The Wall Street Journal reports that General Motors, the single largest private purchaser of health care in the US, will shortly report that its total future health-care liabilities have surpassed $60 billion.
According to the WSJ report, the company has said its total health care obligations increased by even a greater percentage in 2003 than in 2002, and the liabilities will continue to swell despite the fact that GM has managed to curb the growth in costs slightly in recent years.
GM’s health plans cover 1.21 million employees, retirees and their dependents. In 2002, the company spent $4.5 billion, or $3,887 a person, to provide health care benefits and those costs are expected to rise to about $5.1 billion this year.
“When you see our 10-K, our health liability will have jumped from 2002 to 2003,” John Devine, GM’s vice chairman and chief financial officer, told The Wall Street Journal last week during the Geneva Motor Show.
Mr. Devine said there are a number of factors driving the figure, including changes in the discount rate. GM is getting “some help from the Medicare legislation. But the overall liability [reflecting anticipated outlays for retirees] is still up substantially. It’s over $60 billion,” he told the WSJ.