Grocery Workers Get New Health Contract

Grocery store workers in Southern California have ratified a new contract that includes some novel health-care provisions. The region's major supermarkets hope the plan will help to rein in workers' health care costs, without compromising care.

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Here in Southern California, there's tremendous relief. Grocery store workers have ratified a new contract, averting a strike. Four years ago, negotiations didn't go as well. Grocery workers went on strike for months and left shoppers scrambling. This week's compromise includes some novel health care provisions. The region's major supermarkets hope the plan will help to rein in workers' health care cost without compromising care.

NPR's Scott Horsley explains.

SCOTT HORSLEY: The contract covering some 65,000 supermarket workers in Southern California comes after a tense six months of negotiations. It allows new workers to qualify more quickly for health benefits than they did under the old contract. It also includes health care reforms that one supermarket chain calls groundbreaking.

Kevin Herglotz is the spokesman for Safeway, one of the three big chains that took part in the negotiation. He says the idea is to get supermarket workers to shop for bargains in health care just as their customers do in the grocery aisle.

Mr. KEVIN HERGLOTZ (Spokesman, Safeway): We are a consumer-driven society. Everything we do, from buying a car to going into our grocery store, we always look at price. And for some reason in this country we have taken that element completely out of our health care decision-making.

HORSLEY: The new supermarket contract will encourage workers to pay attention to the price of health care by giving each employee control over a health savings account. Herglotz says any money that isn't spent one year can be saved for bigger health bills in future years.

Mr. HERGLOTZ: So then you start to actually think about the costs and say that this prescription drug costs this amount, a generic drug versus a premium drug, maybe I'll choose the generic because I'm spending less money out of my savings account.

HORSLEY: The plan also has incentives for preventive care. Herglotz says Safeway has been offering a similar plan to non-union employees for two years now and save 15 percent on their health care bills. Unionized supermarkets are intensely aware that high health care costs put them at a disadvantage relative to non-union competitors. Herglotz says Safeway's CEO has become an evangelist for health care reform nationwide.

Mr. HERGLOTZ: The more companies we get engaged in finding ways to reduce costs while not reducing the benefits, the more success we're going to have in truly reforming the system that is broken.

HORSLEY: Free marketers, including President Bush, have been promoting this idea of giving consumers more control over health care spending. But economist Melinda Beeuwkes Buntin of the Rand Corporation says it hasn't caught on quickly. Many workers are nervous about the plans, which often come with higher co-payments and deductibles. Still, she says about 40 percent of big employers now offer such plans as an option.

Ms. MELINDA BEEUWKES BUNTIN (Co-director, Center for Health Care Organization, Rand Corporation): That doesn't extend, though, usually to unionized populations. But this may be a bellwether that we have a union that is entertaining in their contract negotiations some elements of what people would call consumerism or consumer-directed health care.

HORSLEY: Beeuwkes Buntin says early experience suggests the plans do cut costs for employers, at least in the short run. Whether they work in the long run is less certain.

Ms. BEEUWKES BUNTIN: People in this plans use less care. We don't know yet what exactly they're cutting back on and whether they're making wise decisions that won't adversely affect their health.

HORSLEY: Beeuwkes Buntin says if employers want their workers to make good decisions about health care, they need to provide not only financial incentives but also good information.

Scott Horsley, NPR News, San Diego.

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