YOU ARE HERE: LAT HomeCollections

Big Three Call for National Health Care System : Autos: The car makers say rising costs of medical benefits threaten their global competitiveness.


DEARBORN, Mich. — The Big Three auto makers Monday called for adoption of a universal health care system, saying that rising health care costs are threatening their global competitiveness.

At a five-hour hearing on health care reform, General Motors, Chrysler and Ford officials said employee medical benefits add nearly $1,100 to the cost of each car they produce, $500 more than what their Japanese competitors face.

"We now spend more on health care than we do on steel," said Peter Pestillo, executive vice president for corporate relations and diversified business for Ford Motor Co.

The testimony came in the third of a series of four health care forums sponsored by the Robert Wood Johnson Foundation and involving top health officials of the Clinton Administration. Hillary Rodham Clinton attended the first two forums but had to cancel her trip here Monday because her father suffered a stroke over the weekend in Arkansas.

But the Administration was represented by Donna Shalala, secretary of the Department of Health and Human Resources; Tipper Gore, wife of Vice President Al Gore and an adviser on mental health issues, and Carol Rasko, domestic policy adviser to President Clinton.

The hearing brought together a broad-based group of several hundred consumers, providers, government officials and business executives from large and small companies. While no solutions were reached, there was widespread agreement that the current system needs to be fixed.

"The time for change is now," Shalala said. "And the American people have made it very clear this system is broke and we need to make changes."

Big business, including Detroit's auto makers, appears to agree. It is little wonder. Spending on health by businesses nearly doubled between 1980 and 1985, then rose another 62% from 1985 to 1990, to $186 billion, according to government statistics.

"Our costs will continue to climb, which will hurt our competitiveness and our ability to create jobs in states like Michigan," Shalala said.

The rising costs have been particularly burdensome for the auto makers, who have nearly as many retirees as employees. They complain that the Japanese competitors have lower costs because they have national health care coverage. They also argue that the Japanese plants in the United States have younger work forces with fewer retirees, giving them a competitive edge.

"The companies have made substantial strides in productivity over the last 10 years, only to see the great bulk of it dissipated by health costs," said Walter Maher, director of federal relations for Chrysler Corp.

GM provides health care coverage to about 1.8 million individuals--370,000 employees, 380,000 retirees and the remainder dependents, said Richard E. O'Brien, the company's vice president of corporate personnel.

"Our ability to continue to provide coverage will be diminished unless we have some form of universal health care system," he said.

The auto makers say their burden is increasing as other companies drop benefits or coverage to employees.

Such an example was provided by Joe Kraus, a former Burroughs employee who took early retirement. He said the company, now known as Unisys, recently stopped paying his health insurance. He now must pay $700 a month for coverage.

"Personally, I feel betrayed," Kraus said. "But these companies that are willing to stand by their employees should not be forced to pay for those that have weaseled out of their obligations."

The health care issue is crucial to the auto makers this year because they are facing negotiation of new contracts with the United Auto Workers union, which has made health care a key area of concern.

William Hoffman, director of the UAW's Social Security department, said that unless a solution to the health care crisis is found soon, labor strife could hit the industry hard.

"I am very concerned we will be forced into a prolonged strike, which would hurt the country's economy," he said.

Los Angeles Times Articles