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January 04, 2006
Is Employer-Sponsored Healthcare Coverage on Its Way Out?
General Motors is one of the two biggest car companies in the world. It was founded and continues to operate as a family-friendly business, offering its workers top pay and very competitive and comprehensive healthcare coverage.
So it comes as a sad surprise that GM’s not doing so well these days. And yet Toyota, the other of the world’s two biggest automotive companies, is doing just fine. And while this gap in performance can be attributed to a number of factors (internal management, for instance), it is curious that GM spends an average of $1,525 per vehicle on employee healthcare costs, while Toyota only spends $201, according to the NPR article. In terms of worker compensation, the disparity is less significant: GM pays $31.35 per hour, and Toyota pays $27 per hour.
The mounting costs of healthcare -- which even have some employers firing those who might incur higher insurance premiums (i.e., Weyco’s infamous firing of smokers) -- do seem to be putting considerable dents in companies’ pocketbooks. So what’s the answer? With so many working Americans lacking healthcare insurance, one can’t help but wonder whether GM is one of a dying breed of organizations that fully cover their employees (even after retirement).
Will companies begin covering their employees less and less to remain competitive? I guess we’ll have to wait and see.
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Posted by Maya on January 4, 2006 at 02:08 PM | Permalink | Comments (10) | TrackBack (0)
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Comments
The interesting part about employers serious thinking about dropping healthcare coverage is that either one of several things will have to happen.,
1) Employers will have to pay even higher wages so employees can afford the cost of private health insurance. This solutions will cost employers even more and will hit their bottome line even harder.
2) More and more employees will have to go Without health insurance because they won't be able to afford. Very bad as this will increase the poverty levels and put more and more people into bankruptcy.
3) Doctors will get rid of health insurance, which a few have already done. That means the patient will for services up front without dealing with all the paperwork. Downside is that in the event of a medical emergency or serious health problems, employees will not be able to afford it.
4) Social medicine. In the US? Somehow I doubt it.
5) Loss of insurance companies will millions out of work. In the light of this lousy 'service economy' that actually means putting way too many people into poverty, since employers are selfishly only thinking of their bottm line and the stockholders. Not the people who are actually doing the work.
Thanks.
Posted by: Dana Bell | Jan 5, 2006 12:28:53 PM
There are many reason why GM is not performing any where close to Toyota:
Legacy/Health Care Costs/Pention: GM is saddled with employee expenses. The biggest of them is the GM job Bank, where 5,000 employees sit waiting for employment while GM pays them a full time wage and benifits for doing nothing. There are some workers who have been in the job bank for over 10 years. The rising health care costs does not help either.
Poor Managemen: I cannot say enough about the management. They truly suck! Even though it apparent that the market is moving towards more fuel efficent vehicles the management has not altred it's strategies. In a article in the Wall Street Journal. GM is sticking to introducing more SUV's!
Lack of exciting products: Face it, GM just does not make exciting prodcts. Their cars and SUV's are avrage in looks and feel, no wonder they have to heavely discount the cars. By doing this GM is also eroding it drand value or whats left of it.
Selling To Rental and Fleet Companies: This is one of the worst practises that GM does. Even though this is what is keeping the company afloat. Many rental companies such as Avis, have deals with GM. They buy the cars use them for six months or so, but then GM has to buy these vehicles back. This reduces the market value of new and used GM vehicles, as practises such as these influx the marke with cheap second hand cars. Further more GM has to buy back these vahicles and then force them onto their dealers.
I could go on but I think you get the jist of why GM is doing so poorly compared to other manufacturers
Regards
http://www.careerpath.cc
Posted by: thaparm | Jan 10, 2006 2:24:53 AM
Re: GM and Toyota.
For 30+ years my father owned a small Buick dealership in a small town (less than 8,000 pop.). I grew up seeing the problems with GM first hand. The times I remember most vividly about him and his business during those years were the times the GM autoworkers went on strike and Dad's inventory all but disappeared. He would stay awake at night wondering how he could stay in business with nothing to sell. I also remember the first oil crisis in the early 70's when gas prices shot up to a shocking $0.60/gal. Then the same thing happened less than 10 yrs. later. What did GM do to prepare in the interim? Nothing! They rushed to put out the infamous X-bodies (Citation, Skylark, Omega, etc.) that were junkers the moment they left the sales lot. I know. I drove one. Many smaller dealers that had their inventories floorplanned rather than paid for, as my father did, went out of business during the Carter adm. with double digit interest rates. My point is that yes, GM management was and still is, to some extent, very short sighted. They were too fat and comfortable to take notice that they were about to be rear-ended by a changing global economy. However, let's not forget to place a good portion of the blame on the UAW for holding all, not just GM, US automotive corporations hostage with strikes several times in the past. Remember that Chrysler was saved only by a federal bailout. These ransoms paid to the auto unions have come home to roost...and GM and others are still paying for it. So are the consumers that buy these vehicles. Maybe if years ago the management had taken the same action that Reagan did with the air traffic controllers union, US manufacturers wouldn't be in the pinch they are in.
