Monday, October 1, 2007

Government reform - Is GM-UAW Pact a Turning Point in Health Care?

A Sept. 27 WSJ article argues the GM-UAW deal is a turning point for health care – a turning away by major employers as the chief health care buyer for its employees and retirees. . The article says major American corporations, like Kellogg Co, and Ford Motor Co. will soon follow suite. It says corporations will give employees and retirees a lump sum and will say, “Here’s a fixed amount of money for health care. You decide how to spend it. You shop for your own coverage.”

It cites the case (no pun intended) of Extend Health, Inc, partly owned by American Online founder Steve Case. Extend Health has built a team of 180 insurance agents and a sophisticated web site to serve Fortune 500 retirees with HSAs .Extend Health, it says, has six large clients, including Ford and Chrysler, and plans to have 18 major Fortune 500 clients by the end of 2009. It quotes Bryce Williams, CEO of Extend Health, who says the paternalistic health-buying corporate model is broken,”This is about making corporate competitive again.”

Well, maybe. It’s true employers offering coverage has dropped from 69% to 60% since 2000, and it’s true some 8 million Americans now have HSAs. But it’s also true Senator Hillary Clinton says her proposal retains employer-financed care as a centerpiece . She asserts, “ We looked at every permutation of how you get to universal health care. There’s great attachment to the employer-based system, even though it’s eroding.”

And it’s true that most major employers want to retain some degree of coverage as an incentive to recruit talent. What seems to be happening is corporate America is offering a middle ground consisting of offering a fixed contribution with individual coverage.

Is this a shift towards individualistic consumerdriven care featuring medical shopping and HSAs, facilitated by employers offering guidance through web sites? Could be, but it will be hard sell to many Americans, politicians, pundits, and elitists who have grown accustomed to and devoted to the entitlement syndrome as administered by health resource and government bureaucrats.


The GM-UAW pact turns from open-ended health benefits to fixed lump payments of tax-deferred dollars to be administered by an independent trust, similar to 401Ks. This is done in the name of making GM competitive in world markets. Does this deal represent a move toward consumer-driven care, with patients dealing more directly with doctors and hospitals? Does it forecast what might happen in the current health reform debate? Will it trickle down to small businesses or to self-emloyd individuals?

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