UAW chief advocates health care pool
A health care pool for active workers at all three Detroit automakers is likely to be one option pushed by the United Auto Workers, as union leaders prepare to deliver contract proposals to automakers — perhaps as early as this week.
A co-op could pool all active salaried and hourly workers to help reduce automakers’ rising health care costs and maintain benefits for its members in the future — similar to what the Voluntary Employee Beneficiary Association, or VEBA, does for the current 860,000 UAW retirees and dependents.
“I don’t think there’s any other way,” UAW President Dennis Williams told The Detroit News on Wednesday. “I’ve walked through this several ways; I just don’t have any other answer. I do believe this will work. It’s worked with the VEBA.”
The system would be a shared responsibility among the UAW and automakers, but driven by union leaders increasingly interested in helping to manage ballooning health care costs and their members’ welfare. The union doesn’t expect the pool would cost workers or the companies more.
The co-op concept is a product of the union’s experience managing the VEBA. Since its creation in 2007, fund managers have reinstated vision and dental coverage for retirees and are preparing to reinstate hearing coverage, as they have learned to better manage their resources and coverage.
A pooled system also could help automakers avoid the Affordable Care Act’s so-called “Cadillac Tax,” which starting in 2018 imposes a 40 percent excise tax on the portion of group health insurance premiums that exceed $10,200 for single coverage and $27,500 for family coverage.
The union president first mentioned the pool in a June roundtable with reporters. But union staffers have redoubled efforts to sharpen the proposals in anticipation of serious bargaining over the next four weeks, as the current contract expires.
Labor experts say challenges to the UAW’s health care coverage could be a strikeable issue for the union’s members. General Motors Co. and Fiat Chrysler Automobiles NV workers have the ability to strike for the first time since the 2007 talks; the UAW gave up that right for the 2011 talks as a condition of GM and Chrysler’s government bailouts.
In just the past four years, outlays for health care have grown 45 percent for Ford Motor Co. and 77 percent for FCA. Automaker spending on health care for hourly workers and their families likely will top $2 billion this year.
Ford says its health care costs for hourly employees is about $800 million this year, up from $550 million in 2011. FCA says it will pay $615 million this year, compared to $347 million in 2011. GM reportedly spent $665 million on health care for hourly employees and families in 2011. The automaker would not say what its current spending is, but said increases are “on par” with Ford and FCA.
“We need to get people healthier,” Jimmy Settles, vice president of the UAW-Ford department, told The News in June. “There’s always ways to do things better.”
Automakers and union leaders also are likely to explore ways to address union concerns of the current two-tier system that pays workers doing the same job different wage rates depending on when they were hired.
One option: reviving elements of the old job classification system. In theory, the effort would bring more jobs and functions back into assembly plants, allowing members to bid for higher-paying jobs and the union to boost its dues-paying rolls.
UAW Vice President Norwood Jewell, head of the union’s Chrysler Division, told The News this year that there should be a path by which workers “apply to move to a different classification.” “We need to have a clear path for people to be able to maneuver in their workplace,” he said.
The two-tier system has caused tension on factory floors and is seen as unsustainable. It was introduced in 2007 as a way to help Detroit automakers be more competitive with their foreign counterparts and help during the economic downturn.
Veteran tier-one workers earn about $28 an hour. New hires — so-called tier-two workers — top out at $19.28 for doing the same work. FCA has benefited most under the two-tier system, with its cap on entry-level workers being lifted in 2009. About 45 percent of its roughly 39,000 union-represented hourly workers are classified as tier-two. That’s compared to 20 percent at GM and about 28 percent at Ford.
Prior to the two-tier system, there was a diverse way of classifying workers based on seniority as well as type of work. GM already employs hundreds of workers at entry-level wages and benefits, similar to what suppliers would pay. In some cases, these pay rates and benefits are lower than entry-level pay and benefits that second-tier workers earn.
Some workers who earn less than starting two-tier wages are at a GM battery plant in Brownstown Township, Orion Assembly Plant in Orion Township and in a few other locations where GM operates new logistics centers. The company currently has a separate labor agreement with the UAW.
GM has added hundreds of new jobs through new subassembly, kitting and sequencing work. GM worked with the union to bring in work that previously was not done in-house. Some veteran workers have said they would forgo a pay raise if it meant ending the two-tier system.
“The elimination of the two-tier system would be the No. 1 priority in my book,” Brian Langdon, a 20-year worker at Flint Assembly, said recently. “I’d rather not have any wage increase, and let’s get that out of the way. Then we can talk later and see how profitable we are.”
Staff Writer Melissa Burden contributed.