The Impact of Unions on Employer-Sponsored Health Insurance

The Impact of Unions on Employer-Sponsored Health Insurance
The Impact of Unions on Employer-Sponsored Health Insurance

Viewers of television and film productions can now heave a sigh of relief, with the resolution of the SAG-AFTRA and Writers’ Guild of America strikes in sight. Similarly, consumers in the automobile industry can expect finalized agreements between the United Auto Workers union and the major three automakers. The solidarity of these workers was not an isolated occurrence. During the initial eight months of 2023, more than 323,000 employees participated in labor disputes with their employers. Strengthened partly by a competitive labor market and a relatively robust economy, labor organizations have been advocating for improved remuneration, safeguards, and perks, including enhanced health insurance schemes. Escalating healthcare expenses levied by heavily consolidated hospital networks have resulted in family premiums reaching close to $24,000 annually, a reduction in the generosity of employer-sponsored health plans, and stagnating wages among workers. Unions not only have a significant role in shielding workers from this cost transfer but also have the potential to ally with innovative tactics to counteract the unsustainable surge in healthcare system expenditure.

Unions Facilitate Employees in Securing Extensive and Economical Health Insurance Policies

Strikes are predominantly spearheaded by unionized workers. A union constitutes an organized assembly of employees that collectively negotiates with an employer for enhanced remuneration, perks, and other workplace regulations. In specific sectors, unions and employers collaboratively administer a variety of perks through Taft-Hartley plans or multiemployer plans. These plans, encompassing retirement benefits, health benefits, and other perks, are negotiated collectively, and the management of the plans involves representatives from both the employer and the union.

In the United States, union membership has witnessed a decline, plummeting from 20.1% of the workforce in 1983 to 10.1% in 2022. Amongst the multifaceted and interconnected causes for this trend encompassing political, cultural, economic, and legal aspects, the implementation of “right-to-work” laws by states has contributed by constricting union resources, resulting in markedly lower unionization rates.

Health benefits typically constitute a pivotal element in most union contract negotiations, and a reduction in unionization can lead to a diminished availability and generosity of health benefits for employees. As healthcare benefits continue to surge, employers have transferred a larger portion of the expenses to employees. Mounting and escalating healthcare costs have also subdued the escalation of wages. However, unionized staff can exert a greater influence on the allocation of these expenses.

Comparing Healthcare Benefits Between Non-Unionized and Unionized Employees in the Private Sector

  Unionized Non-Unionized
Availability of medical care benefits 96% 69%
Entitlement to health benefits for unmarried domestic partners of the opposite sex 61% 42%
Access to health benefits for unmarried domestic partners of the same sex 72% 43%
Average monthly premium amount for family coverage $487.42 $655.39
Enrollment rate for medical care benefits 81% 62%
Source: U.S. Bureau of Labor Statistics, National Compensation Survey, Employee Benefits in the United States, March 2023

Unionization is linked to a higher probability of employers delivering healthcare benefits, while laws favoring “right-to-work” are linked to a reduced likelihood of the same. Unionized staff typically pay lower premiums for family coverage. They are also more inclined to have a regular healthcare provider and contribute less to their annual healthcare expenses out of pocket. The plans for unionized employees also generally feature lower deductibles. Unions can also endorse enhanced healthcare coverage while preserving wages; a study revealed that unionized public servants were more prone to experience an amplified total compensation package, encompassing remuneration and perks. These advantages of unionization are particularly conspicuous for low-income workers.

Some Unions Have Embraced Ingenious Solutions for Cost Restraint

Many representatives of labor unions recognize that the primary driver behind the escalation of healthcare plan expenses is provider charges, not the utilization of services by plan subscribers. Our examination of healthcare plans for state employees revealed that when presented with a choice between elevating cost-sharing for beneficiaries and limiting the array of providers, unions representing state employees preferred the latter. Indeed, unions have been instrumental in instigating inventive approaches to counter rising healthcare expenses and have opposed the advocacy endeavors of financially potent hospital networks.

An organization representing hotel employees in Boston is a case in point. They successfully offered health plans with no deductibles at premiums one-tenth of the national average. This was achieved by developing networks that exclude hospitals charging up to three times more than others in the region (without essentially delivering superior value to patients) and ensuring that employees had access to primary healthcare physicians. This initiative yielded significant dividends, with a substantial reduction in workers resorting to expensive emergency rooms in the inaugural year.

Similarly, representatives of public employee unions in North Carolina and Oregon staunchly supported initiatives to restrict hospital charges and tether them to a Medicare benchmark. Although North Carolina’s endeavor faltered in the face of robust opposition from the influential hospital lobby, an audit conducted in 2021 of Oregon’s Medicare benchmarking initiative estimated that it had saved the state over $112.7 million, surpassing the initial projections.

Other unions have made investments in “next-generation primary care,” employing methodologies such as capitated payments, financial incentives, and even the direct recruitment of providers to extend clinic operating hours and services for employees unable to take time off during regular working hours. The bolstering of access to primary care and the redirection of patients from emergency rooms and urgent care facilities have contributed to these unions and employers curbing healthcare expenses.


A majority of non-elderly adults in the United States are covered by employer-sponsored plans. As the adequacy of employer-sponsored insurance continues to wane, unions can play a pivotal role in preserving and enhancing access to healthcare and other perks, particularly for low-income employees. Being both beneficiaries and procurers of these perks, unions are uniquely positioned to comprehend the trade-offs between extensive benefits and provider accessibility, premiums, and wages. Notably, many unions recognize that the principal impetus for the upsurge in healthcare expenses lies in provider charges. Consequently, unions can be indispensable allies for policymakers and employers seeking to implement initiatives for affordability aimed at regulating provider charges.

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