the workplace is a fundamental issue in health care reform in the United States. Largely because of historical factors, most Americans receive health benefits through their (or their spouse's) employer, benefits that are provided and bargained as part of a larger wage and salary package. Before contract negotiations in 1999, the author served on an "issue‐based" health benefits committee of faculty union representatives and university administrators. Although the committee solicited estimates from health insurers regarding the impact of higher copayments on monthly premiums, in subsequent negotiations, the projected cost savings did not lead to changes in coverage or copayments. The explanations offered are (1) national or regional employers may be reluctant to raise employees' health benefit copayments when labor markets are tight; (2) collective bargaining, particularly when other, nonmonetary issues are being bargained, may lead to results different from those from a strictly competitive model; and (3) employers with market power in the product market may shift these higher costs to consumers through higher prices.