General Motors and Ford are reviewing their health care costs with the United Auto Workers and may follow smaller rival Chrysler Group in negotiating a new health care contract with the union, the UAW told the Associated Press (AP).
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Chrysler reportedly said its new health care pact with the UAW will save it tens of millions of dollars annually.
AP noted that the agreement, which goes into effect on April 1, requires around 35,000 Chrysler hourly workers and retirees to pay annual deductibles [excesses] of between $US100 and $1,000 for health care that previously had been free – the company declined to provide the specific amount it will save.
The change reportedly covers Chrysler workers in the company’s preferred provider plans, or PPOs, but not the 75,000 hourly employees covered by the company’s traditional health care plan or the 32,000 enrolled in health management organisations (HMOs) – those plans will continue to require no deductible, Chrysler told AP.
The news agency said Chrysler’s contract with the UAW allows the automaker to negotiate new terms if the cost of PPOs rises above the cost of the traditional plan.
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By GlobalData“We clearly recognize that rising health care costs are a serious problem for working families and many of their employers,” UAW president Ron Gettelfinger said in a statement cited by the Associated Press. Gettelfinger reportedly said GM and Ford are going through a review process similar to Chrysler’s.
Gettelfinger told AP that GM and Ford have had similar clauses in their contracts since 1982, so they may try to adopt the same change. Neither automaker would tell the Associated Press whether they’re actively pursuing the change, but Gettelfinger reportedly said each of the Big Three has adjusted benefits in the past based on the PPO clause.
“We don’t comment on the specifics of our contract language, but GM has been working with the UAW to improve the quality and reduce the cost of health care plans,” GM spokesman Robert Herta told AP, which added that GM and the UAW are scheduled to meet on April 14 to discuss health care and other parts of the labour contract, which was last negotiated in 2003 and expires in 2007.
