Once General Motors succeeded in shifting its enormous retiree health-care liabilities to a United Auto Workers-managed “voluntary employee benefit association” (VEBA), it was probably inevitable that other companies with unionized workforces would begin doing the same. In addition to other auto manufacturers, both AT&T and Verizon communications companies are apparently looking into the same possibility. [J. Gree “AT&T, Verizon May Shift to Union-Run Health Funds” Tennessean.com, Oct 17, 2007]

In many ways, it may make sense for unions to take on the responsibility for employee, as well as retiree health, as employers seek to get out of the health insurance business altogether. Workers in unionized industries often end up working for employers whose workforce is in the same union when they change jobs, so their health insurance would become as “portable” as many health reform experts have suggested as an essential reform for the misnamed “healthcare system”. And it is certainly possible, if not likely, that unionized workers would trust their unions more than their employers when it comes to efforts to manage their health.

Regardless of whether unions or employers are responsible for paying the bill, it makes sense for both to invest in proven methods to reduce the incidence and prevalence of risk behaviors and conditions, as well as acute and chronic diseases and injuries, in order to protect the workforce, as well as control their expenses. Of course, initiating employee health management (EHM) efforts at the retiree stage is waiting until the last minute, since by then, age as well as a lifetime of unhealthy habits will have made the major challenge one of managing chronic diseases.

Judging by Medicare’s experience, “managing” older people with already established chronic diseases, often more than one at that, is one of the most expensive and least cost-effective investments in the general domain of population health management. Preventing people from adopting unhealthy habits and contracting risk conditions or “pre-diseases” generally works much better. And since this earlier option also increases worker productivity, performance, and value to the employer, it should also increase union’s success in obtaining higher wages for their membership.

One risk in shifting the burden from employers to unions is the same as that involved in shifting it from employers to governments, namely that employers may not recognize or value the opportunity to promote employee health and reduce their disease risks, once they are “absolved” of the responsibility to pay for their sickness care. But since most large employers already recognize and are doing something to improve employee health because of its impact on workforce productivity, performance and value, this may not be such a large risk.

In countries where the government has the overall responsibility for paying costs of sickness care for employees and all citizens, employers have begun taking on added responsibility for both private insurance for sickness care, and internal EHM programs for their employees. As most US employers recognize, enabling employees to access sickness care when they wish, rather than waiting in line for providers in public insurance systems, is a major recruitment and retention “perk”. Moreover, promoting employee health, while reducing productivity and performance impairment factors, can be a highly cost-effective approach to reducing overall labor costs and even increasing revenue.

Even if employers manage to be totally free of any responsibility for employee sickness care expenditures, it will remain in their best interests to protect and promote their employees’ health. The positive economic, bottom-line impact of doing so will still be from two to five times as great as are sickness care cost savings alone. This fact may even become the basis for a more cooperative vs. adversarial relationship between management and labor as unions take on the responsibility, since unlike negotiations over wages, cooperation in EHM would be a win-win opportunity for both, as well as for employees, dependents and retirees.