new york city's largest healthcare union to give up part of raise
new york times, may 10, 2004
new york city's largest healthcare union and an association representing 94 hospitals and nursing homes has reached a tentative contract in which the union will forgo part of a promised raise to help the hospitals pay the soaring cost of health insurance for their workers.
by taking the unusual step of accepting a lower raise than planned, the union, 1199/seiu, will save $200 million over four years for the hospitals, which say that health insurance costs for employees are rising by 13 percent a year.
as part of the four-year deal, the union agreed to give back one percentage point of a 4 percent raise for this year and to contribute that money to the health insurance plan for the 71,500 workers covered by the deal. the return of part of the raise also applies to nursing homes.
the union granted the financial relief after several hospitals that were losing money announced they would close, and after private hospitals in the city had fallen $125 million behind on payments to pension and health funds.
if the deal is ratified later this month, it will give the workers raises of 3 percent a year for four years.
this agreement demonstrates how soaring health care costs have squeezed employers and the unconventional steps that some unions are taking to assist employers and to safeguard workers' health coverage.
"i've never heard of any other employee group willing to reduce its salary like this to help out on health-care costs,'' said bruce mciver, president of the hospital group, the league of voluntary hospitals and homes.
the agreement covers more private-sector health care employees than any other labor contract in the nation and is expected to set a pattern for 80,000 other hospital and nursing home workers throughout new york state. the deal involves most of the city's major hospitals, including mount sinai, montefiore medical center, new york-presbyterian, beth israel medical center, new york university and st. vincent's manhattan.
the accord is also unusual because it was reached a year before the expiration of the old contract between the union and the hospital association. the contract was due to expire on may 1 of next year, but union leaders, seeing how the rising health insurance costs were hurting the hospitals, agreed to reopen the contract and take a 3 percent raise, rather than 4 percent, over the next 12 months.
dennis rivera, president of 1199/seiu, new york's health and human service union, said the union, not management, had come up with the idea to return part of the raise. "we have a strategic objective of trying to keep the health benefit fund solvent and solid and not requiring a large contribution by the employers,'' he said.
mr. rivera emphasized that the hospital workers did not pay anything for their health coverage - no premiums, deductibles or co-payments.
even with the financial problems faced by many new york city hospitals, the agreement contains unusually strong job security language, largely barring the laying off of workers hired before jan. 1, 2000. under the accord, layoffs will be allowed only if hospitals or nursing homes close or face a financial crisis.
workers who are laid off will receive free job training and 80 percent of their pay until they are rehired as long as they continue looking for work. in addition, they will receive priority in being rehired for openings at any of the league's 94 hospitals or nursing homes.
technically, the union and league reached two deals yesterday, the smaller one covering 5,500 nurses with salaries averaging $75,000 a year. the larger deal covers 66,000 workers, including x-ray and laboratory technicians and laundry, housekeeping and food workers. they earn an average of $35,000 a year.
the hospital league had long complained that spiraling health care costs would force its members to pay $427 million more in health insurance contributions over the next three years, stemming largely from increased costs for prescription drugs.