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Ford Retirees May Share Some Health Costs

Posted on: Thursday, 15 December 2005, 06:00 CST

By Sharon Silke Carty

DETROIT -- Local leaders of the United Auto Workers agreed Wednesday to alter the union's health care agreement with Ford Motor, forcing its retirees to start paying toward their insurance, office visits and drugs.

The union says the move should save Ford $850 million annually. Ford spent $3.1 billion on health care last year and says about $2 billion of that was for retirees and their families.

The agreement is patterned after one the UAW reached with General Motors in October, which should save GM $1 billion annually. UAW President Ron Gettelfinger said the union has begun informal talks with DaimlerChrysler's Chrysler Group to work out a similar deal, although that likely won't happen until next year. The changes, which still must be ratified by the general membership, include:

*Monthly premium. Single retirees or widowed spouses would pay $10 a month; families, $21.

*Yearly deductible. Single retirees would pay $150, families $300. Out-of-pocket payments would be capped at $370 for individuals, $752 for families.

*Prescription costs. Retirees will pay $5 per prescription for generic drugs and $10 for brand names.

Gettelfinger said that even though the UAW is willing to help the automakers during a tough period, it doesn't mean the union will roll over when talks on a new contract begin in 2007.

"If they think it's going to be a cakewalk in '07, that's not going to happen," he said.

The 2007 contract talks with the three Detroit automakers are expected to be tumultuous. GM has announced it plans to cut 30,000 jobs and close nine plants by the time the contract expires.

Ford is expected to announce next month up to 10 plant closures and the elimination of up to 30,000 jobs.

Merrill Lynch analyst John Casesa says Ford has to restructure its operations as aggressively, if not more so, than GM. "Ford's fate is increasingly intertwined with GM's, because if GM takes more radical actions to restructure -- Chapter 11 in the most extreme case -- Ford will have to achieve the same savings to compete," he said.

Fears are growing on Wall Street that GM could file for bankruptcy protection. Standard & Poor's downgraded GM's bonds further into junk status this week and said Chapter 11 is not a "far-fetched possibility."

But on Wednesday, Gettelfinger dismissed the possibility that GM will file for bankruptcy protection.

The union hired accountants to pore over GM's books before it agreed to cut retiree health care. "We believe that GM is in very good shape," he said. "We do not anticipate or expect they will be in bankruptcy."

(c) Copyright 2005 USA TODAY, a division of Gannett Co. Inc.

Source: USA TODAY

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