Thursday, June 09, 2005
GM not the only company struggling with health care costs
[Ron Scherer, "Rising benefits burden," The Christian Science Monitor, 9 June 2005.]
GM is making the news rounds with its ongoing struggle to pay for rising health care costs, but the company really just serves as an indicator of larger problems throughout the economy:
An increasing part of production costs in America comes from the price of promises.
There are corporate commitments to provide a pension - some 44 million Americans get a monthly check - that add up to as much as $124 billion a year. There are also healthcare benefits that many companies have agreed to provide, either voluntarily or by union contract, at a cost of billions more each year.
The problems go well beyond GM and the other automakers: Some of the nation's steelmakers, airlines, and old-line manufacturers - and even some municipalities - are also carrying large "legacy costs" - and may face similar layoff decisions.
"Big companies that dominated the economic landscape 20 to 30 years ago are really struggling," says John Challenger, CEO of Challenger, Gray & Christmas, a Chicago outplacement company. "This may not be the last major job cut announcement we see this year as other companies, including the other American automakers, struggle to make a profit amid escalating healthcare costs, not to mention the ongoing health benefits to the growing ranks of retirees."
On Tuesday, the chairman of General Motors, Rick Wagoner, said, "We've worked the healthcare topic hard for a long time, and from every angle." But, he added, "Frankly, the continuing double-digit US inflation in healthcare costs is swamping that progress."
The reality is that we are reaching a breaking point and serious changes must be made in the way health care is provided and consumed in this country.
[John McClaughry, "Patient Power: A Health Care Reform Agenda for Kansas," The Flint Hills Center, May 2004.
Richard B. Warner, MD, "How Would You Like Your Medicine?," The Flint Hills Center for Public Policy, 24 July 1999.]
[Ron Scherer, "Rising benefits burden," The Christian Science Monitor, 9 June 2005.]
GM is making the news rounds with its ongoing struggle to pay for rising health care costs, but the company really just serves as an indicator of larger problems throughout the economy:
An increasing part of production costs in America comes from the price of promises.
There are corporate commitments to provide a pension - some 44 million Americans get a monthly check - that add up to as much as $124 billion a year. There are also healthcare benefits that many companies have agreed to provide, either voluntarily or by union contract, at a cost of billions more each year.
The problems go well beyond GM and the other automakers: Some of the nation's steelmakers, airlines, and old-line manufacturers - and even some municipalities - are also carrying large "legacy costs" - and may face similar layoff decisions.
"Big companies that dominated the economic landscape 20 to 30 years ago are really struggling," says John Challenger, CEO of Challenger, Gray & Christmas, a Chicago outplacement company. "This may not be the last major job cut announcement we see this year as other companies, including the other American automakers, struggle to make a profit amid escalating healthcare costs, not to mention the ongoing health benefits to the growing ranks of retirees."
On Tuesday, the chairman of General Motors, Rick Wagoner, said, "We've worked the healthcare topic hard for a long time, and from every angle." But, he added, "Frankly, the continuing double-digit US inflation in healthcare costs is swamping that progress."
The reality is that we are reaching a breaking point and serious changes must be made in the way health care is provided and consumed in this country.
[John McClaughry, "Patient Power: A Health Care Reform Agenda for Kansas," The Flint Hills Center, May 2004.
Richard B. Warner, MD, "How Would You Like Your Medicine?," The Flint Hills Center for Public Policy, 24 July 1999.]
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