US auto union signals capitulation on GM health-care costs

[undeterred]

Stock soars following meeting of UAW officials
By Barry Grey WSWS
14 June 2005

It took the United Auto Workers union (UAW) exactly two days to officially signal its readiness to accept massive concessions in health-care benefits for active and retired workers at General Motors. Even by the standards of the American trade union bureaucracy, the UAW’s response to GM’s June 7 announcement of huge job cuts and plant closures in the US, and the company’s demand for sweeping rollbacks in health benefits (See: “General Motors announces plans to eliminate 25,000 jobs in US”) was so rapid and craven that it sparked a giddy buying spree of GM stock on Wall Street.

Within minutes of Thursday morning’s emergency meeting of top UAW officials and the presidents and chairpersons of UAW locals at GM and Delphi, GM stock began to soar. (Delphi, the country’s largest auto parts supplier, was spun off by GM in 1999 and remains part of the GM-UAW national agreement.) Big investors and those in the know pocketed a small fortune as GM’s share price rose $2.70, or about 8.5 percent, on the day. GM stock closed at $34.51, far higher than its $26-$31 range of the past three months. More than 25.2 million shares were traded, almost twice the daily volume, according to a June 11 report in the Detroit Free Press.

By the end of the week, GM stock had climbed more than $3.50, a rise of over 11 percent—a gain entirely attributable to GM’s downsizing and cost-cutting plans, and the capitulatory response of the UAW. Thursday’s union meeting brought together some 100 plant-level officers and national union officials, headed by Richard Shoemaker, the UAW vice president in charge of the union’s General Motors department. That the union would not contest GM’s three-year plan to cut 25,000 jobs (23 percent of GM’s current hourly workforce in the US) and close an estimated six factories was a foregone conclusion. Since the late 1970s, the UAW, in the name of “saving jobs,” has entered into a web of corporatist union-management agreements and structures, the result of which has been a wave of plant closures and layoffs that has reduced UAW membership at GM and the other US automakers by more than two thirds.

The general posture of the union was indicated by its decision to hold the meeting, not at the UAW’s “Solidarity House” headquarters in Detroit, but rather at the UAW-GM Center for Human Resources—a mortar and brick symbol of union-management “jointness.” Wall Street was concerned that the union make a clear statement of its willingness to collaborate in compelling current and retired workers to pay substantial premiums and deductibles on their health benefits. In his announcement June 7 of GM’s response to declining sales, market share and profits, GM Chairman and Chief Executive Rick Wagoner emphasized the company’s determination to slash its health-care outlays, complaining that they amounted to $5.2 billion in 2004 and would rise to $5.6 billion this year. He suggested he was looking to cut the additional cost per vehicle from health-care expenses by 50 percent. GM has also complained that its union employees pay just 7 percent of their health-care expenses while salaried workers pay 27 percent, and demanded that the gap be closed.

http://www.wsws.org/articles/2005/jun2005/uaw-j14.shtml

[EVDebs]

1. Ironically, this will hasten SinglePayer/Medicare-4-All

As it will make the current 'free market' system failure obvious to the captains of industry...and we can't have that !

In order to keep the ship afloat they've GOT to adopt the Canadian-style national healthcare system, or crash the economy on the rocks.

A Hobbesian choice requires the lesser evil be chosen.

[Coastie for Truth]

2. Wrong Remedy for an Ill Defined Problem with an Ill System

The solution is not "Give Backs" or "Higher Co-Pays" or "Higher Deductibles" or "Higher Employee Contributions" or Tax Credits/Tax Deductions (which help high salaried employees - a shrinking segment in our new economy).

The time has come for radical surgery on a terminally ill system -- it is time for a taxpayer funded, single payer system. There is no place for shareholder owned, for-profit, private insurance companies any more. They are the "new parasite class."

1.

2. Administrative waste in the U.S. health care system in 2003: the cost to the nation, the states, and the District of Columbia, with state-specific estimates of potential savings, Int J Health Serv. 2004;34(1)- pp79-86, Himmelstein DU, Woolhandler S, Wolfe SM (yes DUers - "Wolfe SM" is OUR Sidney Wolfe from Public Citizen)

3. Health care administration in the United States and Canada: micromanagement, macro costs, Int J Health Serv. 2004;34(1):65-78, Woolhandler S, Campbell T, Himmelstein DU.

4. National health insurance: falling expectations and the safety net. Med Care. 2004 May;42(5):403-5, Woolhandler S, Himmelstein DU.

5. Costs of health care administration in the United States and Canada, N Engl J Med. 2003 Aug 21;349(8):pp768-75, Woolhandler S, Campbell T, Himmelstein DU.




Costs of health care administration in the United States and Canada.

Woolhandler S, Campbell T, Himmelstein DU.

Department of Medicine, Cambridge Hospital and Harvard Medical School, Cambridge, Mass, USA.

BACKGROUND: A decade ago, the administrative costs of health care in the United States greatly exceeded those in Canada. We investigated whether the ascendancy of computerization, managed care, and the adoption of more businesslike approaches to health care have decreased administrative costs.

