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Thursday, February 10, 2005

US Industry Calling for Universal Health Care

Well, almost. GM CEO Rick Wagoner has joined Ford CEO William Clay Ford, Jr. in calling for much broader government coverage. From the Detroit News:
"Clearly, the American industry has a disadvantage in terms of health care cost because in Japan and Europe, those costs are socialized," said Michael Flynn, director of the University of Michigan's Office for the Study of Automotive Transportation.

"Whether it is appropriate for private companies such as GM to be asking for government relief on health care could be a matter for debate," Flynn said.

In the speech, Wagoner will support the establishment of a "consumer driven" health system that encourages people to seek out the most cost-effective care and drugs, and rewards those who do.

He's also likely to advocate a national plan to address catastrophic health expenses.

GM has long employed a wellness approach toward curbing health care costs among its employees by encouraging the use of generic prescription drugs, which are less expensive than name brands, smoking cessation, and fitness programs. But any gains have not been enough to outpace increases in the costs of drugs and medical care.

"Health care costs are not in our control," said GM Vice Chairman and Chief Financial Officer John Devine last month in discussing the company's 2004 financial results. "We have to get them back to a reasonable level. It's a huge drag from a cash standpoint."

The company's health care burden is one reason it faces a possible downgrade of its credit rating to junk bond status, which would be a costly black eye for the world's largest automaker.
As I understand it (recalling some book I read years ago), the Big Three (Ford, GM, Chrysler) and the UAW were instrumental in making the link between employment and health care in the first place. In the 1950's and 60's, the UAW would target one automaker to negotiate with (and strike against if necessary). Once a contract was reached with that company, its terms were basically adopted by the other two. As long as outside competition was limited, this worked out pretty well for both the workers and the companies--wages and benefits rose equally across the board. It was in this era that health insurance became a standard part of the union contracts, and it was extended to the white-collar employees as well. But "free trade" and "globalization" have been used to reverse the tide, putting workers back where the cheap-labor conservatives want them--destitute. It is good to see that GM and Ford are seeking to get our government to help provide health care, rather than to try and put the squeeze on the European and Japanese workers who already enjoy universal health care. GM seems to realize that there's not a lot of hope in the near term:
While Detroit automakers would like to see reform of the health care system immediately, [director of the University of Michigan's Office for the Study of Automotive Transportation Michael] Flynn said the demand comes at a time when the Bush administration is focused on other issues such as Social Security reform and paying down the deficit.

"It's hard to imagine that anything is going to happen in the next year or two. But at a certain level, this is a problem that's going to continue to plague the Big Three for many years to come," Flynn said.

"They know nothing will be done in the next four years. But Rick Wagoner may still want to push and hope that something will be done in six or eight years."