U.S. automakers and health care costs: build them all in Canada?

[kaisen]

http://detnews.com/apps/pbcs.dll/article?AID=/20060926/AUTO01/609260346/1148

http://detnews.com/apps/pbcs.dll/article?AID=/20060926/LIFESTYLE03/609260338/1148

These articles highlight the gap between the healthcare costs of the Big Three and their competitors, but also the difference between healthcare costs in the U.S., Canada, and Japan.

Each vehicle assembled in the United States cost GM $1,525 for health care; those made in Canada cost GM $197. Toyotas built in Japan cost $97.

An excerpt from the second article:

......General Motors Corp.'s best minds fight a losing battle against the bills for Nexium prescriptions, heart bypass surgeries and CT scans that flood in at a rate of $10,000 a minute.

Bradley gets a cup of coffee, and GM has spent $50,000 on health care. He goes to lunch, and $600,000 is gone. He takes a three-day weekend on his sailboat and returns to $43 million in medical bills.

For 12 years, Bradley, GM's director of health care policy, and the corporate soldiers in the automaker's health care war room have waged an unprecedented battle against health care costs, throwing more money, time and energy into the issue than any company in history. GM has used its size to strong-arm doctors and bully drug companies. It built the largest wellness education program in the country, convinced workers to pay more for medical care and cajoled hospitals to incorporate assembly-line efficiencies into emergency rooms.

"We've thrown everything at the monster," Bradley said.

But those efforts have barely slowed the staggering surge in medical bills that many analysts believe is a bigger threat to GM than is Toyota.

The world's largest automaker is being driven deep into financial trouble not only by the cars of a competitor, but also by the medical bills of its own workers and retirees.

Last year, GM spent $5.3 billion on health care -- enough to buy a GMC Yukon for each of its U.S. employees. By 2008, General Motors will likely spend more on health care in the United States than on its hourly-worker payroll.

The economics have become so upside-down that Warren Buffett calls GM "a health and benefits company with an auto company attached."

One out of every 87 Americans over the age of 65 has their medical bills paid by GM, as does one out of every 279 Americans of all ages.

So large is the program that someone has a GM health card in virtually every ZIP code in the United States. So costly is the program that the automaker's health care spending alone is more than the total revenue of 121 companies on the Fortune 500 list.

E

[thrown_hammer]

That's because people in Japan eat healthy and excercise regularly. People in the US sit on a stool, clip a door panel on boring rental car, and then smoke a cigar.

[Nathans_Dad]

Actually it is because the Japanese car makers don't provide pension benefits to their employees. The idea of a company taking care of you for life seems to be an American phenomenon.

The answer is simple, GM should not be responsible for providing health care to their employees for their entire life. Take away that burden and the company is suddenly wildly successful again.

[widebody911]

Originally posted by Nathans_Dad
Take away that burden and the company is suddenly wildly successful again.

Well, except for the part about their crappy products...

[thrown_hammer]

Originally posted by widebody911
Well, except for the part about their crappy products...

LOL

[Moneyguy1]

I think we are all missing the point here.

What are the principal causes for the much higher than c-o-l for medical expenses? Who is profiting the most and most basic, what efforts are being made by society (including the government) to rein in the profits of the medical industry?

Essentially, what has changed since the time when medical coverage was affordable?

I wonder what would happen if large corporations like Ford or GM decided to become "self insured" for medical expenses, with limitations on coverage to eliminate frivilous cases? IMHO, too many industries cave in to the medical "complex" and fail to question the costs.

Yeah, I agree in part with the pension plans being out of control. One of the worst abuses is the near full pay for employees that have been "idled" by cutbacks. A modest pension plan, adequately funded and providing no more than, say, 50% of final average annual wage after, say, 25 years of service and an age of no less than 60 should be do-able and if properly managed, be self sustaining.

[gaijindabe]

Originally posted by thrown_hammer
That's because people in Japan eat healthy and excercise regularly.

The price of saturated fat is much higher (i.e. meat), hence they live a bit longer. I am amazed that their drinking and smoking and poor health care system does not even up the score..

