As goes General Motors

By Derrick Z. Jackson, Globe Columnist

THE SIGH of relief for General Motors is a fresh reason for Americans to scream for a national solution on healthcare. Staggered by $3.8 billion in losses so far this year, but holding the leverage of cutting jobs, GM got the United Auto Workers to agree to a tentative contract that will probably triple or quadruple the contribution of workers to their healthcare.

Up to now, union members paid 7 percent of healthcare costs. Salaried GM employees are now paying 27 percent of their healthcare costs. GM hopes to save $1 billion from its annual $6 billion cash outlay for healthcare. CEO Rick Wagoner said: ’’Health costs in this country are out of control. This will significantly improve our overall cost competitiveness, as is sorely needed and will be critical to getting GM North America back to profitability as soon as possible."

There is a reason unrelated to healthcare that GM will continue to have problems with competitiveness, namely, stupidity. As the world’s largest automaker trumpeted this agreement, it also announced that it will offer $500 of free gasoline to purchasers of 2005 or 2006 sport utility vehicles. This incentive comes at time when $3-a-gallon gasoline has caused sales of small cars to shoot up 23 percent in September.

In the last year, small cars have gone from 13.6 percent of America’s fleet to 18 percent. Sales of SUVs declined 33 percent in September. Vehicles such as Ford’s Expedition and Explorer, GM’s Suburban, Tahoe, Avalanche, Yukon, and Envoy, and Toyota’s Land Cruiser and Sequoia all suffered September sales drops ranging from 46 to 61 percent. Even GM’s sales of its Hummer 2, seemingly hyped with ads on every sports broadcast, fell by 32 percent.

Rather than retool, GM, which in the recent past has bragged about owning 62 percent of the large SUV market, would prefer to find a way to foist their over-the-hill hulks on the consumer, enabling our national denial about fuel efficiency and environmental destruction.

That could easily lead one to be extra unsympathetic to GM’s slashing of healthcare as a scapegoating of workers for the lack of light bulbs in the boardroom. But even if GM actually had a farsighted vision about cars, their dilemma on healthcare is highly symbolic. Wagoner is right: Healthcare costs are out of control. But, of course, shifting them from the company to the worker is no solution.

GM is obviously going to continue to pay the bulk of healthcare for its employees, but its cuts are part of a rapid decline that has seen the percentage of Americans who receive employer-based health insurance fall from 69 percent to 60 percent in just the last five years, according to the Kaiser Family Foundation. The number of uninsured Americans is at a record 45.8 million.

Researchers such as Henry Aaron and Jack Meyer of the Brookings Institution say that overall healthcare costs in the next few decades loom so large that ’’cuts in other government programs cannot plausibly close it." The costs are so dire that they wrote this year: ’’To significantly lower Medicare and Medicaid costs, it may be necessary to limit care for everyone. In plain terms, closing the federal fiscal gap will likely require healthcare rationing for all."

This is ironic, since so many people who have done their best for years to slay single-payer healthcare or other variants of healthcare for all in the United States have painted horrible pictures of healthcare rationing in Canada and other places with universal coverage. What favors GM may do for its individual bottom line surely will boomerang as workers, burdened with more costs, put off checkups that later blow up into a nation awash in far more expensive — to all of us — medical emergencies that were completely preventable.

’’Increased premiums and charges for care could seriously burden all but upper-income elderly and disabled beneficiaries, especially if Social Security benefits are reduced," Aaron and Meyer wrote. ’’Demand for preventive care, such as screening tests and maintenance therapy to slow the development of progressive conditions, seems to be sensitive to price."

Currently, according to the Kaiser Foundation, workers in employer-based family health insurance plans contribute an average of $2,713 to the average cost of $10,880 — 25 percent. So on the surface, GM’s move is not out of line with the ’’market." But with healthcare premiums having skyrocketed by 73 percent in the last five years — five times the cumulative growth in both wages and inflation — you can be sure that there are even greater three-car collisions coming between employers, employees, and healthcare. That is, until we decide to relieve employers of this burden and move this country toward some form of universal healthcare.

Derrick Z. Jackson’s e-mail address is jackson@globe.com

http://www.boston.com/news/globe/ed...