UAW Pres. Bob King. Will the union make concessions on health care in order to win more jobs?
Steadily rising health-care costs will again become a key issue when the United Auto Workers begins contract talks with General Motors, Ford Motor Co. and Chrysler Group later this month.
Critics of the Obama administration’s 2009 bailout of General Motors and Chrysler Group have complained the union’s health-care benefits went through bankruptcy with only modest modifications – despite the union’s agreement, in 2007, to shift responsibility for retiree health care to independent trusts or Voluntary Employee Benefit Associations for each company.
Union members still pay less than 10% of their health-care bills through co-payments and deductibles. In the face of steadily rising health-care costs, so if the two sides win up with no change in the current formula it will represent the equivalent of a pay increase for union members.
But that is something the carmakers insist they cannot accept as they struggle to hold total wage and benefits costs to around $50 an hour, roughly on par with the major transplant assembly lines operated by Toyota, Honda and Nissan.
Along with the cost-of-living increases now abandoned by the UAW, rising health care costs helped drive Detroit’s Big Three labor costs from about $47 an hour in 1999 to more than $76 by 2006 – before concessions began driving costs back down again.
As health-care costs have steadily increased over the past decade, more and more companies shifted costs to employees, who national averages show now pay roughly 30% of their health-care costs through co-payments and steadily rising deductibles.
Consequently, the automakers are likely to ask the union to close the gap between what union members pay and the national averages, since other parts of the union’s compensation are closer to the wages paid at those transplants. The union has already signaled its willingness to consider the issue by agreeing to raise the percentage of health-care cost paid by Caterpillar workers in a contract the union signed last winter.
Changing the health-care package would make the domestic carmakers more competitive with the non-union plants, according to outside analysts.
UAW president Bob King has said several times over the past year the union is prepared to do all it can to ensure the domestic car companies remain competitive.
Holding down costs as part of the contracts coming out of this year’s negotiations also will bolster the union’s case for adding jobs at GM, Ford and Chrysler plants in the U.S, King said.
“What we’re very focused on is jobs,” King said after a recent appearance in Detroit. “We want people to have good-paying jobs.”
However, King, who has come under criticism from union dissidents over previous concessions, also said he expects to raise the entry-level wage of $14.50 per hour to which the union agreed as part of the 2007 contract – which for the first time authorized a so-called “two-tier” wage structure.
Dissidents have demanded the union end the two tier system and King said he planned to address the issue during the upcoming negotiations.
“Entry level to me is not a good standard-of-living today,” King said. “So we want to figure out a way to get more income to those workers.”
Some people believe that more insurance is the answer but it’s insurance that has caused the high cost of medical care and I’ll tell you how I got there. Back in the early 60’s my mother was a single mom working as a waitress. She needed a back operation. She sat down with the back surgeon and worked out a payment plan with him, had the operation and had him paid back in two years. Now how could a single mom working as a waitress with no insurance afford to have a back operation and pay for it? Because this was before Medicaid and Medicare. After Medicaid and Medicare was passed in the mid 60’s Congress didn’t put any checks or stops on it. They trusted the people in the medical field to do the honest thing and charge a fair price for their services just like they trusted the bankers on Wall Street to do the right thing and we saw what happen there. It didn’t take long for those in the medical field to figure out that no matter what they charged the Government would paid them, no questions asked. This is when the cost of health care really started to spiral out of control. It didn’t take long for the private insurance Companies to see the opportunity here and start pushing there own insurance policies and paying the people in the medical field what ever they asked for knowing that the more it cost people to go to the doctor the more people will have to buy their insurance.
So if we really want to fix health care and bring the cost down the only sure way to do that will be to put an end to Medicaid and Medicare. Put an end to all health insurance. No one will have any type of health insurance. I can hear people out there now saying, OMG no one would be able to afford to go to the doctor. No, the people in the medical field will no longer be able to charge these outrages, inflated prices that they charge. Supply and demand will come into play as it should be in a free market. The doctors will have to start competing against each other for your business. Prices will fall. No more insurance Company or the Government getting in-between you and your doctor. In the end most everyone will be able to afford to go to the doctor. Let the free market work.
Of course this isn’t going to happen.
I wish i could even begin to buy into your argument. I can’t.
