A health care co-op that could have pooled together salaried and hourly employees from Detroit’s three automakers to curb rising costs was cut from the second tentative agreement between the United Auto Workers and Fiat Chrysler Automobiles. Members had complained there were few specifics about the proposal in the first contract, which they voted down by a 65-35 percent margin.
UAW President Dennis Williams said Friday he could eventually return to membership with the plan, but it is not part of a new four-year deal tentatively agreed to with Fiat Chrysler bargainers.
“I was a little naive, I thought that everyone understood it,” Williams said. “It was my fault. I should have educated people more on it.”
The concept of a health care co-op was first brought up by Williams earlier this year. It could have included all employees — salaried and hourly — at Fiat Chrysler, General Motors Co. and Ford Motor Co. as a way to ease rising costs, increase buying power and maintain benefits for members in the future.
Art Wheaton, a labor expert from Cornell, said the removal of the co-op was the “most disappointing” part of the new tentative agreement. “That was the best opportunity for them to shave long-term costs and maintain benefits,” he said.
The pool was meant to have a similar effect as the VEBA (Voluntary Employee Beneficiary Association), a health care trust used by Detroit’s Big Three automakers to fund health care for about 750,000 UAW hourly worker retirees and dependents. The trust, created as part of UAW talks with carmakers in 2007, reduced the companies’ labor cost by about $15 an hour, according to Labor and Economic Associates.
Ford says health care costs for hourly employees is about $800 million this year, up from $550 million in 2011. Fiat Chrysler says it will pay $615 million this year, up from $347 million in 2011. GM reportedly spent $665 million on health care for hourly employees and families in 2011; it will not disclose what current spending is, but said its increases are “on par” with Ford and Fiat Chrysler.
Details about the co-op were never made clear, including what happens if GM or Ford didn’t agree to it. If salaried employees at all three automakers were included, the co-op would have had about 226,000 people, including 145,300 union members.
FCA CEO Sergio Marchionne, in a letter following the first tentative agreement that was voted down last month, described the co-op as a “comprehensive approach” that would “explore innovative ways of improving the delivery of health-care benefits in a manner that increases quality, lowers costs and provides better patient care.”
But despite the optimism from union leadership, rank-and-file took to social media to voice their questions and concerns over the lack of detail in the plan.
Wheaton thinks Williams left enough wiggle room to potentially hammer out more details during discussions with Ford and GM, then return to FCA members with an addendum to the contract. “I just don’t think he can afford to have that in this ratification vote,” he said.
Williams said he’ll continue to stay proactive on health care costs and will eventually present his findings to the membership: “We think after they understand it, they’ll feel more comfortable with it.”