Kaiser Daily Health Policy Report

Monday, July 17, 2006

Health Care Marketplace

      U.S. District Court Judge Paul Borman late Thursday approved an agreement between Ford Motor and the United Auto Workers that would require union retirees to pay monthly premiums and annual deductibles for health insurance, the Detroit Free Press reports (Shepardson, Detroit Free Press, 7/14). Under the agreement, retired hourly UAW employees would pay monthly premiums of $10 for single health insurance or $21 for family coverage. They also would pay annual deductibles of $150 for individuals and $300 for families, with caps on out-of-pocket expenses of $370 for individuals and $752 for families. UAW retirees currently pay no annual deductibles. In addition, UAW retirees would make copayments of $10 for brand-name prescription drugs and $5 for generic medications. Active UAW employees would defer 17 cents of future quarterly cost-of-living raises and a 3% wage increase scheduled for September 2006 into a retiree health care fund. In addition, active UAW employees would make higher prescription drug copays but would not pay monthly premiums or annual deductibles. Under the agreement, Ford would invest $900 million over five years in new technologies that could help preserve UAW jobs in the future (Kaiser Daily Health Policy Report, 3/1). The agreement would save Ford an estimated $850 million annually (Baltimore Sun, 7/15). In addition, the agreement would reduce overall Ford retiree benefit obligations by an estimated $5 billion. In a 77-page opinion, Borman wrote, "The potential loss of all benefits, due to either Ford's financial difficulties or Ford's prevailing on the merits, would be far worse for all class members than the relatively modest charges they will be required to pay" (Detroit Free Press, 7/14).