Health care costs are one reason why GM cut jobs

Health care costs are one reason why GM cut 25,000 jobs

“General Motors’ chief exec spelled out Tuesday why U.S. manufacturers are getting their economic butts kicked. And a big reason has nothing to do with the productivity of our workers or the quality of our products.

It’s because our health care system is killing us.

Addressing GM shareholders, Rick Wagoner said runaway health care costs are partly to blame for the world’s largest automaker cutting at least 25,000 U.S. jobs as it closes more assembly and component plants.”

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  • Curious JD

    Hear that noise? It’s a train. A train called universal health care.

  • Anonymous

    Wrong CJD. Again.

    GM has a problem finding enough people who want to buy their cars. The fact is that they made the incorrect assumption that their market share would never dip below 35% of the U.S. market. Now it is 25%. And guess what, the deals they struck with the UAW to give high-end coverage for the lifetime of their retirees have escalating costs, not static or declining costs. No surprise there, since when do labor-intensive services ever decline in cost (unless you are outsourcing to India or China, that is)?

    GM’s whining about health care is a smokescreen for their decades of arrogance and mediocre decision making. Why isn’t Ford and D-C in the same boat? Same UAW workers on the same contracts. All three Union shops.

    Yeah, I hear a train. The Chapter 11 bankruptcy train.

  • Curious JD

    You’re right about one thing, it is a smokescreen. But when they file Ch. 11, do you really think the government is going to let those health care benefits just fall by the wayside? And what happens when some more airlines follow UAL into Chapter 11 to shed their guarantees?

    The government is already responsible for almost 50% of health care payments. We’re getting ready to have more retirees than ever, many of whom are covered by failing companies’ benefit plans.

    But hey, maybe I’m wrong. You should continue your very important focus on tort reform. That’s going to make a big difference in your life! Never mind all the rest of this stuff.

  • Anonymous

    The government is already paying a huge share of “private” or capitalist medicine. No one really knows where this money is going to. Having universal health care would put everyone in their place because it would be more transparent.

    Tort reform? I am a doctor who actually support medical malpractice lawsuits because I see it is the only weapon that patient has in fighting against health care. My hospital wants us to cut down on CT/MRI/Drugs/ICU admissions and length of stay.
    The only thing that they are afraid of right now is that some patient will come back and sue them.

  • Anonymous

    We have a furniture company in our town,that was losing money.They blamed health care costs and Chinese competition. The company was sold.No one was fired or lost their health insurance,but under the new management the company was thriving in just 6 months.
    Maybe GM’s management might look at themselves,and not blame the workers,and everyone else.

  • Anonymous

    Yes CJD, they will let those benefits just fall by the wayside, unless they are covered under the Federal PBGF (if it isn’t already insolvent, that is).

    Look what has happened to the airlines. Defined benefit pension, what is that? This isn’t 1979 with Chrysler on the skids, or the S&L bailout; times have changed. I don’t think that a big bailout perceived to benefit highly paid UAW retirees or GM stockholders is going to get a whole lot of traction in a country where few workers will get that quality of retirement benefits.
    Look what happened to the steelwokers.

  • Curious JD

    You mean the steelworkers that Bush gave protective tariffs?

    I guess we’ll see. By the way, do you know how many people are expecting to get health care benefits from GM? 1 million.

    Ever heard of Long Term Capital Management? The government will bail out if they are convinced enough people will suffer if they don’t.

    1 million is quite a voting bloc.

  • Bob Vineyard, CLU

    Displaced workers who can attribute their layoff to foreign imports are entitled to tax credits to cover approximately 60% of their COBRA premium for up to 12 months. This means the taxpayer will fund a significant portion of the cost of their medical care.

    PBGC has nothing to do with retiree health care, so that is not a factor. But the PBGC is in debt because of underfunded pension plans under their management.

    I really can’t see a national healthcare system becoming a reality. Approximately 40% of those with health care coverage have a taxpayer funded plan. The govt, at the federal and state level, is doing everything in their power to DECREASE their roll in funding coverage. Every year Medicare shifts more of the cost to the participants in the way of higher deductibles and premiums (for part B).

    States are conducting audits on Medicaid rolls because of cutbacks in federal subsidies. The result of these audits is fewer eligible beneficiaries of this boondoggle.

    And this . . . just look at countries that have socialized medicine. Point to one system that works better than what we have here.

  • Anonymous

    As government intrusion into healthcare has increased, costs have skyrocketed.

    Look at the timeline. AFter Medicare was passed in teh 1960s, costs started rising and have risen at faster rates in the years since then than at any time in other decades.

    And now you want government to be even MORE involved? I hope you like seeing healthcare costs go up even more.

  • Anonymous

    “The govt, at the federal and state level, is doing everything in their power to DECREASE their roll in funding coverage. Every year Medicare shifts more of the cost to the participants in the way of higher deductibles and premiums (for part B).”

    There is a breaking point on how much you can shift and get reelected. There is also a breaking point where the shiftees simply don’t carry health insurance, but will still expect treatment.

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