The Impact of Unions on Employer-Sponsored Health Insurance

TV and movie watchers can breathe a sigh of relief, with final settlements in sight for the SAG-AFTRA and Writers’ Guild of America strikes. So can car buyers, as the United Auto Workers union finalizes deals with the big three automakers. But these workers were not alone. In just the first eight months of 2023, over 323,000 workers engaged in a labor action against their employers. Bolstered in part by a tight labor market and a relatively strong economy, unions have been demanding better wages, protections, and benefits—including better health plans. Rising health care prices charged by highly consolidated hospital systems have led to family premiums that are now close to $24,000 per year, a decline in the generosity of employer-sponsored health insurance, and suppressed workers’ wages. Unions not only play an important role protecting workers from this cost-shifting, they can also be critical allies for innovative strategies to reduce the unsustainable growth in health system costs.

Unions Help Workers Secure Comprehensive and Affordable Health Insurance

Strikes are predominantly led by unionized workers. A union is an organized group of workers that “collectively bargains” with an employer for better pay, benefits, and other workplace policies. In some industries, unions and employers jointly administer various benefits through Taft-Hartley plans or multiemployer plans. The retirement, health, and other benefits provided through these plans are collectively bargained, and the plans are jointly administered by both employer and union representatives.

Union membership has been declining in the United States, dropping from 20.1 percent of workers in 1983 to 10.1 percent of workers in 2022. Among the varied and interconnected political, cultural, economic, and legal reasons for this trend, states’ “right-to-work” laws have contributed by limiting union resources, leading to significantly lower unionization rates.

Health benefits tend to be a central component of most union contract negotiations, and a decline in unionization can reduce the availability and generosity of health benefits for workers. As the costs of health benefits continue to rise, employers have shifted more of the cost towards workers. High and rising health care costs also suppress wage growth. However, unionized employees can have more of a voice in how these costs are allocated.

Comparing Health Benefits Between Private-Sector Unionized and Non-Unionized Employees

 UnionNon-UnionAccess to medical care benefits96%69%Access to opposite sex unmarried domestic partner health care benefits61%42%Access to same sex unmarried domestic partner health care benefits72%43%Average monthly employee premium amount for family coverage$487.42$655.39Take-up rate for medical care benefits81%62%Source: U.S. Bureau of Labor Statistics, National Compensation Survey, Employee Benefits in the United States, March 2023

Unionization is tied to a higher likelihood of employers providing health benefits, while right-to-work laws are associated with a lower likelihood. Union workers tend to pay lower premiums for family coverage. They are also more likely to have a regular care provider and cover a lower share of annual health care expenditures out of pocket. Unionized employee plans also tend to have lower deductibles. Unions can also promote better health coverage while protecting wages; one study found that unionized public workers were more likely to see an increase in total compensation, including wages and benefits. The advantages of unionization are particularly pronounced for low-income workers.

Some Unions Have Turned to Innovative Cost Containment Solutions

Many union representatives understand that the main driver of health plan cost growth is provider prices, not the use of services by plan enrollees. Our study of state employee health plans found that “when faced with a choice between increased enrollee cost-sharing and more constrained provider choice,” unions representing state workers have preferred the latter. Indeed, unions have been catalysts for creative solutions to rising health care costs, and helped to counter advocacy efforts by deep-pocketed hospital systems.

One union in Boston representing the city’s hotel workers managed to offer no-deductible health plans at premiums that are one-tenth of the national average. The union built networks that exclude hospitals charging up to three times more than others in the area (without necessarily providing better value to patients) and ensured that workers were connected with primary care physicians. This initiative paid off—workers’ use of expensive emergency rooms fell significantly in the first year.

Similarly, North Carolina and Oregon’s public employee union representatives strongly supported efforts to limit hospital prices and tie them to a Medicare benchmark. Although North Carolina’s initiative foundered in the face of strong opposition from the powerful hospital lobby, a 2021 audit of Oregon’s Medicare benchmarking initiative estimated that it had saved the state over $112.7 million, more than initially projected.

Other unions have invested in “next-generation primary care,” using techniques such as capitated payments, financial incentives, and even direct hiring of providers to expand clinic hours and services for workers who cannot take time off during work hours. Increasing access to primary care and diverting patients away from emergency rooms and urgent care has helped these unions and employers control health care costs.

Looking Forward

A majority of non-elderly adults in the United States are covered by an employer plan. As the adequacy of employer-sponsored insurance continues to decline, unions can help maintain and improve access to health care and other benefits, particularly for lower income workers. As both the purchasers and users of those benefits, unions are uniquely situated to understand the tradeoffs that exist between generous benefits and provider access, premiums, and wages. In particular, many unions recognize that the primary driver of health care cost growth is provider prices. As such, unions can be critical allies for policymakers, and employers, seeking to implement affordability initiatives that target provider prices.