A review of the Culinary Union’s health plan documents, along with other data sources, shows that it’s done an excellent job under difficult circumstances. The review also shows that the union’s members would be much better off under Medicare for All, and that this plan — like virtually every plan — is held back by deep flaws in today’s health care system.

The big fear expressed by union leadership was the loss of the health care plan workers fought for several years to achieve. But union members who caucused for Sanders against the advice of their leadership may have been better analysts of their own financial system than pundits expected: Indeed, if Sanders does manage to enact his Medicare for All plan as it’s written, their coverage will improve.

Despite a high-profile battle with the leadership of Nevada’s powerful Culinary Workers Union leading into the caucuses on Saturday, Bernie Sanders emerged with a decisive victory — even dominating other candidates among culinary workers themselves, according to entrance surveys.

First, the backstory: The Culinary Union’s Local 226 administers an employer-funded health plan called the Culinary Health Fund, or CHF for its Las Vegas members. Union leaders reacted angrily when Sanders, at a town hall, told its members that their employers would save $12,000 per employee under Medicare for All, and that they’d see that money in their paychecks. They fired back again after a barrage of online criticism from Sanders supporters.

“Workers should have the right to choose to keep the healthcare Culinary Union members have built, sacrificed for, and went on strike for 6 years, 4 months, and 10 days to protect,” union leader Geoconda Argüello-Kline said in a statement.

The union is proud of its health plan, and understandably so. They fought hard for it, and its coverage outdoes most employer-funded plans. Still, the union’s members would be much better off under Medicare for All. The same is true for most, and probably all, of today’s union plans. So why are so many people demanding the “choice” to keep them — especially if that means preserving some of the worst flaws in today’s system?

The Culinary Health Fund Has Done Good Work

The union’s plan, as well as the infrastructure it has built, are impressive.

The plan runs its own well-regarded clinics, and some doctors are salaried rather than paid by fee-for-service. This reduces insurance profit-taking (the plan likely has some form of reinsurance for especially costly cases) and removes incentives for physicians to over-treat, a problem that’s likely to get worse as investors and hospitals continue to buy up medical practices.

Workers don’t make premium contributions from their paychecks. That doesn’t mean the plan is “free.” Most economists believe employers compensate for benefit costs by reducing wages. But it does add a level of predictability to workers’ household budgets.

This puts the Fund’s members well ahead of the curve. The Kaiser Family Foundation’s 2019 survey of employer benefits found that 5 percent of workers in large firms, and 31 percent in smaller firms, pay no portion of their premiums. For those that do pay a premium, the average worker with employer-based insurance paid $1,242 for single coverage and $6,015 for family coverage.

There are no deductibles in this plan, either, which means members don’t need to pay a certain amount themselves before coverage kicks in. Here, too, they’re doing well compared to most other workers. The Kaiser survey reports that 82 percent of workers with employer health insurance have a deductible, and that the average deductible for single coverage is $1,655 (rising to $2,271 in small firms).

Copays (a flat rate per visit or treatment) and coinsurance (where the patient pays a percentage of the cost) are another area of out-of-pocket expenses. Here, too, the CHF plan beats most employer coverage. There are also no copayments or coinsurance for in-network primary care or some forms of specialty care. When these costs occur, copays are typically $25 for primary doctors and $40 per visit for specialists, and coinsurance is typically in the 18 percent range. These and other patient costs are relatively modest when they occur, when compared with other such plans.

There are copayments for in-network hospital and outpatient facility care, but there is no coinsurance. Again, the plan is ahead of the curve. Two-third of covered workers in the U.S. must pay coinsurance in these facilities, at an average rate of 20 percent. That can add up extremely fast.

But its members could do better.

Even this above-average plan falls seriously short of the coverage its members would receive under Medicare for All.

The maximum amount CHF members could pay out-of-pocket for their own care is $6,350 per person per year, $12,700 per family. That means households covered by the plan are not protected from financial catastrophe.

