|
|
|
Jewish World Review June 17, 2005 / 10 Sivan, 5765 GM's healthcare dilemma By Jeff Jacoby
http://www.JewishWorldReview.com |
Is General Motors an automobile manufacturer that provides healthcare benefits for its workers? Or is it a health insurance provider that also happens to make cars?
The question is facetious, but there's nothing funny about GM's predicament. At the company's annual meeting in Detroit last week, CEO Rick Wagoner told shareholders that health benefits add a staggering $1,500 to the price of every vehicle GM makes. GM will spend more than $5.6 billion this year on health coverage for 1.1 million people — a population greater than Rhode Island's. Yet of that number, only 160,000 or so are current employees: The majority are retirees and their families. And with GM planning to shed 25,000 jobs through attrition over the next three years, its already lopsided ratio of 2.6 retirees per active employee is only going to get worse.
The health benefits GM provides are generous to the point of recklessness. While its salaried employees pay 27 percent of their healthcare costs, the nearly 120,000 workers who belong to the United Auto Workers pay a minuscule 7 percent. They have no deductibles, no monthly premiums — only modest co-pays for doctor's visits and prescriptions. Benefits that lavish might have been tolerable back when GM was king of the automotive hill and could count on selling enough cars to defray such a huge expense. But GM today sells only about one-fourth of the cars bought in America — down from nearly half in the 1950s.
All of which helps explain why GM lost $1.3 billion in the first quarter of this year. At the annual meeting, Wagoner warned that the exploding cost of healthcare benefits is ''perhaps the most challenging element" of GM's looming financial crisis. Is it ever.
Of course, GM has other problems, too. Union rules block it from shutting down underused plants. It takes 34 hours to build a GM vehicle, while Toyota can build a car in 28. Sales of high-profit SUVs and pickups have been depressed by rising gas prices. And, as critic after critic has complained, GM's array of brands is too large and indistinct. How many non-car buffs can distinguish a Buick from a Pontiac?
''One has to wonder," writes auto industry analyst Maryann Keller, ''why it has been so hard for GM to figure out what car buyers want and then give it to them."
Surely part of the reason is all those billions GM is spending on first-dollar health coverage for its legion of retirees. When $1,500 per vehicle is earmarked for Lipitor and knee replacements, that's $1,500 not being spent designing cars that drivers will fall in love with. Wagoner indicated last week that he intends to force down healthcare costs whether the union likes it or not — ''our strongly preferred approach is to do this in cooperation with the UAW," he said, implying that other approaches are available if necessary. Indeed, The New York Times reported Wednesday that GM has given the UAW until the end of June to agree to healthcare concessions or face unilateral action by management.
Why not run to the doctor for every minor ailment when the out-of-pocket cost is minimal? Why inquire whether a procedure can be performed less expensively when it'll be covered by insurance either way?
In no other area do we rely on insurance for routine expenses or repairs. Auto insurance doesn't cover oil changes; no one uses homeowner's insurance to repoint the chimney. That's because most of us pay for those policies ourselves, and therefore get only the insurance we really need — generally against catastrophic events, like a car being stolen or a house burning down.
Only when it comes to healthcare do we expect insurance to cover nearly everything. The problem may be especially acute at GM, but most of us have gotten used to having a faceless third party pick up the lion's share of our medical tab. GM's board of trustees can play hardball with the union. But ultimately this isn't a problem that a single company can fix. So long as Americans don't expect to pay for their healthcare themselves, what's no good for General Motors won't be good for America, either.
Every weekday JewishWorldReview.com publishes what many in in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.
Jeff Jacoby is a Boston Globe columnist. Comment by clicking here. © 2005, Boston Globe |
Columnists
Toons
Lifestyles | |||||||||||
