More importantly, that's also significantly more than its key foreign competitors spend on healthcare. GM officials estimate that healthcare costs for Toyota are only about one-fourth as much per car, largely because the government pays more of the tab in Japan than in the U.S.
This is a problem too big for GM and its workers to resolve alone. Whether or not they negotiate a new formula for dividing healthcare costs, the prognosis is for perpetual conflict and economic strain unless the overall increase in medical costs is slowed. And that requires national action.
For The Record
Los Angeles Times Tuesday February 14, 2006 Home Edition Main News Part A Page 2 National Desk 1 inches; 39 words Type of Material: Correction
State of the Union -- In a Jan. 29 Washington Outlook column on President Bush's address, and in previous columns, about 46 million Americans were said to lack health insurance. That figure included noncitizens living in the United States.
There's no silver bullet for controlling medical costs. The inability of even a massive consumer like GM, with its vast bargaining power, to hold down its bills belies the simplistic suggestions from Bush and conservative thinkers that transferring more of the cost to individuals will significantly reduce costs by making patients smarter consumers.
Instead, meaningful cost control requires a comprehensive agenda. One place to start would be by modernizing the healthcare industry's antiquated record-keeping and billing systems.
Last week, the odd couple of Senate Majority Leader Bill Frist (R-Tenn.) and Sen. Hillary Rodham Clinton (D-N.Y.) introduced legislation that they estimated could cut total medical spending by as much as 10% by providing incentives for hospitals and other providers to computerize medical records that now pass through too many hands and generate too many errors.
Next, Washington could shoulder more of the cost for the handful of catastrophic cases that inflate premiums for everyone else. As Rick Wagoner, the GM chairman and chief executive, noted last winter, 1% of patients generate 30% of the spending on healthcare.
The best domestic policy idea that Sen. John F. Kerry (D-Mass.) produced in his 2004 presidential campaign directly addressed that problem. Kerry proposed that Washington assume 75% of the cost for any patient whose annual health expense reaches $50,000. One leading analyst estimated that change alone could reduce health insurance premiums by 10%.
Kerry plans to embody his proposal in legislation this year. Frist hasn't progressed as far toward a specific plan, but he has proposed a public-private partnership that could absorb more risk for the most expensive cases from individual insurers.