If the coverage is that good, how could they incur those expenses? First, the benefits listed above are for in-network services, and it can be challenging for working people to find in-network providers. They may have a preexisting doctor relationship, or may find themselves taken to an out-of-network hospital after an accident. (Provider access is limited in Las Vegas, but that can cut both ways when it comes to finding in-network care.)

The employee plan summary warns, “Be aware, your PPO network provider might use a Non-PPO provider for some services (such as labwork). Check with your provider before you get services.”

That’s not always top of mind for working people who are sick or injured and may need immediate treatment.

In addition, the plan only waives coinsurance and other costs up to “100% of allowable charges.” What charges are allowable is determined by the plan and while in-network providers cannot bill patients for the difference, this can create serious problems in some circumstances.

Provider choice is even more strictly limited for other forms of care. For example, the Culinary Health Fund provides some of its coverage solely as “capitated services.” This is an arrangement where a medical center or other provider serves members on a “per-capita” basis. Plan materials warn that, “If you need a capitated service, you can only visit the capitated provider for that service.” That is as strict as it gets, and it covers a number of grave conditions. If, for example, you have a form of blood cancer and want to see a specialist who is not part of the plan, this says that you can’t.

These programs typically give health providers a financial incentive to keep costs down. Although contracts normally have some provisions regarding outcomes too, that’s a source for concern.

The fund’s capitated service programs include “blood disorder & cancer services,” “cardiology,” “high-risk pregnancy,” and “mental health & addictions.” These specialties routinely deal with life-threatening conditions for patients and families who are already under extreme duress.

Shadow Work

The Culinary Health Fund plan imposes another major burden on its enrollees, and it’s one that virtually all private-sector health plans in this country place on their members: There is a lot of paperwork and legwork.

The need to find in-network providers is only the beginning. The plan’s “Forms and Information” web page alone contains more than 100 links. Although some of those links offer employees assistance and education, a lot of administrative functions are represented. They include a set of 10 documents on plan provisions and limitations, a “Co-payment Book” listing out-of-pocket costs for various services and providers, and a set of 12 forms. One of them, the “appeals form,” lists 11 categories for appeal including “late filing,” “maximum benefit,” “no prior authorization,” “non-covered service or supply,” and “non-PPO to non-PPO referral.”

Prior authorization is required for a number of services, as well as for some medications and more costly medical equipment. This places a burden on both patient and doctor.

Philosopher Ivan Illich coined the term “shadow work” to describe the enormous amount of unpaid labor that people are called upon to perform, inside and outside the home. The administrative burden reflected in these forms is one more category of shadow work that Culinary Health Fund members, and most of us in the current system, are called upon to perform. For a union whose members work hard, often for low wages, this burden must not be overlooked.

Diagnosis: Precarity

One form of shadow work that plan members must carry out reflects the economic and health insecurity imposed on them by the current system. If union members don’t work enough hours in any given two months (240 hours), they are required to pay the cost of their health coverage themselves if they want to keep it.

It’s not a simple process. They must report their hours for those months, use an online calculator to determine how many hours they are short, and then pay a per-hour fee for those hours. If they are short in January, for example, they will need to pay by April 30 to keep coverage through the months of May and June. If their employers failed to report their hours accurately (something employers have a financial incentive to do), there’s an additional process to address that.

Workers must then pay a premium of $4.74 for each lost hour of work. Employees who already live in financial precarity due to unpredictable hours are faced with an additional challenge: either paying an additional cost after working a short month, or take their chances and go without coverage. And since they already worked shorter hours during that period, they by definition have less money to make those payments.

Plan Comparison

Here are some of the advantages Fund members would gain by switching to Medicare for All:

Plan members would no longer pay any copayments or deductibles.

Plan members would now be able to see any provider they choose, without financial penalty.

Plan members would not have to wonder whether their provider has a financial incentive to provide less treatment (though they would conceivably have to worry about over-treatment).

Plan members would no longer have to fear the insurance-related expense, uncertainty, and paperwork associated with fewer work hours in a month. Their coverage would no longer depend on their work status.

All that “shadow work” would go away.

They would be protected from financial harm caused by the need for medical care.

