Collaborating With Unions Can Help Control Health Care Costs

By Carl Mowery

Apr. 9, 2009

Employers and unions often go head to head on negotiating health care issues. But we have seen that if employers can work together with their unions to establish a health care plan, three goals can be achieved: a cost-efficient program that gives employees quality, affordable health care; healthier and more productive employees and dependents; and a better labor-relations environment.

In industries with an entrenched unionized workforce, there is often a sense of entitlement to quality health care, but no sense of personal responsibility.

The traditional way that companies engage unions on health care matters is through collective bargaining. However, this approach neither gets the unions to buy in to the benefits plan nor does it instill a sense of individual responsibility over an employee’s health care. A more engaging process is one that takes place outside of the traditional collective bargaining process and that emphasizes collaboration, not negotiation.

Key management and union officials must actively participate in this collaborative process. If an employer has an excellent working relationship with its unions, management should initiate a dialogue directly with the unions’ leadership. If the relationship isn’t solid, then an employer (with or without the advice of its unions) should retain the services of an impartial third party to help facilitate the process. Key management must participate to show the unions that the collaborative process is important to leadership who can operate with some authority during the process. Similarly, union leaders must participate in order to indicate to management, as well as to their own union members, the importance of this dialogue.

During this process, management and union leadership should be treated as equal partners in this endeavor. Both parties need to understand the dynamics of health care in general and the employer’s benefit plan in particular. The company should benchmark the plan against its peers on a national, regional and industry basis so that both sides understand how it compares. In addition, management should be prepared to indicate where the savings from a more cost-efficient program may go—to shareholders, increased salaries, fewer layoffs and increased staff, for example. Honest and direct dialogue about the current program’s shortcomings and successes must take place in order for the union leadership to buy in to this process of collaboration.

Each phase of the process should have specific goals. Through the education phase of the process, key management and union officials learn together about health care trends and how the employer’s plan benchmarks against others in their region or industry. Then the health care benefit program is redesigned by management and union officials working in collaboration. As part of the effort to engage employees to become better consumers of health care, the new benefit program must have a strong disease management program, wellness and prevention programs and a strong communications plan—components that are often missing in some collectively bargained programs.

During the maintenance or monitoring phase, a health care advisory committee composed of management and union leadership should be established to allow employees to continue their ownership of the health care program. This phase is important to the long-term cost savings of the program.

For our clients that have used this collaborative process, the relationship between labor and management has improved. This process has been very successful in the public-sector environment, for example. At one school district that adopted this collaborative approach, more than $100 million has been redirected from health care costs into areas at the core of educating the district’s children. The management and unions at that school district use the health care committee as an example of how they can work effectively together and have successfully used this collaborative concept as a model in other areas of the organization.

Collaborating with employees through their unions is an effective means to create an affordable and quality health care program for an organization’s employees and to have that program be cost-efficient, create a healthier and more productive workforce, and create a better labor-relations environment.

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