Monday, May 02, 2005
George Will: "GM is a welfare state"
[George Will, "Pension, medical costs cripple GM," The Lawrence Journal-World, 1 May 2005.]
Following the breakdown in negotiations between Boeing and SPEEA, it is interesting timing for George Will to release a column discussing the unsustainability of current health care benefits in major companies:
Who knew? Speculation about which welfare state will be the first to buckle under the strain of the pension and medical costs of aging populations usually focuses on European nations with declining birth rates and aging populations. Who knew the first to buckle would be General Motors, with Ford not far behind?
n 2003, GM's pension fund needed an infusion from the largest corporate debt offering in history. And the cost of providing health coverage for 1.1 million GM workers, retirees and dependents is estimated to be $5.6 billion this year. Their coverage is enviable -- at most, small co-payments for visits to doctors and for pharmaceuticals, but no deductibles or monthly premiums.
GM says health expenditures -- $1,525 per car produced; there is more health care than steel in a GM vehicle's price tag -- are one of the main reasons it lost $1.1 billion in the first quarter of 2005.
GM says its health care burdens, negotiated with the United Auto Workers, put it at a $5 billion disadvantage against Toyota in the United States because Japan's government, not Japanese employers, provides almost all health care in Japan. This reasoning could produce a push by much of corporate America for the federal government to assume more health care costs. This would be done in the name of "leveling the playing field" to produce competitive "fairness."
Health care for retirees and their families -- there are 2.6 of them for every active worker -- is 69 percent of GM's health costs. GM says it has $19.8 billion in cash and normal mortality rates will reduce the ratio of retirees to active workers. Meanwhile, Rick Wagoner, GM's CEO, can only muse, "It's strange. When I joined GM 28 years ago, I did it because I love cars and trucks. I had no idea I'd wind up working as a health-care administrator."
Companies that continue to offer over-the-top benefits at little to no cost can expect similar fates. Others, such as Wendy's and Dell, are moving to HSA policies and forever changing the trend lines of their health care spending.
[Devon Herrick, "Health Savings Accounts: The Future Of Health Care For Kansans," The Flint Hills Center, 14 February 2005.]
[George Will, "Pension, medical costs cripple GM," The Lawrence Journal-World, 1 May 2005.]
Following the breakdown in negotiations between Boeing and SPEEA, it is interesting timing for George Will to release a column discussing the unsustainability of current health care benefits in major companies:
Who knew? Speculation about which welfare state will be the first to buckle under the strain of the pension and medical costs of aging populations usually focuses on European nations with declining birth rates and aging populations. Who knew the first to buckle would be General Motors, with Ford not far behind?
n 2003, GM's pension fund needed an infusion from the largest corporate debt offering in history. And the cost of providing health coverage for 1.1 million GM workers, retirees and dependents is estimated to be $5.6 billion this year. Their coverage is enviable -- at most, small co-payments for visits to doctors and for pharmaceuticals, but no deductibles or monthly premiums.
GM says health expenditures -- $1,525 per car produced; there is more health care than steel in a GM vehicle's price tag -- are one of the main reasons it lost $1.1 billion in the first quarter of 2005.
GM says its health care burdens, negotiated with the United Auto Workers, put it at a $5 billion disadvantage against Toyota in the United States because Japan's government, not Japanese employers, provides almost all health care in Japan. This reasoning could produce a push by much of corporate America for the federal government to assume more health care costs. This would be done in the name of "leveling the playing field" to produce competitive "fairness."
Health care for retirees and their families -- there are 2.6 of them for every active worker -- is 69 percent of GM's health costs. GM says it has $19.8 billion in cash and normal mortality rates will reduce the ratio of retirees to active workers. Meanwhile, Rick Wagoner, GM's CEO, can only muse, "It's strange. When I joined GM 28 years ago, I did it because I love cars and trucks. I had no idea I'd wind up working as a health-care administrator."
Companies that continue to offer over-the-top benefits at little to no cost can expect similar fates. Others, such as Wendy's and Dell, are moving to HSA policies and forever changing the trend lines of their health care spending.
[Devon Herrick, "Health Savings Accounts: The Future Of Health Care For Kansans," The Flint Hills Center, 14 February 2005.]
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