How to negotiate a great contract


Let’s say you just negotiated a new union contract for a ten year period. During the first five years, there were productivity gains, new work rules to save money, the union agreed to pay more for health care and to switch to a cash balance pension from a traditional plan. There were no wage increases until the beginning of year six. Does that seem like a pretty good deal for the employer during the life of the contract? You bet it does. Welcome to the accounting for health care reform.

Of course, there is one big difference. It is unlikely that the company will agree to modification to the union contact during its ten year term while Congress is unlikely to leave things alone during the next ten years. The planned elimination of the Medicare Part D donut hole is one good example. Here is a program that while modest (but better than before it existed) in some ways, actually came in under budget but now in the guise of health care reform is being “improved” or as we simple folk say, made more expensive and less manageable.

According Sen. Baucus, his committee’s bill will lower the burden of health care spending on the federal government which is one of the President’s top objectives. Silly me, I thought the objective was to reform health care or is it reform health insurance or is it to cover all Americans or is it to make health care “affordable?”

What was it he said?  Oh, right, assume medical inflation is 2%
What was it he said? Oh, right, assume medical inflation is 2%

Has anyone else figured out that to achieve the above stated top objective that all the rest of us are going to pay more whether it be higher taxes, higher out of pocket medical costs, higher premiums, or in the case of ten million seniors higher everything if they are enrolled in a Medicare Advantage Plan?

It’s not that we should not find a way to cover the uninsured, it is the convoluted way we are trying to do that, the absurd assumptions, the lack of candor in telling the American people what is actually going on and the lack of anything that will truly reform health care or manage the future rate of increase in health care costs in any reasonable period or maybe ever that is most troublesome.

Once again Congress is demonstrating its inability to understand the law of unintended consequences.

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