UAW, Ford reach tentative agreement on health costs

Following on the heels of its agreement with General Motors, the United Auto Workers announced it had reached a similar agreement with Ford Motor Co. to cut the auto manufacturer's health care costs.

The agreement, announced in December 2005, is again leaving physicians in areas where cars are manufactured wondering how they might be affected. When the UAW's agreement with GM was announced, doctors said it could lead to lower reimbursements from health plans affiliated with the car company. Or, they said, it could compel some patients to wait longer to be seen by a physician because they would be shouldering more of the cost, which could lead to lower health quality and more overall system costs.

"Our gravest concern is for the patients in need," said Alan Mindlin, MD, president of the Michigan State Medical Society. "We have been busy fixing the ravages of what has happened to them from a lifetime of working in the plants. The question now becomes, can they afford it?"

Like GM, Ford said it was suffering under the weight of its costs to provide health care benefits to current employees and retirees. The company estimated its health care costs were $3.1 billion in 2004, according to its annual report.

The tentative agreement between the UAW and Ford will save the company about $850 million each year in health care costs, according to estimates. The agreement had not been fully approved by UAW-Ford membership at press time.

According to the agreement, retirees and surviving spouses would pay $10 monthly premiums for individual health coverage and $21 for family coverage. They also would see deductibles, with a maximum out-of-pocket cost of $250 for an individual and $500 for a family. Retirees and surviving spouses drawing less than $8,000 per year in pension income and whose pension benefit rate is $33.33 or less per month per year of service would not be affected by the changes.

Active workers would defer about 99 cents per hour in wage increases into a retiree health care fund. They would have higher co-pays for prescription drugs, but they would not have monthly premiums or deductibles, according to the agreement.

In return, Ford would invest about $900 million over the next five years in new car-making technology.

"The tentative agreement will require sacrifices from active workers, retirees and surviving spouses to help ensure that all UAW-Ford families will continue to have excellent health care coverage now and in the future," UAW's President Ron Gettelfinger and Vice President Gerald Bantom said in a prepared statement.

Ford representatives declined to comment on specifics of the deal, but the company said in a prepared statement that it was "pleased to have reached a tentative agreement with the UAW on health care."