Physicians brace for impact of GM's health cost cuts

As union workers and retirees are asked to pay more health care costs, doctors wonder if patients will delay visits, or fees will drop.

By Bob Cook — Posted Nov. 7, 2005

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General Motors is coughing, and physicians are fearing they'll catch cold.

The nation's largest automaker, which has blamed health costs as a big reason it has lost $3 billion in the first nine months of this year, recently announced that the United Auto Workers agreed to a deal on health coverage that the company said would cut GM's expenses by $3 billion annually, before taxes.

Physicians in GM states say that, historically, when autoworkers are forced to pay more for health care, they "delay getting medical treatment and other measures for cost-saving purposes," said William Mohr, MD, immediate past president of the Indiana State Medical Assn.

Physicians also wonder whether GM's cost cutting eventually will mean reduced reimbursement from GM-affiliated health plans, though the company has announced no plans to seek reduced physician pay.

Already, the Michigan State Medical Society and the Michigan Osteopathic Assn. -- with the vocal support of the AMA -- have a lawsuit pending against Blue Cross Blue Shield of Michigan for lowering physician fees without their consent, then threatening to kick out any physician who did not accept them. The lawsuit is related to the Blues' role as a third-party administrator for the plan covering UAW members employed by GM, Ford Motor Co. and DaimlerChrysler.

"We are very, very concerned as to how the [new GM-UAW deal] is structured," said Alan Mindlin, MD, president of the Michigan State Medical Society. If the new deal results in further reduction of physician fees, the society will not take it lying down, he said. "The days are gone when you can treat doctors like dogs."

There's also the question of whether the GM-UAW announcement on Oct. 17 was merely a case of one company getting a hold on its health costs or the beginning of the end of generous corporate health benefits -- for those that still have them.

Ford and DaimlerChrysler have asked for similar concessions from the UAW, though those won't be discussed until union members approve the GM deal, which they're expected to do. Meanwhile, some analysts say more companies in the auto industry, such as bankrupt auto-parts maker Delphi, could make similar requests.

In fact, some analysts say the GM-UAW deal is likely to inspire anyone who relies on union workers and offers relatively generous health benefits to follow GM's lead.

The here and now

GM has worked with physicians on various programs to try to better the health of its employees as a way of gaining long-term savings on health costs. But the automaker said it had to do something now to get more immediate cost savings, particularly when it came to paying for retiree benefits.

GM's 340,000 UAW retirees and their families, excepting 74,000 retirees and surviving spouses drawing less than $8,000 per year in GM pensions, will for the first time pay monthly premiums, according to details released by the UAW. Individuals would pay $10 per month; families, $21. Meanwhile, retirees also would be hit with deductibles, with a maximum out-of-pocket expense of $340 for individuals and $752 for families. Prescription costs also would go up.

All told, GM estimates that its future retiree health liability would be reduced by $15 billion.

Under the GM-UAW agreement, the union said, the 118,000 active hourly employees at GM, and their covered dependents, still will pay no deductibles or premiums.

But workers will defer $1 an hour in future pay increases to an independent retirees' health benefit fund. GM also will contribute $3 billion over the next six years to that fund. Current union employees also will pay greater co-pays for prescriptions.

Given that before this deal union employees contributed to about 7% of their own health care costs -- contrasted with an average of 32% for all American employees, according to Hewitt Associates -- the cuts might not appear terribly drastic.

But some physicians said the GM-UAW deal is an indication that not only GM but also other companies in the auto industry are going to look anywhere they can for savings -- including physician reimbursement.

"Our grave concern is every time -- every time -- they do something like this, the be-all and end-all is the physicians get the screws put on them," said Dr. Mindlin, an ophthalmologist who has practiced for 31 years in Pontiac, Mich., a site of GM plants since 1909.

Missouri physicians also have felt the effects of attempts by GM to manage health care costs. The Missouri State Medical Assn. and St. Louis-area societies, with AMA support, fought United Healthcare in its attempt to rate doctors for a quality-pay plan that involved GM employees. United backed off its original plan and is now working with physicians more closely on quality-pay initiatives.

"GM frequently thinks patients are abusing" the health system, said Jim Peterson, MD, president of the St. Charles/Lincoln County Medical Society, which along with the St. Louis Metropolitan Medical Society took part in the United fight. He said Missouri doctors are waiting for more details before assessing the new GM-UAW announcement.

The Indiana State Medical Assn.'s Dr. Mohr -- a family physician practicing in Kokomo, home to Delphi and DaimlerChrysler plants -- said most discussions he's been a part of have focused on access to care for autoworkers. Dr. Mohr said he worries that workers will stay away from the doctor's office for preventive and minor treatments, which could end up costing GM, and companies that follow its lead, more in the long run.

"We feel as if probably the [auto industry] contracts will be made very similar," Dr. Mohr said. "Exactly how that's going to play out, we don't know ... [but] we feel this is going to have an impact on our UAW patients."

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