Steadily rising health-care costs will again become a key issue when the United Auto Workers begins contract talks with General Motors, Ford Motor Co. and Chrysler Group later this month.
Critics of the Obama administration’s 2009 bailout of General Motors and Chrysler Group have complained the union’s health-care benefits went through bankruptcy with only modest modifications – despite the union’s agreement, in 2007, to shift responsibility for retiree health care to independent trusts or Voluntary Employee Benefit Associations for each company.
Union members still pay less than 10% of their health-care bills through co-payments and deductibles. In the face of steadily rising health-care costs, so if the two sides win up with no change in the current formula it will represent the equivalent of a pay increase for union members.
But that is something the carmakers insist they cannot accept as they struggle to hold total wage and benefits costs to around $50 an hour, roughly on par with the major transplant assembly lines operated by Toyota, Honda and Nissan.
Along with the cost-of-living increases now abandoned by the UAW, rising health care costs helped drive Detroit’s Big Three labor costs from about $47 an hour in 1999 to more than $76 by 2006 – before concessions began driving costs back down again.