UAW details health cuts

GM retirees may see cost rise as much as $752 a year

October 21, 2005|By STACEY HIRSH | STACEY HIRSH,SUN REPORTER

Retirees from General Motors Corp. could pay up to $752 a year more in health care costs for their families as part of a tentative agreement with the United Auto Workers union, an increase some experts say may be just the beginning of cutbacks to try and stem losses at the financially-ailing automaker.

The tentative agreement requires most of GM's retirees to pay premiums that were previously covered, as well as increased deductibles and co-pays, according to a UAW statement released yesterday. The statement provided the first public details of a tentative agreement announced earlier this week. This "asks every UAW-GM member, active and retired, to make sacrifices so that everyone can continue to receive excellent health care coverage today and in the future," said a statement by UAW President Ron Gettelfinger and Vice President Richard Shoemaker, who heads the unions' GM department.

General Motors hourly workers and retirees currently pay 7 percent of their health care costs on average. The average American worker paid $2,713 toward premiums for family coverage, or 26 percent of the total heath premium, this year, according to a health benefit survey released last month by the Kaiser Family Foundation and Health Research and Educational Trust.

General Motors, which closed its Baltimore plant in May, has been struggling with the increased cost of health care.

As the nation's largest private health care provider, the company spent $5.2 billion last year on medical benefits for its workers, retirees, and their dependents.

Earlier this week, GM announced a tentative agreement with the UAW that would cut those annual costs by $3 billion before taxes and save it $1 billion a year in cash.

The company also this week reported a $1.6 billion loss for the third quarter.

Experts have said that slashing health care costs is only a first-step in saving the troubled company. GM has lost footing to foreign automakers with lower production costs. Its market share has been cut in half over the past three decades and analysts say consumers don't want to buy the cars GM makes.

"It's a step in the right direction," said Jack W. Plunkett, chief executive officer of Plunkett Research Ltd., a market research firm in Houston and publisher of Plunkett's Automobile Industry Almanac. "Certainly their problems are more myriad and complex than just the health care issue."

For active workers, $1 an hour of future pay increases will go to a fund to help pay for retiree health care. Also, co-payments for prescription drugs will increase as much as $13 per prescription. Health care coverage for active workers will not otherwise change, according to a statement released by the UAW.

For the 500,000 General Motors' retirees, their surviving spouses and dependents, the tentative agreement will mean monthly premiums of $10 for individual coverage and $21 for family coverage in addition to the increased co-payments and deductibles, according to the UAW.

The changes would mean an annual increase of up to $370 for individuals and up to $752 for families, said UAW spokesman Paul Krell.

Health care coverage will be unchanged for lower-income retirees who have annual pension incomes of $8,000 or less and meet other criteria set forth in the tentative agreement. About 74,000 retirees, their surviving spouses and their dependents fall into that category, Krell said.

The tentative agreement is still subject to a ratification vote by union members, which could take weeks, and court approval, which could take months, Krell said.

But Wallace Kirtz Jr., a retiree of the Broening Highway plant, is already worried.

"It seems like we're always paying something," said Kirtz, 55, who worked at GM for 37 years before retiring when the plant closed earlier this year.

Some labor experts predict the automakers' workers and retirees will see more benefit changes in the future.

Bill Barry, director of labor studies for the Community College of Baltimore County, worries that General Motors' jobs bank program could be next in line for cutbacks.

The program allows workers from closed factories - including the Baltimore plant - to collect pay and benefits if they go to school, volunteer full time or sit in a room with other local GM workers for 40 hours a week that would otherwise have been spent on the assembly line.

"It's going to be tough," Barry said of the proposed health care cutbacks. "And I also think health care today, job bank tomorrow. That's my fear."

Or more health care cuts for retirees could follow, said John Jordan, president of Principor Communications and a former labor strategist and organizer.

"This is the problem with these concessions," Jordan said. "Once they're made, management keeps coming back. It's highly likely that [health care benefits for retirees] will be cut further in the future."

Paul Pinkney is already resigned to the potential health care increases. "I would hate to lose $750 a year, but I believe that's just the start," said the 65-year-old, who retired from the Baltimore van assembly plant when it closed in May.

But Pinkney said he understands that the UAW had to do something to help the ailing company.

"They figure GM is definitely in trouble, so we've got to help the corporation stay viable. I could understand that," Pinkney said. "General Motors is having a major problem. ... I'm stuck with them. We all are. As General Motors goes, so goes the country. If GM goes south, that would really be something for the economy of the country."

stacey.hirsh@baltsun.com

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