They would still be insured if they, for some reason, no longer held their union job.

But would plan members really gain $12,000 in wages?

It’s not clear where the $12,000 figure came from, but the Sanders Medicare for All proposal would require employers to return any savings in health care costs back to their employees in wages or other benefits.

It’s hard to know for certain what the employers in this plan are currently paying for health care coverage. Matt Bruenig of People’s Policy Project annualized the $4.74 per hour “Self Pay” charge and estimated the total cost of their coverage at $9,859 per year.

That’s not impossible. Survey data from the Kaiser Family Foundation shows that average PPO premiums in 2018 were $7,149 for single coverage and $20,324 for family coverage. A typical split of roughly 50/50 between single and family coverage gives us $13,736 as an average premium.

But there are adjustments to be made and unknowns to consider. Workers in the Fund may be younger than average. That would make them both healthier and more likely to be single than the average employee. But their plan is also more generous than the average.

If we shift from a 50/50 split of single to family coverage to 75/25 percent single, we wind up with an average premium of $10,442 for the Culinary Fund plan — not far from Bruenig’s figure. But if we add in the cost of the plan’s more generous benefits, we might find ourselves back with the original, higher figure. The union probably doesn’t take profits off the top like insurers do. But it does use a third-party administrator, Zenith American, to pay claims, and the plan’s administrators add another layer of expense.

Without more information, a decent range for their per-employee costs is $9,859 to $13,736.

Now for the savings. The Sanders plan charges employers a 7 percent payroll tax. The average annual salary for all “Food Preparation and Serving Related Occupations” in Nevada was $26,500, according to Bureau of Labor Statistics data. The plan’s unionized, Las Vegas-based members almost certainly earn more, raising payroll costs. But they only need to work roughly three quarters of the full-time work hours in a month to retain their employer-funded coverage, which brings the cost back down.

Weighing all that (have I lost you yet?), let’s assume that the average yearly salary for a covered worker in the Fund plan is $32,000, making the average payroll tax $2,240. Our estimate — with limited data! — is that employers would save between $8,202 and $11,496 per employee per year under Medicare for All. That money would be returned to workers under Bernie’s plan.

Back to the beef: The higher number is close to Bernie’s $12,000, but the lower number clearly isn’t. Still, it’s a very decent chunk of change for most working people. Looking only from the perspective of workers, not union leaders who oversee the fund, it’s hard to understand the anger. Indeed, there may not be much, at least among the rank and file, judging from the results of the caucuses.

Why Do Some Union Leaders Push Back Against Medicare for All?

Then why was there such a furious response? The health centers administered by the plan have a strong reputation, and they could be funded and maintained under the Sanders plan. The union could also design other services, and could offer them to its members, their employers, or the single-payer system itself. So why the pushback?

David Dayen provides some political and institutional context for the Culinary Union’s response, but the heat isn’t coming from Las Vegas alone. As Reuters reported in August 2019, AFL-CIO head Richard Trumka said, “You can’t ask the American worker, who sacrificed wages and everything, to simply say: ‘Okay, I’ll accept this plan here.’”

That sounds a lot like the sunk-cost fallacy. Most workers probably would accept a plan that gives them better benefits, regardless of past history.

According to Reuters, Trumka also noted that “some union plans likely provide more benefits than Medicare.” That’s not accurate. Medicare for All has better benefits than today’s Medicare, and a side-by-side comparison with the CHF plan suggests it probably outperforms even the best union plan.

That is probably why other union leaders, like the SEIU’s Mary Kay Henry and Association of Flight Attendants-CWA’s Sara Nelson, support Medicare for All. The advocacy group Labor for Single Payer lists 21 unions who support it. But the controversy lingers, kept alive in part by politicians who oppose Medicare For All.

Now, perhaps the union believes it’s unreasonable to expect Sanders’s Medicare for All plan to be enacted as written, and that some of the generosity will be stripped out as it is whittled down to some version of a public option. That’s not an unreasonable concern, but in such a scenario, the fear they expressed — the loss of their private insurance — would be safely off the table.