Can't Afford to Get Sick

By Christine Gorman

The strike was widespread and militant from the start. In Boston, 14 striking New England Telephone workers were arrested for blocking the company's repair trucks. Customers in New York, New Jersey and California lost service when phone lines were sabotaged. In Van Nuys, Calif., two striking Pacific Bell employees suffered injuries when they were bumped by cars crossing the picket lines. The drivers "got angry because we called them scabs," claimed Marisa Rotondi, a shop steward for the local union. "Things are starting to get pretty bad out here."

Nearly 160,000 telephone operators, installers and repair workers in 15 states launched strikes last week against three regional U.S. telephone companies: Bell Atlantic, NYNEX and Pacific Telesis. While direct-dial calls in the affected regions were handled smoothly by automatic switching equipment, customers encountered delays in getting directory assistance, repair service and phone installation.

The two striking unions, the Communications Workers of America and the International Brotherhood of Electrical Workers, are taking a tough stand on what has become an emotional and high-stakes labor issue: medical benefits. In an era of rising health-care costs, companies are trying to shift more of the burden to employees. Workers, on the other hand, look upon their medical benefits as hard-won rights that have become essential to maintaining their standard of living. Declared picket signs last week: CUTTING OUR HEALTH BENEFITS IS SICK.

While wages have increased at an annual rate of 3.3% since 1983, corporations have seen their health-care premiums jump 10% to 15% annually, to a current average of some $3,100 a worker. Economists expect that total U.S. health-care spending will exceed $600 billion this year, nearly 12% of the U.S. gross national product, up from 9.1% in 1980.

Many employers have tried to attack the problem from two angles. Hoping to get better prices for service, companies have negotiated favorable rates for their employees at certain hospitals and health-maintenance organizations. To reduce outlays further, more than 70% of companies require employees to pay at least some of the costs of insuring themselves and their families; only 51% did so in 1984. Negotiators for Bell Atlantic want the company's employees, who currently pay a $150 deductible for nonhospital medical care, to take on a $150 deductible for hospitalization and an additional $200 deductible for any treatment outside a prescribed network of doctors and hospitals. "The whole idea is to make consumers thoughtful buyers and to stop rising health-care costs by asking them to put something at stake," says Bell Atlantic spokesman Kenneth Pitt.

The problem with that approach, some health-care experts say, is that employees have even less control over medical costs than do corporations. "What can an ordinary phoneworker do about the prices that hospitals and physicians charge?" asks Dale Hiestand, professor of corporate relations at the Columbia University School of Business. A better solution, union leaders argue, is to work harder to keep costs down. They point to a program at BellSouth in which managers and employees have joined forces to cut costs, enabling the Atlanta-based company to keep its generous health-care coverage intact.

For long-term help, corporate America and organized labor are increasingly looking to a third party: the Federal Government. Several business and labor leaders are pushing for some type of national health plan in which everyone would automatically be insured. While a big-picture solution is still hazy, the problem is now in sharp focus: a debilitating financial drain on American workers, companies and the U.S. economy as a whole.

With reporting by Mike Cannell/New York, with other bureaus