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Manufacturing Tomorrow: Maintaining a Healthy Work Force |
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Executive Advice
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By Fernie Grace Tiflis
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Tuesday, 08 January 2008 |
 Rising healthcare and pension costs have drained company funds and suppressed R&D funding.
Rising healthcare and pension costs have drained company funds and suppressed R&D funding. For example, UAW says General Motors spent more than $5.2 billion on medical benefits for more than 1 million workers and retirees last year; Ford spent $2.5 billion on healthcare benefits; and Chrysler spent $1.4 billion.
"GM is the single-largest provider of healthcare in the United States, and as medical costs have relentlessly risen over the past years, they have taken increasing chunks out of the company's bottom line," the organization explains. "Prescription drug costs alone have been rising at a 15 to 20 percent yearly pace over the past few years, and now account for nearly a third of GM's healthcare spending."
To combat the healthcare costs, UAW says it is urging Congress to consider some alternatives, which include:
- "[Providing] incentives for the introduction of modern information technology into the healthcare system to reduce paperwork and administrative costs
- "[Requiring] "head-to-head clinical trials on the effectiveness of similar drugs, as well as stronger post-marketing surveillance of drugs once they are approved by the FDA
- "[Encouraging] the states to regulate expenditures for the construction of healthcare facilities by requiring a Certificate of Need ... [which] would help to slow the unprecedented push to build specialty facilities to compete with full-service community-oriented hospitals"
In addition, UAW says Congress needs to fix the Medicare program by:
- "[Extending] the deadline for beneficiaries to enroll in the Medicare Rx program, without incurring any penalties
- "[Guaranteeing] that all beneficiaries will have access to a federal Medicare-sponsored option in all areas of the country
- "[Eliminating] the huge subsidies for private health insurance companies in the Medicare Advantage program and [stopping] the privatization of the entire Medicare program
- "[Allowing] the federal government and the states to negotiate discounts in Rx prices
- "[Permitting] the importation of safe, lower-cost prescription drugs from other countries"
The automobile industry is not the only market affected, however. Profiled in this issue, Wells Concrete Products, a precast and pre-stressed concrete manufacturer based in Wells, Minn., is concerned, as well. "Increasing healthcare costs are an important issue for us," President and CEO John Rivisto says. "It makes up a large percent of our operating cost after labor and materials. We are looking at ways to improve the health of our employees through many manners, including wellness programs, health savings accounts and pooling our resources."
In Europe and Japan, according to UAW, healthcare plans are meant to maintain a healthy work force, while businesses pay little or nothing for them. "Healthcare costs are thus the source of a significant competitive disadvantage for the American auto industry and manufacturers generally," it explains. |