GM did what state and locgal governments have been doing - loading up on the benifits and future liabilities... Now the bills are coming due.

[thrown_hammer]

I didn’t think about the smoking and drinking….I think the breakdancing makes up for it.

[gaijindabe]

[I think the breakdancing makes up for it. [/B]

[kaisen]

Originally posted by Moneyguy1
I think we are all missing the point here.

I wonder what would happen if large corporations like Ford or GM decided to become "self insured" for medical expenses...

A modest pension plan, adequately funded and providing no more than, say, 50% of final average annual wage after, say, 25 years of service and an age of no less than 60 should be do-able and if properly managed, be self sustaining.

GM is self-insured:

" GM is the largest private buyer of health care in the world. Most companies pay an insurance company to assume the financial risk for health care claims. GM, on the other hand, is self-insured, meaning the cost of every mammogram and Viagra prescription comes straight out of the auto giant's pocket."

GM's pension plans are funded to the tune of $100 BILLION dollars, so the pension side has always been manageable.

Healthcare, not so manageable.

[dd74]

Can GM legally restructure their health care situation?

Can they just say, "No, we will no longer provide health care?"

How about the pensions? Can they just say, "From now on, every ex-employee gets 50% max (or even less)?"

I plead ignorance on this. But I hate to see them fall south because of health care issues.

[kaisen]

I'd like to hear someone else's take on this as well. I think quite a few of these 'benefits' are contractual agreements, including those with the UAW, that are not easily broken.

[dd74]

But if GM went bankrupt because of health care issues - and let's not think that this could not be a possibility - where does that leave the UAW? Are they equipped to supplant what GM gave their workers?

[scottmandue]

I don't understand all the pissing and moaning about pensions and medical coverage.

It is a contractual agreement between a employer and employee.

You get two job offers:
Job A offers more pay but no medical or pension.
Job B offers lower pay with medical and pension.
You pick the job that fits you lifestyle.

If you took a job and they guaranteed you a five percent raise every two years you would damb straight expect to get that raise wouldn't you?

[Nathans_Dad]

The only way that I know of for GM to drop their pensions is to declare bankruptcy and then restructure.

Even then, the more important question is how to we re-educate the American worker to not expect a free ride for the rest of their life from the company?

I'm a doc. I just signed a contract. I have a 401k which my employer matches, but I don't get a pension. I don't get free health care for life. None of that. Why should an auto worker be any different?

[kaisen]

Originally posted by Wayne at Pelican Parts
So, yes the cost has gone up tremendously, but so has the quality of life and the overall quality of care. As the old saying goes, there is no such thing as a free lunch...

-Wayne

There is no doubt that medical advancements help quality of life, but that isn't the whole cost story. We aren't any 'healthier' as a society because of it. Obesity and diabetes overpower the other gains. For the first time in hundreds of years our kids are expected to have shorter lives than we will.

[Nathans_Dad]

I hope you aren't saying that the increase in obesity and diabetes is the fault of the medical profession.

First, obesity and diabetes are linked, so you may as well just boil it down to obesity. Not too many skinny people get Type II Diabetes.

So, the real question is why are Americans eating more and exercising less? Is that medicine's fault or is it the fault of the person who eats at McDonalds and hasn't exercised in 30 years?

[kaisen]

I wasn't blaming the medical profession at all. Maybe the french-fry-making profession

[scottmandue]

Originally posted by Nathans_Dad
The only way that I know of for GM to drop their pensions is to declare bankruptcy and then restructure.

Even then, the more important question is how to we re-educate the American worker to not expect a free ride for the rest of their life from the company?

I'm a doc. I just signed a contract. I have a 401k which my employer matches, but I don't get a pension. I don't get free health care for life. None of that. Why should an auto worker be any different?

I don't know anything about what autoworkers make but I took a job with the state and I could make more money working in the private sector however I opted for the state job because of the benefits. Now if those benefits were not in place I would have moved on a long time ago.

[RallyJon]

For the first time in hundreds of years our kids are expected to have shorter lives than we will.

Yes, but they'll die with a full head of hair and an erection that just won't quit.