I do believe that insurance (government or other) has created a huge bureaucracy, with a lot of medical staff simply there to handle payments and such. There’s also the malpractice issue, which adds phenomenal amounts of cost, especially in high-risk medical fields, such as OB-GYN. But the level of care is so much more extensive, the degree of testing, etc., is so far advanced, that I cannot see costs shrinking, nor will they balance out in a way that would be acceptable. There will be too many folks, like a good friend, who get hit with catastrophic bills they simply could never hope to cover without either private or government care.
I can no more see the world without medical insurance than I could see us all giving up auto coverage (though, of course, in CA and some other states, it seems, half of the drivers on the road aren’t covered…but that just drives up costs for everyone, as I think would happen in the medical world).
Paul E.
Yes, with my mother recovering from a severe heart attack just two weeks ago, and being constantly in the ICU with her for that amount of time and seeing the wondrous technology, the wondrous drugs, to say nothing of the wonderful people that was employed to produce a satisfactory result, so far, and knowing that it was Medicare and Anthem footing the bill, I’d certainly agree that no one individual, short of a Warren Buffett, could pay for this by arranging payments with the doctors. I don’t know the answer to the health care dilemma, but I do know that if it was up to me, we’d be doing a little redistribution of wealth, giving those darned incredible nurses of every stripe a hefty pay raise, even if it meant that the doctors would have to take a pay cut. I know, it won’t happen, but after spending nearly every night and day in the company of those wonder-working nurses and support staff, watching them perform minor miracles and major miracles, in a situation that I found most stressful, I would think they would be among the highest paid workers in America.
Just a thought, and probably one influenced by lack of sleep: Why wouldn’t a VEBA work for active employees, perhaps by combining the active employees into the UAW’s retirees’ VEBA, with seed funding coming from the companies, as was first discussed in 2007 by the UAW and the D3?
A very interesting question which I do not feel competent to answer. Perhaps I can find someone to respond instead with a deeper understanding.
In the meanwhile, I am glad to hear your mom is pulling through.
Paul A. Eisenstein
Publisher, TheDetroitBureau.com
Paul, I agree with you on most every topic that comes up on this board and I can understand how you feel about keeping insurance as opposed to letting the free market work in the medical field. This is the way the medical field and insurance Companies have condition us to think. They lead us to think that if we didn’t pay these high price then we wouldn’t have this state of the art care but the fact is the United States isn’t number one in the health care field. I can’t remember where we are for sure but I think we’re 14th. These other countries have just as good are better healthcare than we do plus at a fraction of the cost because they don’t have insurance Companies paying the bills. We see people getting on planes everyday going to these countries to have surgery because they can have it done there for just a fraction of what it cost here. I do agree with you about some people being hit with a catastrophic bill. I feel if we do have any kind of health insurance it should only be the kind that would cover catastrophic bills only. Everything else, let the free market work and the prices will come down. We may even see things like “Come to our Hospital for your knee replacement and get the second one free”.
r123t, you stated that if it wasn’t for Medicare and Anthem footing the bill that no one short of Warren Buffett could pay. That’s the point, without insurance, no longer could the medical field charge these outrages, inflated prices. They would have to adjust their cost to what the market could bare. The free market works when it’s allowed to.
Sorry, JHowe51, you have a much more fervent belief that the free market works than I do, especially where corporations are concerned. They have corporate personhood, the recent Citizens United decision, and can pick and choose where they do business and who they do business with. I’d like to believe that we could all have a kumbaya moment with service providers whatever their stripe, but the fact is if I can’t pay for services, somebody else can, and a virtual free-market uprising, as you suggest, would just fall short. Unless of course, you are suggesting what my instincts tell me is the correct way to go, with cradle-to-grave medical coverage for all, which will never fly in this country.
r123t,cradle-to-grave medical coverage for all is something that I have mentioned before and I total agree with you on that. Either we have no insurance and let the free market work or we have cradle-to-grave medical coverage for all with checks and balances with price controls to keep the cost down but don’t look for either one of these to happen. The medical has too strong of a lobby and they like to be able to name their on price and keep the cost inflated knowing that what ever they charge the insurance Companies will pay then jack up our premiums to cover the cost.