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GM’s Health-Care Shakedown Shows Systemic Flaws In Bush’s America

by Open-Publishing - Tuesday 21 June 2005
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Un/Employment Healthcare USA

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GM’s Health-Care Shakedown Shows Systemic Flaws In Bush’s America
Bill Gallagher
June 21, 2005

Detroit - General Motors and the United Autoworkers are on a collision course over health-care costs and the issue underscores the refusal of George W. Bush and the Republicans in Congress to do anything to fundamentally change our failed system. It also shows how gutless GM executives and the other suits in corporate America are in refusing even to discuss the issue in real terms.

What’s good for America is good for Wal-Mart is the essential Bush policy on health care. The result is 45 million Americans with no health insurance at all, skyrocketing costs for workers fortunate enough to have insurance, large corporations and small businesses faced with "unsustainable" burdens in providing coverage for their workers and American enterprises severely weakened and stuck in a competitive disadvantage in the world marketplace.

Our fractured health care system is the most costly, inefficient and ineffective in the industrialized world. But Bush and the Republicans like it that way because it pumps obscene profits into the coffers of their core constituencies and campaign donors: drug companies, insurance companies and corporate health care providers.

GM has issued an ultimatum to the UAW to deliver health-care concessions by June 30 or else the automaker is threatening unilateral action, which will violate workersâ contracts and is certain to set-off labor strife.

GM is in big trouble and Standard & Poor’s has downgraded America’s largest industrial corporation’s debt to "junk bond" status. Ford also has serious problems and is in the same debt status pickle, but it does not have nearly the manufacturing capacity and labor force of the GM behemoth, and thus can more quickly adapt to changing circumstances. Daimler-Chrysler began significant restructuring in 2001 and is now churning out profits.

Health care costs are only a part of GM’s a plight. The company has never fully recovered from the disastrous tenure of its former chairman, Roger Smith. He went on a business acid trip and decided GM’s future would be better as a computer and financial services company. The flashbacks alone still cause corporate hallucinations and Smith’s legacy of failure still hasn’t been entirely purged. Smith was a strategic idiot and a first-class jerk but he never had to deal with the consequences of his follies.

Now GM’s is spinning out of control. Its market share is way down with consumers shying away from gas-guzzling products. In the growing Chinese market, GM’s herd of SUVs may not meet fuel efficiency standards there.

The company consistently opposes government efforts to limit air pollution and greenhouse emissions. This tactic works with the Busheviks and GM whores in the U.S. Congress, but in other parts of the world where the health threats of pollution are taken more seriously, the company’s cars and trucks with their filth spewing tailpipes are way out of step.

The company is still the world’s number one automaker, but just barely with Japan’s Toyota braced to soon capture that distinction. There is little support in Washington for restricting imports, but a case can be made that foreign competitors — with the help of their governments — make it difficult for North American manufacturers to compete.

GM has too many nameplates and continues to make cars people don’t want. GM — more than any other automaker — is addicted to costly incentives aimed at bribing reluctant consumers to buy unwanted products. The company hopes some new lines will help, but getting those products to market, start up costs and the time required to introduce them won’t help the near-term bottom line that, for now, is hemorrhaging red ink.

GM lost $1.1 billion in the first quarter and has plans to slash 25,000 manufacturing jobs. Many of the company’s wounds are self-inflicted and the cultural arrogance among many GM executives still prevails in spite of their dismal performance.

The company is spending $5.6 billion per year to pay for health insurance for its 1.1 million current and retired employees. That tacks on $1,500 to the cost of each GM car and truck rolling off the assembly line. Cutting those costs is a top corporate priority, although many other factors have much greater impact on GM’s profitability.

The company is threatening to reduce health care benefits with or without the permission of the UAW. The union’s present contract protecting those benefits doesn’t expire until 2007, but GM is demanding concessions now.

Company Chairman Rick Wagoner says he wants to achieve the concessions "in cooperation with the UAW," but even with the union leadership on board, selling concessions to the membership will be difficult at best.

Wagoner and other desperate American auto company executives are ignoring the true nature of the problem — Bush’s refusal to even acknowledge, let alone do something — about the catastrophic failure of our health care system.

Paul Krugman, the Princeton economist and New York Times columnist is a national treasure in explaining just how flawed the system is and how Americans pay considerably more and get substantially less than people in more enlightened countries do.

Krugman is a prophet of reform and his fact driven analysis shows how we squander health care dollars on bureaucratic shuffling. He notes that "much of our health care spending is devoted to passing the buck: trying to get someone else to pay the bills."

Krugman cites a World Health Organization report that shows administrative costs in U.S. private health insurance companies eat up 15 percent of the money, "but only 4 percent of the budgets of public insurance companies, which consist mainly of Medicare and Medicaid."

Krugman also points to a "New England Journal of Medicine" estimate that found that "administrative costs took 31 cents out of every dollar the United States spent on health care, compared with only 17 cents in Canada" with its single payer system.

In the United States, we are spending 13 percent of our gross national income on health care and yet in the Netherlands, where everyone is covered, they spend only 8.5 percent.

The big auto companies with their older work forces, union contract obligations and large number of retired workers pay a huge price for the wasteful U.S. health care system.

Bush likes to help the automakers. His chief-of-staff, Andrew Card, is a former GM executive and auto industry lobbyist. GM’s Wagoner, Ford’s boss, William Ford Jr., and the cadre of martini-sipping auto executives from Detroit-area country clubs were are all big Bush campaign contributors.

