GM-UAW Deal's Impact Could Be Far-Reaching

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http://www.truthout.org/issues_05/102405LA.shtml

 

GM-UAW Deal's Impact Could Be Far-Reaching

By Kathy Barks Hoffman

The Associated Press

 

Monday 23 October 2005

 

Lansing, Mich. - Art Luna knows he's going to have to pay more for

his health care coverage under a historic agreement worked out between

the UAW and General Motors Corp.

 

Luna, president of the United Auto Workers Local 602 in Lansing,

figures UAW members at Ford Motor Co. and DaimlerChrysler AG probably

can count on seeing their share of health costs rise as well, as

leaders at both companies have said they'll ask for similar help to

cover health care benefits.

 

Luna doesn't see the trend ending there.

 

Although some analysts argue the Big Three automakers are only

coming into line with changes already made by many employers, others

say the shake-up could mean other workers with good health plans -

teachers, government employees and those who work for major

corporations - could see their health benefits eroded or have a higher

share of costs passed along to them.

 

" It's a spiral to the bottom, " Luna said.

 

He said health care problems have moved beyond what employers can

afford to offer to a national health care crisis that needs a national

solution.

 

" We're not getting any support from the administration in

Washington, " said Luna, whose local represents nearly 3,000 UAW

workers who will help GM open a new plant just west of Lansing early

next year.

 

The national UAW has urged a move to a national health care

system, and GM and Ford leaders have asked for more federal help with

health care costs.

 

GM alone spends $5.6 billion annually to cover 750,000 U.S. hourly

workers, retirees and their families. Ford spent $3.1 billion to cover

550,000 hourly and salaried workers, retirees and dependents in 2004,

and expects that to rise to $3.5 billion this year. Chrysler spent

$1.9 billion in 2004 to cover 375,000 people.

 

Under a tentative agreement reached this week with the UAW, GM

plans to save $3 billion annually before taxes and slash its liability

for retiree health care by $15 billion, or 25 percent. GM retirees

would be required to pay up to $752 annually for health care for a

family, while active hourly workers would pay more for their

prescription drugs and defer $1 an hour in future pay increases to

help pay for retirees' health care.

 

George Erickcek, senior regional analyst for the nonprofit

research group Upjohn Institute, said the Big Three's need to compete

in a tough global marketplace makes their situation unlike those of

workers in some other sectors of the economy.

 

" When you look at Toyota North America and then look at GM, the

legacy costs between the two carmakers is huge. There are about

340,000 retirees for GM and less than 100 for Toyota North America, "

he said.

 

Erickcek does see possible problems for other work places covering

health costs for many retirees. " That may cause some concern with the

teachers' unions here and maybe some of the other unions, " he said.

 

Not everyone agrees.

 

" General Motors didn't do something which is going to cause a

large ripple, " said Michael Chernew, professor of health management

and policy at the University of Michigan. Although other companies or

economic sectors may also be looking for ways to lower their health

care costs, " I don't think General Motors exerts a lot of downward

pressure on them. "

 

Stuart Paterson, senior research associate in Lansing with the

nonpartisan Citizens Research Council of Michigan, said GM's

circumstances are so unique that they don't necessarily carry over to

other businesses, although he does expect more pressure to move health

care costs off employers.

 

Most workers already are paying a share of their health care

premiums, along with copays for prescription drugs and a portion of

their medical bills until they reach their deductible, he said. Many

already are in managed health care programs rather than more expensive

fee-for-service ones.

 

" My guess is that you're not going to see sort of a serious

attempt to say, `General Motors did this and now we're going to do it,

too,' " Paterson said. " There's so much resistance on the part of the

people who have the insurance. "

 

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