By Christina Rogers
The United Auto Workers is looking to create one large health
insurance pool for workers at Detroit's Big Three auto makers, a
move aimed at helping the companies better leverage their size to
win cost savings from medical providers.
UAW President Dennis Williams said Thursday he aims to bring the
proposal to the bargaining table next month when the union starts
negotiations for a new four-year contract with Ford Motor Co.,
General Motors Co. and FCA US LLC, the U.S. unit of Fiat Chrysler
Automobiles NV. He said the insurance pool could include active
hourly workers, as well as salaried employees and hourly retirees,
a group that would combined have more than 1 million members.
Currently, GM, FCA US and Ford each have separate health plans
for their blue-collar factory workers. Benefits for more than
600,000 retired hourly workers are managed and paid for by a
UAW-run trust that was established in 2007 and is now one of the
nation's largest private health-care providers. Mr. Williams
declined to offer specifics on the proposal, only to say that this
is "the focus right now."
"The more people pooled together in this health care system, the
more leverage you have with institutions, such as hospitals,
clinics and insurance companies," Mr. Williams said. "I would love
to create a pool to insure members across companies."
Health care promises to be a priority for the both the union and
the Detroit car makers as they work to replace a four-year
agreement that expires Sept. 14. Today, auto workers have some of
the richest health-care benefits in the country; and while UAW
members have had to make other concessions during the industry's
darkest days, their medical plans have remained largely intact.
The UAW could find support at the auto makers, who are each
exploring similar arrangements. Combined, Ford, GM and FCA US will
spend more than $2 billion in medical costs for its hourly workers
in 2015, or about $14,800 per worker.
Negotiators at the Detroit car makers have said they are willing
to be creative in lowering expenses, which they view as rising
steeply over the course of the agreement due in part to a new
federal tax scheduled to take effect in 2018 on the benefit-rich
plans now offered to workers.
The effort could include forming a shared private exchange that
would allow companies to use their combined scale to push for
better costs and potentially negotiate with hospitals, doctors and
other health providers directly, according to people familiar with
the matter.
UAW members pay between 6% and 8% of their medical costs--far
less than what is typical for manufacturing employees. Fiat
Chrysler estimates it is conceivable hourly worker medical costs
will eventually exceed the equivalent of $16 an hour, or more than
the entry-level wage, if they go unchecked.
FCA US said, in a statement, "as the cost of health care
continues to increase at an unsustainable rate, FCA US is open to
discussing with the UAW options that will reduce cost while both
improving the quality of care and the health of our employees."
Ford and GM declined to comment directly on the UAW's proposal.
GM said it is "always open to talking through creative solutions"
on employee benefits.
Write to Christina Rogers at christina.rogers@wsj.com
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