Originally published November 11 2005
Worker's union helps GM cut overwhelming costs of employee healthcare
by Mike Adams, the Health Ranger, NaturalNews Editor
The worker's union for General Motors employees voted to shift some healthcare costs away from the company, as GM has recently felt the financial burden of being the largest private provider of healthcare in the U.S.
Shares fell to their lowest in 23 years on Thursday on fears about mounting financial woes at the auto giant and a possible strike at its main auto parts supplier, bankrupt Delphi Corp..
GM, also the largest U.S. private health-care provider, said the deal will save it $1 billion annually and slash its long-term health-care liability by $15 billion.
Welcoming the ratification, GM said the deal would cut its hourly health-care liability by 25 percent and reduce health care expenses by about $3 billion annually, before taxes.
Retirees with annual GM pensions of $8,000 and less, whose GM pension benefit rate is $33.33 per month per year of service or less, will continue to get health care free of charge.
Coverage for GM hourly employees will continue with few changes, although drug co-payments will go up by $5 in most cases, and they will be required to defer or forgo $1 an hour in future pay increases to help fund their health-care coverage.
The proposed changes are subject to approval by U.S. District Court for the Eastern District of Michigan.
"The deal is definitely a positive effect on GM," Burnham Securities analyst David Healy said.
"It's one of the reasons GM will lose less money in 2006."
GM has lost nearly $4 billion so far this year, as it grapples with health-care and high commodities costs, eroding U.S. market share and stalling sales of big sport utility vehicles, which were cash cows but have lost popularity due to high gasoline prices.
Analysts say much needs to be done beside cutting health-care costs.
"They are losing too much market share.
And they have too many plants, too many people and too many models," Healy said.
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