House Majority Policy Committee

I would like to thank the committee for the opportunity to testify on this crucial issue facing workers and employers across the Commonwealth.  Everyday as president of Local 1776 of the United Food and Commercial Workers, I must confront the issue of health care costs as we struggle to not only negotiate the best possible coverage for our 23,000 members, but also try to insure our employers can remain competitive in the marketplace.

Let me make this clear, there is a health care crisis in the Commonwealth.  In a state with some of the best medical facilities in the world there remains a crisis.  The subject of this hearing - "PAYING THE COST?" - goes to the heart of the matter in my mind.  I often say we already have health care for all in this country. If you get sick and you have health care insurance, you go to the doctor or go to the hospital and get the care you need.  However, if you don't have insurance, you go to the hospital emergency room and again, you get the care you need.  What we don't have in this country is an efficient way to utilize and pay for healthcare.

In the last 10 years we have witnessed health care premiums rise over 83% nationally.  A huge contributor to the increase in healthcare premiums are the estimated 767,000 uninsured Pennsylvanians who are using the  healthcare delivery system as I just discussed. But who is paying for their emergency room visits?  The hospitals claim it is uncompensated care.  My members wind up paying in several ways. The uninsured Pennsylvanians are part of the nearly fifty million people in this country without any healthcare at all, and there are tens of millions more who are underinsured. They are the people covered by plans with thousands of dollars in deductibles and maximum benefits as low as $10,000.  When these people do not get the primary care of a doctor, they end up sicker.  They end up in our hospital emergency rooms, and often are unable to pay the bill. The hospital builds these costs back into the rates they negotiate with insurance companies, and the insurance companies ultimately pass it on to our members and our employers in the form of higher premiums. I have heard estimates that the amount used to cover uncompensated care ranges between 7% and 25% of premiums.  Look at auto insurance!  At least when you pay your car insurance the company tells you how much you are being charged to cover the costs of uninsured motorists In healthcare insurance, the figure is buried, but we pay just the same.

Those without insurance who qualify for publicly funded benefits shift the cost completely to the taxpayer.  Last year the Philadelphia Inquirer reported that over 16% of Wal-mart employees were on Medicaid. There is ample anecdotal evidence that thousands more are encouraged by their employers to apply for adult basic and CHIPS in order to shift costs from the business.  Please don't get me wrong, we support these programs for low income uninsured families; however, we do have a problem when our employers and their employees subsidize their competition who are among the richest corporations in the world.  This puts our employers in uncompetitive positionsn It translates to higher taxes for all of us and forces the union to negotiate lower wage increases in order to pay for higher health care premiums.

A recent report by the Government's Centers for Medicare and Medicaid Services estimates that health care costs will double over the next ten years. Additionally, a recent report published in the Philadelphia Inquirer showed that 40% to 65% of all revenue received in Delaware Valley area hospitals came from tax payer funded programs.

Most of the companies we negotiate with are now paying between $1,000 - $1,300 per person per month for healthcare benefits.  That's $15,600 per year for healthcare.  Our members' employers pay more in a year for healthcare than what Wal-Mart pays two-thirds of its employees in total annual salary.  Where does that money come from?  The employer takes it out of its profits and has to raise prices as well as cut back on improvements and expansion projects.  The employees pay because that's part of their total compensation package.  It represents dollars that would otherwise be used for wage increases, pension funding, vacations and other benefits.  These exorbitant healthcare costs are the leading cause of wage and economic stagnation.

When unionized companies are forced to increase prices or cut hours to make the bottom line, their union employees find themselves paying for the uninsured again through lost wages and lost hours of work.

In conclusion, that is why our local union urges support for Governor Ed Rendell's "Prescription for PA".  It is not a perfect plan. We will continue to discuss our differences as the legislation proceeds; but the cost of not passing this legislation is staggering.

The "Prescription for PA" will not only help spread the costs more equitably with the tax policies contained in "Cover all Pennsylvanians", but will also lower costs in general by moving the uninsured out of the financially disastrous emergency room scenario. The program has built-in preventive and wellness programs that can eliminate or at least lower the costs of medical mistakes.

Ladies and gentlemen, I urge you to support this or any other plan that will help control the increases in healthcare costs. But as we go forward we must keep in mind the need to spread the cost of paying for this program to all of Pennsylvania's employers.  Responsible employers and their workers can no longer be asked to continue to shoulder the entire load while subsidizing their own competition.

If you can do this I pledge to you the full support of the 23,000 members of Local 1776 in this historic endeavor.

Thank you for giving me this opportunity to testify.