GM Move Reflects Health Benefits Trend : Workplace: The decision to make white-collar workers and retirees pay premiums is part of aggressive effort to cut soaring costs.
General Motors Corp.’s decision to make white-collar workers and retirees pay health insurance premiums reflects an increasingly aggressive stand by major employers to contain a rapidly escalating expense.
The decision, confirmed by GM executives Tuesday after it was reported in Detroit newspapers, also sets a precedent for the leading auto maker to pressure the United Auto Workers for concessions on health benefits when the UAW’s contract is renegotiated next year.
GM spokesman Mark Tanner declined to say if the company would ask GM’s union members to pay part of their health insurance, which is now basically free.
Automotive industry analysts welcomed the GM move, saying it will help the company cut costs. But for the 190,000 current or former salaried workers affected by the GM decree, it is the most sweeping cutback in benefits coverage since the auto industry recession years of 1979-82.
The GM move comes against a background of growing corporate militance over containing employee and retiree health care costs, which are rising at a rate more than double the pace of inflation.
A survey released earlier this month by Foster Higgins, a leading employee benefits consulting firm, showed the cost of medical plans for retirees alone jumped 9.3% in 1991 versus a consumer inflation rate of 4.2%.
The same survey also showed nearly half the companies surveyed have made retirees pay more for coverage in the last few years.
GM, which lost $4.5 billion last year, said its medical coverage costs have risen 12% annually since 1965 and cost $3.4 billion in 1991 for U.S. workers alone.
Tanner didn’t specify how much it would save or how much workers and retirees would pay under the change, but only U.S. workers are affected.
Labor benefits specialists said GM’s move is a powerful signal to other American companies and unions that corporate health care benefits, once taken for granted by millions of workers, are now at much greater risk.
“What you’re seeing now is some benefits that are pretty endemic for the whole economy,” said Dale Brickner, associated director of Michigan State University’s School of Labor and Industrial Relations.
“GM has clearly said, ‘We’re looking at the bottom line, we’re going to cut costs,’ ” he said.
GM is in the midst of a historic restructuring that is expected to close 21 plants and lay off about 60,000 workers in the United States and Canada by 1995.
Other large companies have sought to reduce health coverage to workers and retirees in just the past few months.
Truck maker Navistar International Corp., for example, went to court last month seeking permission to slash medical benefits for 40,000 retirees and their dependents. Steelmaker LTV Corp., which has been operating under bankruptcy protection for more than six years, has made health care containment a key part of its plan to emerge as a healthy business.
The GM health care rollback was disclosed internally Monday in a memo to the white-collar work force.
“I see health care as a major bargaining issue with UAW and also with retirees and others from the regular work force for the same reason, it’s a heavy part of the compensation package. Wages plus health care is a big item these days,” Brickner said.
GM provides insurance coverage for about 1.8 million people in the United States, including active hourly and salaried workers, retirees and their dependents.
