GM's call for health care reform the latest push by auto industry

When General Motors Corp. struck a tentative deal with its union to
cut health care benefits, it renewed a call that has been pushed by
automakers in recent years for more help from Washington on health
care.

GM, the world's No. 1 automaker, expects to spend $5.6 billion on
health care this year and says the escalating costs places it at a
disadvantage competing against foreign companies whose national
governments largely pay for health care.

"Health care costs in this country are out of control," said GM
Chairman and CEO Rick Wagoner, announcing the agreement with the
United Auto Workers on Monday. "We would really like to see much more
focus and leadership from elected officials, especially in
Washington."

Wagoner's pitch comes amid trying times for the U.S. auto industry and
the decision by GM's financially troubled parts supplier, Delphi
Corp., to seek bankruptcy protection. This past week, GM posted a $1.6
billion third-quarter loss, while Ford reported a loss of $284
million.

Ford Chairman and CEO Bill Ford also brought up health care in talking
about his company's losses.

"We need to have a debate nationally that includes business and
obviously includes the politicians," said Bill Ford, who argues that
health care costs cannot be dealt with simply by shifting them around
between companies and workers. "It's got to come up and it's got to
come fast."

While members of Michigan's congressional delegation support steps to
help the auto industry and other manufacturers saddled with mounting
costs for health care and pensions, it's unclear whether the
automakers can rouse enough support in Congress to address a problem
much larger than the industry.

Some members of Congress say interim steps can be taken, such as using
technology to reduce medical paperwork costs and helping companies and
insurers pay an employee's catastrophic medical costs in exchange for
firms holding down premiums.

But with Congress facing many other obligations -- such as paying for
the post-Hurricane Katrina recovery -- special treatment is not
likely.

"The federal government isn't going to come out and bail out their
health care -- the government isn't going to assume their health care
costs," said Rep. Mike Rogers, a Brighton Republican. "It has to be a
partnership."

Under the tentative agreement, the UAW would reduce GM's health care
costs by $3 billion a year before taxes and cut its retiree health
care liabilities by $15 billion, or 25 percent.

GM retirees, who now pay nothing for their health care coverage, would
be required to pay up to $752 annually in premiums for health care for
a family, while active hourly workers would pay more for their
prescription drugs and defer $1 an hour in future pay increases to
help pay for retirees' health care.

David Cole, chairman of the Center for Automotive Research in Ann
Arbor, Mich., said mounting health care costs have become a problem
larger than the auto industry and are amplified by increased
globalization. He argues the long-term issues have yet to be tackled.

"I think we haven't really connected this to quite the level we should
with the sense of urgency to really begin to deal with this in a
fundamental way," Cole said.

Health care premiums have grown dramatically in recent years. A survey
released last month by the Kaiser Family Foundation found that
premiums have soared 73 percent since 2000 and grew an average of 9.2
percent in 2005. The rate of growth this year is more than three times
the growth in workers' earnings.

"There has to be a major restructuring of how we fund health care and
all that takes is political will," said U.S. Sen. Debbie Stabenow, a
Democrat from Lansing.

Stabenow is backing legislation that would help computerized health
care information systems, providing $4 billion in grants and tax
incentives over five years for hospitals and other medical facilities.
The program could save the nation's health care system $300 billion a
year, Stabenow says, and the funding would offset the cost of putting
the new technology in place.

Rep. John Dingell, D-Dearborn, has long supported a national health
insurance plan. He said an improved health care system remains a
pressing need, but notes there are many obstacles.

"You've got to get the support of the administration, get support of
Republicans and overcome the opposition of the insurance lobby and
pharmaceuticals," he said.

Other political leaders are beginning to focus attention on the
problems of the auto industry. Sen. Hillary Rodham Clinton, D-New
York, urged President Bush on Thursday to convene a national auto
industry summit to look at issues such as health care and pension
costs, fuel efficiency and foreign competition.

GM said it plans to work with the UAW to ask the federal government to
help reduce health care costs. It does not back the union's support
for a national health care plan.

Art Luna, president of UAW Local 602, which represents nearly 3,000
UAW members who will be working at GM's new Delta Township plant just
west of Lansing next year, said labor agreements can only do so much.

"The Big three needs to understand that health care issues aren't
something that can be negotiated across the bargaining table. They can
be bandaged, but they need to be fixed in Washington," Luna said.

www.freep.com