Health Insurance At Heart Of Calif. Grocer Strike

By Dale Kasler, The Sacramento Bee
McClatchy-Tribune Information Services

Nov. 08--The handmade sign carried by a striking Raley's employee in Elk Grove said it all: "It is not about the money. It's about retirement medical."

Health insurance is at the heart of the strike against Raley's. Even as they prepare to give ground on wages, workers are fighting to preserve a plan with no employee premiums and some of the most generous benefits found in the private sector.

As experts point out, this fight is one most workers haven't been able to win.

Over the past few decades, companies have shifted a significant share of their health care costs to workers in the form of premium payments, deductibles and co-pays. And few private employers still provide the benefit central to the Raley's fight, and which the grocer is trying to eliminate: health coverage for retirees who have turned 65 and are eligible for Medicare.

"These generous retiree health plans are becoming an endangered species," said Larry Levitt, senior vice president at the Kaiser Family Foundation, a health care think tank.

How rare is Raley's retiree health coverage? Fewer than 18 percent of private-sector employees work for companies that provide it, according to a recent study by the nonprofit Employee Benefit Research Institute.

Raley's, a private company controlled by the Raley family, said it has no choice but to join the trend. The West Sacramento grocer earlier this year eliminated health care for Medicare-eligible retirees elsewhere in the company. That includes corporate executives, warehouse workers and employees at its two dozen or so nonunion stores.

"The reason is simple -- we can no longer afford this very expensive coverage," said Raley's spokesman John Segale.

Even in the public sector, where employee benefits are generally considered sacred, retiree health care is under siege. Stockton dramatically reduced benefits to its retired city workers after filing for bankruptcy protection in June. Retirees tried to overturn the decision in court but were rebuffed by a bankruptcy judge, who said the city's decision was legal even if it caused "tragic hardships."

With the Raley's strike in its fourth day Wednesday, one of the company's stores took on the air of a political rally during the evening rush hour.

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Two Democratic Sacramento politicians, Senate President Pro Tem Darrell Steinberg and Assemblyman Roger Dickinson, stopped by to speak to striking workers at the Raley's on Freeport Boulevard in South Land Park. Yvonne Walker, president of Local 1000 of the Service Employees International Union, was also there, and Assemblyman Richard Pan was expected later in the evening.

But as the strikers cheered, the challenge they face was on display: The store was doing a fairly brisk business. Employees said traffic had picked up since the strike's first day, when the store was largely empty. Company officials have said sales revenue across the chain is recovering.

The fate of thousands of retirees isn't the only sticking point in the Raley's strike, but it's the one that seems to spark the most emotion.

"I understand health care is going up," said Doug Troutman, 32, who was walking the picket line Wednesday at the Raley's on Elk Grove Boulevard. "But that was a promise to the retirees."

When a Raley's human resources manager, Brenda Phillips, wandered by the picket line, she was confronted by retiree Candice Arcuri. Phillips said retirees over the age of 65 won't be left without health care.

"They're 65 and they're eligible for Medicare," she said to a cluster of striking workers. "We're just asking to switch them from the Raley's benefits to Medicare."

Arcuri, clutching a picket sign, found that unacceptable.

"Do you realize what will happen to you if you have no benefits?" she asked Phillips. "God forbid if you or your husband gets really sick."

Making an apples-to-apples comparison of Medicare to private coverage is difficult, experts said. But in general, they said Medicare isn't as comprehensive -- that's why many seniors purchase Medicare-supplement or "Medigap" coverage.

"Medicare only covers about 60 percent (of costs) on average," said Paul Fronstin, senior research associate with the Employee Benefit Research Institute.

Union grocers have been wrestling with retiree health care costs for some time. In the Northern California contract negotiated with the United Food and Commercial Workers in 2005, the companies got one significant concession: Retirees now contribute $70 a month toward their health care premiums.

In the latest negotiations, the UFCW has indicated a willingness to accept wage concessions. The company wants to eliminate "premium" pay on Sundays and scale it back on holidays.

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On health care, though, the union is digging in. With most workers earning considerably less than the top pay of $21 an hour, a solid health plan helps make grocery work a decent middle-class occupation for many. A fight over health benefits helped trigger the state's last grocery strike, the nine-month walkout in Southern California nine years ago.

"Almost every grocery strike has health benefits in there somewhere," said Joanne Spetz, a health care economics expert at UC San Francisco. "The unions have worked pretty hard to provide good family health care (but) it just gets really expensive for employers."

Northern California's union grocers, including Raley's, Safeway and Save Mart, contribute more than $6.20 an hour toward employee health and pension benefits -- one of the highest contribution rates in the entire U.S. supermarket industry. Employees don't pay any premiums.

Raley's says bloated health care costs are contributing to the company's deteriorating financial condition. Struggling against nonunion grocers, Raley's says it is losing millions of dollars a year.

Besides cutting off coverage for retirees eligible for Medicare, the company wants to put everyone else -- active workers and the younger retirees -- into a new insurance plan.

The plan is identical to the coverage provided to the unionized workforce at Raley's Food Source subsidiary. It includes three options: two Blue Shield PPOs and a Kaiser HMO.

Segale said the proposed package is at least as generous as the current plan, which is run by a trust fund overseen by labor and management. Workers would continue to pay no monthly premiums, although they would be charged co-pays and deductibles.

Under the proposal, Raley's would run the health plan. "We can manage the plan more efficiently and more economically," the Raley's spokesman said.

On the picket line, workers said this week they believe the plan isn't nearly as good as their existing insurance. UFCW leaders have told their members that the company can't be trusted to run the health plan on its own.

"Decisions about co-pays, deductibles, drug coverages, even medical providers (are) left up to the company," UFCW Local 5 in San Jose said in a pre-strike memo to workers. "Taking your voice out of medical coverage decisions and leaving it to the company will have disastrous consequences."

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Call The Bee'sDale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.

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(c)2012 The Sacramento Bee (Sacramento, Calif.)

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