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Trading Healthcare for Jobs

Rick Johnson, for HealthLeaders News, October 4, 2007

American companies have long said the burden of escalating health plan costs puts them at a competitive disadvantage in today's global economy--and now General Motors might have wiggled free from the $50 billion liability of retiree health benefits. The United Auto Workers essentially traded the benefit for promises that GM invest in plants in the United States.

The agreement calls for GM to pay $35 billion into a healthcare trust fund that UAW will manage. The deal is pending a vote by the 73,000 UAW-GM members, but union leaders have expressed confidence that members will go along.

Look for other US companies to try to hammer out similar agreements. In fact, the New York Times reports that the UAW is already moving to negotiate similar deals with Ford and Chrysler.

The healthcare industry hasn't yet seen much impact from the consumer-driven movement. But the GM-UAW pact could represent a shift in this direction. The UAW is now the manager of a multi-billion-dollar health savings account that the union must sustain in the face of escalating healthcare costs and aging GM retirees.

"It's a magnificent opportunity to drive large gains in the quality and efficiency of care delivery," says Arnold Milstein, MD, chief physician at Mercer. "Large gains will hinge on much more selectivity in physician network composition and engagement by chronically ill patients in self-management. The psychology of shared resources among a community of retirees who trust their benefit plan's leaders could powerfully raise patient acceptance of these two pivotal changes."

Of course, it's too early to tell how the UAW will structure the trust fund. But the agreement represents another notable shift away from employer-managed health benefits. The downstream ramifications of this deal and others to come will influence the way patients select and pay for healthcare services.

So as patients continue to have greater financial stake in their healthcare choices, expect them to become more engaged in decision-making and more demanding about price and quality.

Will providers be able to give these patients real information to make sound choices for their health?


Rick Johnson is a senior editor with HealthLeaders Media. He can be reached at rjohnson@healthleadersmedia.com.

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