The Wall Street Journal on Thursday examined the difficulties that General Motors is facing in its efforts to reduce the cost of providing health care benefits for workers, retirees and dependents, including the potential for "heated negotiations with the United Auto Workers union, which has long fought to protect the gold-plated health benefits workers enjoy." This year, GM expects to spend $5.6 billion to provide health coverage for about 1.1 million active and retired employees and their families (Hawkins, Wall Street Journal, 4/7). GM is the nation's largest private health care provider. Last month, the company announced that the first quarter of fiscal year 2005 would be its second consecutive quarter reporting a loss. In an effort to achieve fiscal solvency, GM announced last month that it will negotiate with UAW union leaders to shift more health care costs to hourly employees. According to company data, salaried employees are responsible for about 27% of their health care costs, compared with about 7% for hourly workers. Salaried workers also pay deductibles and monthly premiums for health care coverage, unlike hourly workers (Kaiser Daily Health Policy Report, 3/24). GM's U.S. CEO Rick Wagoner "blames [health care] costs for much of GM's profit woes," the Journal reports. About 26% of GM's beneficiaries are obese, a figure that is "slightly below the national average," the Journal reports. The company estimates that it pays $1,000 to $3,000 more in health services to cover an obese beneficiary. In addition, according to the Journal, "[s]moking is one area that shows how far GM has to go just to catch up with health standards in many other parts of the country." The company has begun "cautiously encouraging" workers to initiate designated smoking areas but permits workers to smoke while on the job and "shies away from provoking union members with a blanket smoking ban," the Journal reports.
Action Steps
GM has begun expanding programs to discourage
employees from engaging in habits such as smoking, drinking alcohol,
eating unhealthy foods and leading a sedentary lifestyle. Under its
LifeSteps program, which began in 1996, the company added gyms to some
manufacturing plants and now offers health care seminars and classes "to
get workers ready for the hunting season" -- a popular activity among GM
workers that can cause heart attacks in out-of-shape people, the
Journal reports. However, "[e]ven if employees get healthier,
it's not clear how much the company can save" because 69% of the company's
health care spending goes to retired employees and their families -- a
demographic that is more difficult to "reach with the live healthy
message," according to the Journal (Wall Street
Journal, 4/7).