Part of the deal the unions struck with the White House and congressional Democrats was a promise that their members would be allowed to shop in the health insurance exchanges. This could have a huge impact on the market within and outside these new insurance marketplaces that would be created by health reform legislation. (The Senate and House bills as currently written would open the exchanges only to small businesses and individuals initially, with some provisions to gradually open them further to larger businesses.)
Union representatives I spoke with said the exact details of the deal are still not clear, even to them. One thing they did say is that individual union members could not independently decide to shop in the exchanges in lieu of using employer-sponsored health insurance. These are unions, after all, and they need workers to stick together. The option to buy insurance in the exchanges, say union representatives, is merely one arrow in the quiver for organized labor when negotiating employment contracts. In other words, workers in a union would either all shop in the exchange – where they may be able to choose their own individual policies – or they would all stay out of the exchanges. Whether it would be advantageous for unions to move their workers into the exchanges depends on one thing – how well the marketplaces function and therefore whether they can offer health insurance at a price lower than what could be offered to workers through employers.
The fact that the unions saw the exchange option as something to fight for whilst they were (mostly) losing their battle over the excise tax could be interpreted as a vote of confidence in the exchanges. “We think the exchanges are frankly the way insurance is going to be done in the future,” says Gerald Shea, the lead health policy expert for the AFL-CIO. That’s very possible. What this would mean in real terms is that people who now sign up for health insurance at work might, some years down the road, be able to choose their own coverage package on the insurance exchange. This could mean more competition, more choice and even more business for insurers. After all, most large companies now self-insure, hiring a company like Cigna to simply administer benefits. If everyone in American bought insurance through the exchanges, it’s theoretically possible the self-insured model, which saves companies money on administrative costs, could fall away.