Boston Globe
October 22, 2005

By Robert Kuttner

The United Autoworkers union has agreed to save General Motors over a billion dollars a year in health insurance costs. This is a disguised pay-cut, since workers will now pay more out of pocket for their healthcare.

 

The union agreed to this desperation deal to help keep GM alive. The once-dominant auto-maker posted a record $1.1 billion loss in the third quarter; and its former parts division, Delphi, with 34,000 union jobs, has just gone into bankruptcy. If and when it emerges, Delphi's $26-an-hour workers will be cut to something like $12. That gets your attention.

The union leadership was so eager to help GM survive that the UAW filed an unusual suit intended to block its own union retirees from challenging the negotiated health-benefit cuts. Now Ford has just reported a $284 million third-quarter loss, and wants the same kind of deal the UAW gave GM.

Even with these concessions, the industry that once was the core of America's blue-collar middle class is continuing its downward spiral, cutting jobs and cutting the pay and benefits of the workers that remain. General Motors, which a generation ago had about half a million union workers, will soon be down to 84,000.

But it would be a mistake to conclude that high wages or excess health benefits are bankrupting US industry. Look at our competitors. Japanese labor costs in the auto industry are comparable to American ones and German wages are far higher.

There are, however, two offsetting differences. First, the Japanese and Germans are ahead technologically and have a knack for making reliable cars that consumers want to buy. Second, their healthcare is financed socially.

So GM's biggest problem is not labor costs; it's that except for its profitable SUVs (which are becoming white elephants as gas prices rise), too few consumers are buying GM's products. When management makes dumb decisions about design, quality, or marketing, autoworkers end up paying the price.

GM spends also $5.6 billion a year on healthcare -- more than it spends on steel. Its foreign competitors spend nothing on healthcare. So GM and the UAW are common victims of America's failure to have national health insurance.

The UAW, to its credit, has advocated national health insurance since the days of its first president, Walter Reuther. General Motors, like the rest of American big business, has fiercely resisted it -- preferring to bear billions in expenses to having a national policy it considers socialistic. But it would be another mistake to conclude that autoworkers have had too good
a deal on health insurance. The reality is that most Americans have had too bad a deal.

Somehow, the rest of the industrial world can provide health coverage for everyone, and only spend an average of about 10 percent of its national income, while we spend 14 percent and leave over 44 million people without health insurance.

How is that possible? Simple: we squander hundreds of billions of dollars processing claims, having dozens of competing insurers spend a fortune on marketing, paying HMO reviewers to second-guess physicians, evaluating who is "insurable," and otherwise wasting about 30 cents on every premium dollar paying middlemen who provide no healthcare.

And we overpay dearly for treatment in emergency rooms, where tens of millions of poor people go when they get really sick, having been unable to afford cheaper and more cost-effective routine care. Other nations spend more efficiently on preventive care, because everyone can afford to see the doctor.

Here is one good idea, proposed by environmental activists Michael Shellenberger and Ted Nordhaus, and sponsored by Senator Barack Obama of Illinois as the Competitiveness and Accountability Act. Congress would offer automakers the following deal: If they invest substantially in fuel-efficient technology, Congress will relieve them of the health insurance burden of their retirees.

Isn't this a bailout? As Shellenberger and Nordhaus observe, after 9/11, Congress bailed out the airlines and asked nothing in return. This proposed subsidy would insist, in return, that auto-makers help themselves, their workers and consumers -- by building more competitive and fuel-efficient cars. A bankruptcy is also a bailout -- investors and workers bail out failing management.

If we could think more creatively, we wouldn't have to choose between saving the auto industry and having decent health coverage for its workers -- and everyone.
____________

Robert Kuttner, co-editor of The American Prospect, can be reached at kuttner@prospect.org. His column appears regularly in the Globe.

(c) Copyright 2005 The New York Times Company

Bullet Points for Legislators

  • Single Payer saves money.  For the past 20 years, states have commissioned studies on different types of health care systems.   In EVERY case, single payer was shown to be the only way to cover everyone and the only system that saved money and controlled costs.

  • Publicly financed does not mean government run health care.  YOU have publicly finance health coverage, but the government does not make decisions regarding your health care.

  • Cost conscious patients often don't get the care they need.   Most decisions are made by the doctor in concert with the patient, but the patient relies on the doctor's knowledge to make a decision.  Expensive tests and treatments cannot be ordered by the patient, only the doctor.

  • Lifestyle choices are not what is fueling high costs in health care.   The United States ranks low in general health indicators, but high in good health habits.  We smoke less, drink less and consume less animal fat that many other countries with better health indicators and much lower health care costs.

  • Businesses can accurately determine their health care costs and are not subject to unanticipated large premium increases.

  • It will reduce labor costs due to a more efficient way of financing health care, eliminating much wasteful administration.

  • Workers' Compensation costs will be reduced, likely by half, due to the fact that everyone has health coverage and there is no need for the medical portion.

  • It reduces the need for part time employees and provides easier recruiting.  There are no pre-existing conditions or Cobra issues.

  • Eliminates the oversight of health benefits and bargaining health coverage with employees.

  • It creates healthier personnel and more stable employees, reduces absenteeism and eliminates employer health coverage complaints.

  • It reduces employee health related debt and personal bankruptcies.

  • It frees up family income that can be spent on other goods and services, thus stimulating the economy.

Tips for Writing Letters to Editor

Follow guidelines for your local paper (word count, submission instructions, etc.)

Frame your letter in relation to a recent news item Use state specific data whenever possible (let us know if you need help finding some!)

Address counter arguments

Be aware of your audience and emphasize how Medicare for All is good for ALL residents of the state

Criticize other positions, not people Include your credentials (especially if you work in the healthcare field)

Avoid jargon and abbreviations

Don’t overload on statistics and minor details

Cover only one or two points in a single letter

Avoid rambling and vagueness

DONATE HERE

Donations to SPAN Ohio help cover operating and lobbying expenses and are NOT tax deductible. To donate, click the DONATE button below. On the page that appears, type in the amount of your donation. If you want your donation to be recurring, check the box where it says "Make this a monthly donation." If this is a one-time donation, leave that box blank.Then click either "Donate with PayPal" (if you have an account) or."Donate with a Debit or Credit Card." Complete the transaction on the page that follows.

Donations to HCFAO go to our education fund and ARE tax deductible. To donate, click the Donate button below. On the page that appears, type in the amount of your donation. If you want your donation to be recurring, check the box where it says "Make this a monthly donation." If this is a one-time donation, leave that box blank.Then click either "Donate with PayPal" (if you have an account) or."Donate with a Debit or Credit Card." Complete the transaction on the page that follows.

UPCOMING EVENTS

  • Region 1 Meeting - Cleveland Mon. 29 Jan, 2018 (5:00 pm - 6:30 pm) North Shore AFL-CIO Office, 3250 Euclid Ave, 2nd floor - Note: enter parking lot from Prospect Ave. Enter building from re...
  • SPAN STATE COUNCIL MEETING Sat. 10 Feb, 2018 (10:00 am - 1:00 pm) First Unitarian Universalist Church of Columbus - 93 W Weisheimer Rd - Columbus OH
  • SPAN ANNUAL STATE CONFERENCE Sat. 28 Apr, 2018 (9:00 am - 3:00 pm) Quest Conference Center - 8405 Pulsar Place - Columbus OH
Add New Event Show Full Calendar