METHODS: For the United States and Canada, we calculated the administrative costs of health insurers, employers' health benefit programs, hospitals, practitioners' offices, nursing homes, and home care agencies in 1999. We analyzed published data, surveys of physicians, employment data, and detailed cost reports filed by hospitals, nursing homes, and home care agencies. In calculating the administrative share of health care spending, we excluded retail pharmacy sales and a few other categories for which data on administrative costs were unavailable. We used census surveys to explore trends over time in administrative employment in health care settings. Costs are reported in U.S. dollars.

RESULTS: In 1999, health administration costs totaled at least 294.3 billion dollars in the United States, or 1,059 dollars per capita, as compared with 307 dollars per capita in Canada. After exclusions, administration accounted for 31.0 percent of health care expenditures in the United States and 16.7 percent of health care expenditures in Canada. Canada's national health insurance program had overhead of 1.3 percent; the overhead among Canada's private insurers was higher than that in the United States (13.2 percent vs. 11.7 percent). Providers' administrative costs were far lower in Canada. Between 1969 and 1999, the share of the U.S. health care labor force accounted for by administrative workers grew from 18.2 percent to 27.3 percent. In Canada, it grew from 16.0 percent in 1971 to 19.1 percent in 1996. (Both nations' figures exclude insurance-industry personnel.)

CONCLUSIONS: The gap between U.S. and Canadian spending on health care administration has grown to 752 dollars per capita. A large sum might be saved in the United States if administrative costs could be trimmed by implementing a Canadian-style health care system.

Copyright 2003 Massachusetts Medical Society



6. Proposal of the Physicians' Working Group for Single-Payer National Health Insurance.JAMA. 2003 Aug 13;290(6):pp798-805, Woolhandler S, Himmelstein DU, Angell M, Young QD; Physicians' Working Group for Single-Payer National Health Insurance.



Woolhandler S, Himmelstein DU, Angell M, Young QD; Physicians' Working Group for Single-Payer National Health Insurance.

Department of Medicine, Cambridge Hospital/Harvard Medical School, Cambridge, Mass 02139, USA.

The United States spends more than twice as much on health care as the average of other developed nations, all of which boast universal coverage. Yet more than 41 million Americans have no health insurance. Many more are underinsured. Confronted by the rising costs and capabilities of modern medicine, other nations have chosen national health insurance (NHI). The United States alone treats health care as a commodity distributed according to the ability to pay, rather than as a social service to be distributed according to medical need. In this market-driven system, insurers and providers compete not so much by increasing quality or lowering costs, but by avoiding unprofitable patients and shifting costs back to patients or to other payers. This creates the paradox of a health care system based on avoiding the sick. It generates huge administrative costs that, along with profits, divert resources from clinical care to the demands of business. In addition, burgeoning satellite businesses, such as consulting firms and marketing companies, consume an increasing fraction of the health care dollar. We endorse a fundamental change in US health care--the creation of an NHI program. Such a program, which in essence would be an expanded and improved version of traditional Medicare, would cover every American for all necessary medical care. An NHI program would save at least 200 billion dollars annually (more than enough to cover all of the uninsured) by eliminating the high overhead and profits of the private, investor-owned insurance industry and reducing spending for marketing and other satellite services. Physicians and hospitals would be freed from the concomitant burdens and expenses of paperwork created by having to deal with multiple insurers with different rules, often designed to avoid payment. National health insurance would make it possible to set and enforce overall spending limits for the health care system, slowing cost growth over the long run. An NHI program is the only affordable option for universal, comprehensive coverage.




7. National health insurance or incremental reform: aim high, or at our feet? Am J Public Health. 2003 Jan;93(1):102-5. Himmelstein DU, Woolhandler S.



National health insurance or incremental reform: aim high, or at our feet?

Himmelstein DU, Woolhandler S.

Department of Medicine, Cambridge Hospital/Harvard Medical School, Mass, USA.

Single-payer national health insurance could cover the uninsured and upgrade coverage for most Americans without increasing costs; savings on insurance overhead and other bureaucracy would fully offset the costs of improved care. In contrast, proposed incremental reforms are projected to cover a fraction of the uninsured, at great cost. Moreover, even these projections are suspect; reforms of the past quarter century have not stemmed the erosion of coverage. Despite incrementalists' claims of pragmatism, they have proven unable to shepherd meaningful reform through the political system. While national health insurance is often dismissed as ultra left by the policy community, it is dead center in public opinion. Polls have consistently shown that at least 40%, and perhaps 60%, of Americans favor such reform.



8. Taking care of business: HMOs that spend more on administration deliver lower-quality care.Int J Health Serv. 2002;32(4):657-67, Himmelstein DU, Woolhandler S.



Taking care of business: HMOs that spend more on administration deliver lower-quality care.

Himmelstein DU, Woolhandler S.

Department of Medicine, The Cambridge Hospital, MA 02139, USA.

The authors analyzed health maintenance organizations' administrative costs and quality measures from the National Committee for Quality Assurance's Quality Compass database for the years 1997-2000. HMOs with higher administrative overhead had consistently worse quality scores in univariate analysis. Multivariate analyses controlling for geographic region (all years) and HMO model type (1997 and 1998 analyses only) confirmed that higher administrative costs were associated with lower quality. Excess HMO bureaucracy is not only wasteful but harmful.

And over 180 more studies by this group alone.

[undeterred]

3. thanks for all the good information on this subject

If only our elected officials would listen to common sense.