DETROIT (AP) – General Motors Corp. retirees represented by the United Auto Workers pay nothing now for their health care coverage, but most would have to pay up to $752 annually in deductibles, co-payments and monthly premiums under a tentative agreement reached this week between GM and the union, UAW officials said yesterday.
Under the agreement, GM hourly workers would contribute $1 per hour in future pay increases to a new fund to help pay for retirees’ health coverage. Single retirees would pay up to $370 in deductibles and fees for their coverage. And most retirees and all active hourly workers would pay higher co-payments for their prescription drugs.
GM pays for health care for 750,000 U.S. hourly employees, retirees and their dependents. The agreement would exclude around 74,000 low-income retirees whose GM pension is $8,000 a year. Most of those are elderly or are the surviving spouses of GM retirees, the UAW said.
This was the first time the UAW has revealed details of the agreement, which was announced Monday. UAW workers must ratify the agreement for it to take effect. UAW President Ron Gettelfinger declined to say when the vote would take place, saying the UAW and GM still need to work out some details.
If it is ratified, GM says the agreement would save it $3 billion annually before taxes and would cut $15 billion off its $60 billion in retiree health care liabilities. Gettelfinger said the union agreed to the changes after reviewing GM’s financial situation and was convinced the automaker needed the help it was requesting.
“This is a major move on our part, and it’s very difficult and very challenging,” Gettelfinger told reporters after meeting with local union leaders from across the country. “These are the times in which we find ourselves. We’re not hiding from our responsibilities.”
Gettelfinger said free-trade agreements that don’t protect U.S. workers and bankruptcy laws that allow companies to shed their pension obligations are partly to blame for the current climate. He repeated his call for a national health care system.
Three national UAW committees, including a group of retirees, endorsed the agreement yesterday, Gettelfinger said. Art Luna, president of UAW Local 602 in Lansing, said he was disappointed the union couldn’t do more for its retirees but he supported the agreement.
“We don’t just have an obligation to the workers, we have an obligation to the communities we live in,” Luna said. “The auto industry is very competitive and sometimes we have to do things to help the company along because we as a labor union cannot be successful if the company isn’t successful.”
But Luna said U.S. autoworkers also need government help.
“All this is a Band-Aid,” he said. “If they really want to resolve the health care issues, they can’t negotiate over the bargaining table, it has to be done in Washington, D.C.”
While the agreement would be a big change for the UAW’s retirees and hourly workers, who have long enjoyed some of the best benefits in the world, the premiums still pale in comparison to the U.S. average, according to a recent study by the Kaiser Family Foundation.
A single worker contributes $610, and families contribute $2,713 annually in premiums for coverage in the average U.S. employer-sponsored health care plan, the study said. By comparison, single UAW retirees would pay premiums of $120 and families would pay $252 annually under the agreement. The actual cost of the premiums is higher, but GM and UAW hourly workers would pick up the rest of the tab through the new fund called the Voluntary Employee Benefit Association.
GM would donate $3 billion to the VEBA over the next six years. The VEBA also would be funded through contributions in the future wages of active hourly workers. In exchange, hourly workers would continue to pay no premiums or deductibles for their own care.
Retirees also would pay up to $500 annually per family in deductibles and co-insurance under the plan, as well as $50 for emergency room visits.
Hourly workers and most retirees would have to pay $5 more than they do now for a 90-day supply of mail-order prescriptions. They also would have to pay new, higher co-payments of up to $18 for erectile dysfunction medications such as Viagra.
Ford Motor Co. and DaimlerChrysler AG’s Chrysler Group plan to ask the UAW for similar benefits, but Gettelfinger wouldn’t comment on negotiations with other automakers.
GM shares closed unchanged at $28.38 on the New York Stock Exchange.