General Motors Corp. has negotiated a union contract that could cut medical insurance costs by $1 billion per year, and Rick Wagoner, the automaker’s chairman, is asking for the government to do something about health care costs.[@@]
General Motors, Detroit, says in a document filed with the U.S. Securities and Exchange Commission that the proposed agreement with the United Auto Workers, Detroit, announced Monday, could lower company retiree health care liabilities by about 25% of hourly liability or $15 billion.
The agreement would create an independent plan, called a “voluntary employee benefit association.” Employees and retirees affected by General Motors’ benefits cuts could replace some of the lost coverage by paying to join the VEBA, General Motors says.
General Motors will help support the VEBA with 3 contributions of about $1 billion each. The contributions are scheduled to be made in 2006, 2007 and 2011, General Motors says.
The proposed health benefits agreement should cut General Motors’ annual health coverage expenses by about $3 billion before taxes, the company says.
General Motors expects union leaders to ratify the pact this weekend.
Wagoner says in a statement included in the SEC filing that the issue of skyrocketing health coverage costs is still a critical one for the overall competitiveness of American industry in general.