Monday, October 30, 2006 Capitol
Hill Watch
Ford, Chrysler, GM To Ask Congress for Legislation
To Help With Health Care Costs
The big three U.S. automakers, which
reported steep losses in the third quarter, will not seek a bailout from
the federal government and instead will ask Congress to focus on
legislation that would relieve their health care costs, among other
legislative priorities, CQ
Today reports. Ford Motor, Chrysler Group and General Motors maintain that reduced health care
obligations would help them compete with Asian manufacturers that are
aided by their home governments. The Big Three said that in 2005 they
provided $13 billion in health care benefits to about two million U.S.
residents. According to CQ Today, "industry officials and
observers say a change in control of Congress as a result of the Nov. 7
elections might create a more receptive environment" for the automakers'
requests. Such priorities include ensuring the rapid introduction of
generic drugs to the market and creating a federal reinsurance pool from
which employer-sponsored health plans would be reimbursed for catastrophic
health care costs. Alan Reuther, legislative director of the United Auto Workers, said the
question of whether these problems will be addressed is "really all about
what the next Congress looks like." According to CQ Today,
"industry observers stress ... that the legislative priorities can
help the domestic automakers only so much in their struggle to regain
their competitive edge." Sean McAlinden, vice president and chief
economist of the Center for
Automotive Research, said, "Clearly, a lot of Detroit's problems are
of their own making." He added, "Their product has been inadequate.
They've guessed wrong on product planning" (McGrane, CQ Today,
10/27).
GM Caps
In related news, the Detroit Free Press on Saturday looked at GM
salaried retirees' concerns about the increased contributions they will be
paying for their health care benefits (Collier, Detroit Free
Press, 10/28). GM made the change as part of an overall
cost-cutting effort that includes reducing its stock dividend by half and
cutting executive compensation. GM said that starting in 2007, it will cap
how much it contributes to health care coverage for salaried retirees at
2006 levels. After the limit is reached, retirees will face higher monthly
premiums, larger deductibles and higher prescription drug bills as costs
increase, according to GM (Kaiser Daily Health Policy Report, 2/8). GM
said it will hold a series of meetings this week to explain the changes.
GM Chair and CEO Rick Wagoner said the changes are a "difficult but
necessary decision." Company spokesperson Michelle Bunker said, "It's just
one of the many steps we're taking" to cut costs (Detroit Free
Press, 10/28).
Opinion Piece
When the leaders of the Big Three automakers
meet next month with President Bush, "[h]opefully" they will stress to
Bush and presidential adviser Karl Rove "that a more focused effort is
required to alleviate the problems" of high employee health care costs,
which are "faced not just by the auto industry but all businesses,"
columnist David Lazarus writes in a San Francisco Chronicle opinion piece.
Lazarus suggests that the automakers and other major employers "use their
considerable political clout" to steer lawmakers toward health care
reform. Such reform could result in "a single-payer system similar to the
universal coverage available in every other industrialized democracy" or
something "in between, with the federal government playing a greater role
in meeting the needs of those with chronic health problems." Lazarus says
that in order to "standardize insurance payments and rein in growth in
health care," a "partnership between the public and private sectors" is
required (Lazarus, San Francisco Chronicle, 10/29).