California Healthline Rounds Up Recent News on Grocery Store Workers Strike Over Health Benefits

The ongoing grocery store worker strike could affect forecasted enrollment and earnings increases for Cypress-based PacifiCare Health Systems, officials announced on Friday, the Los Angeles Times reports. PacifiCare officials said that enrollment and earnings figures for 2004 may be lower than projected in part because 28,000 of its 48,000 members receiving health benefits through United Food and Commercial Workers have become ineligible for coverage (White, Los Angeles Times, 1/10). In addition, 100,000 UFCW members have lost their eligibility for prescription drug coverage through Prescription Solutions, PacifiCare's pharmacy benefit manager (Wolfson, Orange County Register, 1/10). About 77% of the 70,000 striking and locked-out unionized supermarket workers at Albertsons, Kroger-owned Ralphs and Safeway-owned Vons lost their health care coverage on Jan. 1 and must pay to keep their health insurance active because they did not work enough hours in October to maintain coverage. UFCW members employed by the grocery stores began a strike in mid-October to protest proposed revisions in their health benefits and other contract issues. Workers who are no longer eligible for their health coverage can receive family benefits either by paying $365 for a one-time, three-month extension or by paying about $500 per month to maintain benefits under COBRA for a maximum of 18 or 36 months (California Healthline, 1/7). According to PacifiCare officials, the 20,000 UFCW members who have retained their health coverage in the state are not on strike. Because of the membership loss, the insurer backed away from a projection last month that it would achieve a "modest, single-digit increase" in enrollment from its current 2.2 million members, the Times reports (Los Angeles Times, 1/10). The 28,000 UFCW members account for less than 1% of PacifiCare's national membership, but the company said that the strike could reduce this year's earnings by between $6.6 million and $9 million.

Effects on Other Insurers

About 26,000 union members who receive health insurance through Kaiser Permanente have lost their coverage, although the HMO will continue to provide the strikers with emergency care and delay any billing for at least 60 days, according to Kaiser spokesperson Jim Anderson. Blue Cross of California announced that it also has lost some business because of the strikes, but officials at the insurer said the effects were "minimal," the Register reports (Orange County Register, 1/10).

Negotiations Fail

In related news, "secret" negotiations between officials from UFCW and the three supermarket chains ended Sunday "with the sides no closer to a new contract" after four days of talks without a federal mediator, the Orange County Register reports (Galvin, Orange County Register, 1/12). The grocery companies have sought a two-year wage freeze; a requirement that workers pay $780 in annual premiums for family health insurance; a cap on employer contributions to health benefits for workers, which would most likely lead to a decrease in coverage; and a second tier of wages and health benefits for new hires in which employer contributions to health benefits would total about $1,800 per worker per year, compared with about $5,000 per worker per year for current workers under the past contract (California Healthline, 1/7).

Los Angeles Times Examines Health Care Debate

The Los Angeles Times on Monday examined the "tussle" over health benefits between strikers and the grocery chains. According to the Times, the union wants to preserve its "maintenance of benefits" plan, under which both parties agree to a health plan that would be purchased using preset contributions from the chains and the union; the plan would require the grocery store chains to pay for any unexpected cost increases. But the grocery store chains want to cap their health care contributions at $4.60 an hour per employee for current employees and at $1.35 for new hires, who "typically are younger and don't need as much coverage," according to the Times. Currently, the companies pay $4.30 an hour per employee for health benefits. However, union officials say such a plan would "essentially leav[e] it up to the employees" to maintain the quality of care offered under the current plan if prices increase, the Times reports. The union has said it may be willing to pay higher deductibles and copayments to absorb about 25% of the supermarkets' current per-hour contributions, saving the stores an estimated $375 million over the term of the contract. The union also said that it would drop the maintenance of benefits standard if the stores would build a six-month reserve of between $160 million and $300 million for the health care fund (Peltz, Los Angeles Times, 1/12).

Editorial, Opinion Pieces

Summaries of a recent editorial and two opinion pieces addressing the grocery store workers' strike are provided below.

Los Angeles Times: "[T]here is no shortage of ironies in this sad strike," a Times editorial states, noting that "grocery stores that demanded health care cuts to compete more closely with Wal-Mart are losing customers" and grocery store workers "who went on strike to protect health benefits lost them" Jan. 1 when their contracts expired. "As more working Americans are forced off insurance rolls and into emergency rooms, the federal government will be forced to deal with a crisis only it can fix," the editorial states, concluding that the union and grocery store chains "will have to compromise instead of fighting to the death" if they "hope to survive" (Los Angeles Times, 1/13).
Bill Dombrowski, San Francisco Chronicle: Striking grocery workers need to realize that they are "fighting the wrong foe" and should retreat from the dispute with the grocery store chains, Dombrowski, president of the California Retailers Association, writes in a Chronicle opinion piece. The chains' proposal "recognizes a rock-hard reality of today's economy": that "[n]o employer ... can withstand the crushing pressure of spiraling health care costs" without asking employees to "help shoulder the burden," he adds (Dombrowski, San Francisco Chronicle, 1/11).
Ruth Milkman, San Francisco Chronicle: When the grocery store workers' strike began four months ago, the workers "won enormous public sympathy," in part because it "reflected the anxiety so many working people have about being forced to absorb more and more of the costs of health insurance," Milkman, director of the Institute for Labor and Employment at the University of California-Los Angeles, writes in a Chronicle opinion piece. Milkman writes that both sides "need to recognize the debilitating effects of a protracted strike on the industry and act diligently to achieve a settlement," adding that the supermarkets must abandon their two-tier wage proposal, unions must concede to make contributions toward health care premiums and politicians should consider playing a leadership role as "a last resort" (Milkman, San Francisco Chronicle, 1/11).

Broadcast Coverage

The following broadcast programs reported on the grocery store workers' strike:

KCRW's "Which Way, L.A.?": The segment includes comments from Jack Kyser, chief economist and senior vice president of the Los Angeles County Economic Development Corporation (Olney, "Which Way, L.A.?," KCRW, 1/12). The complete segment is available online in RealPlayer.

KPCC's "Talk of the City": The segment includes comments from Los Angeles Business Journal staff writer David Greenberg (Felde, "Talk of the City," KPCC, 1/12). The complete segment is available online in RealPlayer.

MPR's "Marketplace": The segment includes comments from Neil Stern, a retail consultant with McMillan Doolittle; and Andrew Wolf, an analyst with BB&T Capital Markets (Glaser, "Marketplace," MPR, 1/12). The complete segment is available online in RealPlayer.

NPR's "All Things Considered": The segment includes comments from Los Angeles Times business writer Jim Peltz (Norris, "All Things Considered," NPR, 1/12). The complete segment is available online in RealPlayer.

NPR's "Morning Edition": The segment includes comments from retail management consultant George Whalin (Kahn, "Morning Edition," NPR, 1/13). The complete segment is available online in RealPlayer.

This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.