Posted by: David Stark | Jan 18, 2006 2:31:15 PM
Maya,
I mostly agree with you, but let's not exaggerate. The $1525 per vehicle that GM spends is spread over more employees (they're less efficient than Toyota) and also retired workers (GM used to be much bigger than it is). My impression is that Toyota's current employees' health benefits are comparable to those of GM's current employees.
Also, there are a few market-based solutions that may help, notably medical savings accounts. (see http://www.forhealthfreedom.org/Publications/HealthIns/MSAs.html)
Posted by: PJ/Maryland | Jan 20, 2006 7:51:12 AM
Check the Future for Health Care Read HSAinsider.com Is the wave of the future.
National Health Care (Hillary Care)!!!
Do you really want the Govt handling this?? Look at Medicare/Medicaid!!
Just look to the north (Canada) and see why Canadians who need Immediate DX Test (MRI's for Example) have to wait for the test, weeks to months! Hope you don't have a life threating Injury ex.(sub-dural Hemmorage for Example)and have to wait more than a couple of hours!?
You get the Picture??
Posted by: Ron Hughes | Jan 20, 2006 12:54:06 PM
Healthcare in the U.S. sucks and it's the most expensive in the world.
Posted by: PS | Jan 20, 2006 6:07:14 PM
The Japanese have lower manufacturing costs because, like every other civilized industrial nation, they have a national healthcare plan. We do not. Americans have the most expensive healthcare system on the planet and it fails to cover everyone. Our President and Congress, wholly-owned subsidiaries of the insurance companies, call government-operated single-payer healthcare systems "socialized medicine" while enjoying the benefits of that system for themselves.
The much feared delays in getting medical tests and treatments in Canada are nothing compared to the deliberate foot-dragging fostered by US insurance companies. I personally know people who have suffered crippling and painful occupational injuries made agonizingly worse by the endless paperwork and delays of penny-pinchers at insurance companies. This kind of conduct should be every bit as criminal as that which involves armed robbery and attempted murder because that is what it is.
Americans need to wake up and realize that our cruel and inefficient healthcare system is run solely for the benefit of the executives and the fantastically wealthy monstrosities who own it. They are not only killing American businesses large and small, but people, literally.
Posted by: Mednonymous | Jan 21, 2006 4:03:59 PM
When will people realize that Health Insurance is the problem, not the solution? Otherwise intelligent people say to me "Thanks goodness I have health insurance, I would never be able to pay for my health care costs..." What, do the insurance companies have printing presses in the back room that they print money on? On average, by paying insurance premiums, everyone with health insurance pays for his own health care PLUS the overhead to pay the insurance companies. And for this extra cost, all you gain is lack of power over your own health care decisions. It's truly insane.
Posted by: dbjoyce | Jan 24, 2006 7:42:50 PM
It's going to be hard for the insurance, pharmaceutical, medical, and legislative monopoly to hold onto the facade that they provide the right approach to health care, esp since their system has vaulted MDs into the leading cause of death (See "Death by Medicine" by Gary Null et al online). 900,000 are unnecessarily dead each year from this system; that's over 2400 a day (Iraq is 2.1 US soldiers dead per day). Null's study is not the only one that exposes medical-performance shortcomings (See JAMA Vol 279(15) p1200 and the Barbara Starfield, MD, study in JAMA 2000. Or you could just read "Who's Representing the Healthy? by me and get all those studies in one place.)
As a CEO on Ron Insana's CNBC roundtable discussion pointed out recently, "At the bottom line, we need fewer people going to doctors, if we plan to control costs." That means having healthier people. What motivates people to be healthy? Does free insurance provide motivation? It is more likely to produce a tax increase to pay for the "free" insurance.
Rather than resort to socialism to attempt to repair our health-care problems, it might be worth asking if our current system provides incentives for good performance or disincentives for poor performance. It doesn't; everbody in the group pays the same premium. Group-health plans dump the poor-performance cost overruns onto the employer, the government and worst of all, onto the healthy policyholders, who end up paying a large portion of the premiums for those who fail to maintain their own bodies. Who is that motivating?
Capitalism can fix the health-care problem, and part of that solution will be for people to own their body performance through individualizing premiums.
Best regards,
Dr. Thomas N. Campbell, DC
Posted by: Thomas N. Campbell | Jan 31, 2006 11:54:21 AM
I have to say you have a great blog, i really enjoy reading it, i have bookmarked it so i can find it back
Keep up the good work
Greets
Dave
Posted by: Dave | Dec 7, 2006 8:59:15 AM
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