Wagoner and Ford both publicly endorsed Bush tax cuts for the super rich. Both men are considerably enriched as a result of the raid on the U.S. Treasury that’s produced record deficits working class Americans and their children are now stuck paying for. As a result, ironically, they will have less money to buy cars.

Bush is more than willing to toss the auto industry the bones of lax fuel efficiency standards and permitting more dirty air emissions at the cost of public health. But he won’t do a damn thing to change our catastrophically failed health care system, which is doing irreparable harm to the auto industry.

And no leading figure from the U.S. auto industry will say the bloody obvious: We need a national health care system to remain competitive in the world marketplace, and Bush is standing in the way of any discussion or consideration of that practical reality.

Instead, with GM leading the charge, they are going to try to take it out of the hides of the autoworkers that fought for decades to get decent health insurance benefits. As a nation, we should strive for all Americans to have the medical benefits UAW members have, not attempt to diminish the autoworkers’ plans to some common denominator of poor and more costly coverage.

We recently experienced a little-noticed milestone in the North American auto industry that underlines what’s wrong with our health care system. For more than 100 years, Michigan produced more cars than anywhere else. No longer. That distinction now belongs to the Province of Ontario and the Canadian national health care system is the primary reason for the shift of auto production there. The real Motor City these days is in Toronto.

U.S. auto executives know lower health care costs fuel the advantage of making cars in Canada, but they won’t say that out loud for fear of offending the Busheviks or being labeled "socialists." The president of GM of Canada in 2002 did sign a joint letter with the president of the Canadian Auto Workers proclaiming, "It is vitally important that the publicly funded health care system be preserved and renewed."

Canada’s system is far from perfect but it is a much more efficient and cost-effective way to provide health care than Bush’s prescription-a tonic for corporate interests, but poisonous public policy.

The Canadian Auto Workers union estimates the health system there saves the automakers about $4 per hour per worker. Buzz Hargrove, the ever-so-smart and progressive president of the CAW, knows this and won’t even think of concessions. He told the Detroit Free Press that in contract negotiations this summer, "We are not going to go backwards, not on wages, pensions or other matters. We go forward with talks and make progress for our workers." Hargrove also says unbridled imports pose as far more serious threat for Detroit’s automakers. "Their problem is not health care. Their real problem is trade and falling market share. You aren’t losing sales just because of some $1,500 per-vehicle health care cost. That’s peanuts considering they put incentives on the hood to make up for that. It’s about unfair trade," Hargrove said.

But GM is hellbent to cut health care costs and lay off workers. That means those of us who do work and have federal and state taxes deducted from our checks will be paying more because as Paul Krugman points out in our system, "Medical costs act as a tax on employment." GM reduces its head count but "the insurance premiums saved by firing workers are no saving at all to society as a whole: Somebody still ends up paying the bills," Krugman wisely observes.

Charles E. Wilson, the former GM chairman, took a little heat when President Dwight Eisenhower nominated him to become secretary of defense. At his Senate confirmation hearing old "Engine Charley" might have too closely linked the fates of his company and the nation. Often misquoted, what Wilson actually said was, "For years I thought what was good for the country was good for General Motors and vice versa." His views then were hardly sinister. And now, when it comes to health care costs, what’s bad for the country is also bad for General Motors.

The Busheviks like the Wal-Mart model for health care coverage. Provide as little as possible and, if you can, stick the taxpayers with the tab for uninsured workers and tack it on to the government deficit.

In terms of sales, Wal-Mart replaced GM as the nation’s biggest corporation a few years ago. But no one will ever compare Wal-Mart to "Generous Motors," GM’s now dated nickname. Wal-Mart offers health insurance to fewer than half its employees. And the price of the coverage the workers must pay is so high, many of those eligible for the benefit simply can’t afford it.

A United Food and Commercial Workers union study found that, "More than 60 percent of Wal-Mart’s employees — 600, 000 people — are forced to get health insurance from the government or through spousesâ plans, or live without any health insurance."

The huge retailer notoriously shifts health care costs to other employers or the taxpayers. GM and every other business that does provide health insurance, along with every working American, subsidize Wal-Mart and the cheap, exploitative bastards who own the company.

More than 10,000 Wal-Mart employees in Tennessee are on the state’s expanded Medicaid program. Wal-Mart workers in California rely on the state to provide $32 million annually in health-related services. In Georgia, more than 10,000 children of Wal-Mart employees are enrolled in a state health insurance program for families living on incomes below the federal poverty levels. Doesn’t Wal-Mart just make you proud to be an American?

The net worth of the Walton family, owners of Wal-Mart, is now pegged at $98 billion. Bush’s tax cuts have made them even richer. Spending just 1 percent of the family wealth could provide every Wal-Mart employee with affordable health insurance.

The Bush annual deficit that covers for his tax cuts — largely benefiting the wealthiest Americans — is now pushing $500 billion. That number too is "unsustainable." But we’d get a much better bang for our deficit dollar spending it on national health care.

It is a far more fair way to spend that money. That way, every American could have the same health care coverage as the Walton family, the members of GM’s board of directors, and, of course, George W. Bush and the members of Congress.

Forum posts

  • Well I have to tell this scam is now pretty common in other western economies f. e. Germany, too.
    The application of the Anglo/American patterns seems to be mandatory for all those "high developed" countries, in order to maintain to be competitive.
    Americas job infrastructure has already being changed to 47 % service jobs, that’s what P.M. Blair tries to apply to European economies nowadays, knowing very well that countries without a strong finance industry can hardly make it that way.
    Poverty is nothing modern? Right?