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Warren’s health plan is big trouble for organized labor

Elizabeth Warren has a plan — to annoy union members who work for state and local governments. With her “Medicare for All” plan, the top-tier Democratic contender is revealing a tension in the neo-progressive movement.

Warren’s $20.5 trillion over a decade to pay for Medicare for All requires what she calls a “redirection” in funds: $6 trillion in “existing state- and local-government insurance spending.” Of this figure, $3.3 trillion goes for Medicaid, public insurance for poorer people.

But the other $2.7 trillion comes from the funds state and local governments “currently spend on employer contributions to private insurance premiums for their employees.”

Warren wants these governments to give this money to Washington instead. Teachers, firefighters, police officers and the like would be covered by a federal plan, not by the private plans their employers currently pay for.

This provision bares a weakness in Warren’s wonkiness. She is trying to fulfill her pledge not to raise taxes on middle-class Americans, but she can’t do it without expropriating the state and local taxes they already pay.

Yet Washington can’t just reach out and grab the money that state and local taxpayers provide to their governments. To gain their cooperation, Warren bets that state and local governments will voluntarily go along with this in exchange for future savings — that is, they’ll think that Washington can better manage health-care costs than they can.

The proposal is useful, then, in pointing out a fissure between insurgent politicians such as AOC, who style themselves as wanting universal, but more basic, rights for everyone, and the old-line public-sector unions that make up much of the Democratic voting base, who fight for select — and more expensive — perks for themselves.

Consider New York state’s own effort to create a similar single-payer health-care plan. Although Democrats control both lawmaking branches of government, the New York Health Act has languished, in part because of union opposition. The Municipal Labor Committee, a coalition of public-sector unions, worries that universal benefits won’t be as good for union members as the benefits they’ve bargained.

Or consider the local United Federation of Teachers’ deal with Mayor Bill de Blasio last year, awarding members a six-week family leave at 100 percent of pay.

This was unnecessary, as a matter of creating a basic safety net. The previous year, Gov. Andrew Cuomo had approved a more modest statewide family-leave program, funded by a payroll tax. A less powerful city union, DC-37, opted for the state program.

The UFT wasn’t fighting for a basic right then. If it were, it would stand in solidarity with DC-37 workers until the more generous benefit was universal. It was fighting for something special for its members, to keep them in the union.

Plus, public-sector unions regularly spurn the country’s most basic safety net, with many state and local workers exempt from paying Social Security taxes because they have superior pensions.

And though the federal government already has a near-universal Medicare program for retirees, New York City has amassed a more than $100 billion health-care liability for its own public-sector retirees. The state-subsidized Metropolitan Transportation Authority has amassed a similar $20 billion liability.

That’s because city and MTA workers and retirees expect more than what Washington offers.

To find out whether local unions support Medicare for All, or Medicare for All but Us, New York can perform an experiment right now. The MTA’s contract with the Transport Workers Union, which represents subway and bus workers, is up — and union chief Tony Utano has called for round-the-clock negotiations.

The MTA should ask the union to sign a provision to waive all health-care claims — eliminating that $20 billion future liability — should Congress pass a Warren-style plan. The city should ask its own unions to sign off on similar agreements as contracts expire.

There’s one good reason for state and local governments to prefer Warren’s plan. Cities like Chicago and states like New Jersey are broke, and have little hope of making good on their similar retiree-health-care obligations.

But if state and local governments want to trade their autonomy over a big portion of their tax dollars for the prospect of off-loading future health-care cost growth to Washington, they’ll first have to convince their own unions how broke they are.

Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal.

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