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April 20, 2005

Reasons This Country is Going to Need to Fix Its Health Care System and Fast

From the LA Times:

General Motors Corp. on Tuesday posted a first-quarter net loss of $1.1 billion, its worst quarter in 13 years, due to disappointing sales in the crucial North American automotive market and soaring healthcare costs.
...
Other analysts, though, said GM could be holding back as part of its negotiations on healthcare costs with the United Auto Workers. Last week, the union said it had no intention of revising its current labor contract to help the automaker lower medical expenses but would do what it could within the agreement to help lower costs.

GM has warned that its U.S. healthcare costs could grow to $5.8 billion this year. Making things look as bleak as possible would help GM persuade the union to pass on some of the company's healthcare costs to its hourly workers, analysts said.
...
Although healthcare costs are the company's principal long-term concern, getting its product mix right for the competitive U.S. market is the more immediate concern, he said.

Sounds like some corporations are chafing under the weight of health care costs. Now what to do, what to do...

April 20, 2005 in Big Business, Health Care | Permalink

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Comments

I grew up in the auto industry. My dad is a retired auto worker. Many of my neighbors work for General Motors (they are the largest emplolyer in Lansing MI). I have previously worked in the auto industry. The problem at General Motors is that they don't make cars people want to buy. They are losing market share almost every year. The Japanese automakers are doing better at innovation and quality control. The domestic auto companies spend too much time and energy fighting any regulations concerning their businesses.
However, I do agree that a national healthcare system would increase the competivness of our corporations. The current system makes no sense and only serves doctors and insurance companies. Health care should not depend on where you work this week. This series of postings have been excellent. I don't think much will be done in the next several years because of all the political clout of the medical lobbies.

Posted by: marvyt | Apr 20, 2005 8:42:04 AM

Whoa, whoa, whoa, there, Ezra!

Just because GM says it's biggest problem is health-care costs doesn't mean that's actually the case. It's a convenient scapegoat for an otherwise abysmal failure. And I think marvyt points to the correct problem: GM makes cars that nobody wants to buy, cars that are big and clunky and get lousy gas mileage, cars that fall apart quickly and are cheaply built. If they addressed those problems, they could easily make enough money to pay for their workers' health insurance costs--which benefit them, too, by promoting a healthier workforce, which boosts productivity. A good benefits package is also a hell of a recruitment tool. You can afford to pay your people a little less if the benefits you give make up for it.

Posted by: Michael | Apr 20, 2005 9:36:03 AM

"Just because GM says it's biggest problem is health-care costs doesn't mean that's actually the case. It's a convenient scapegoat for an otherwise abysmal failure. And I think marvyt points to the correct problem: GM makes cars that nobody wants to buy, cars that are big and clunky and get lousy gas mileage, cars that fall apart quickly and are cheaply built."

I think you have the causation backwards. Their high costs prevent them from making cars that people want to buy, at least at a reasonable price. The engineering capabilities of American automakers are just as good or better than Japanese ones. The problem is that their embedded costs are higher than their Japanese competitors.

High labor and benefit costs, as well as bloated executive compensation make it hard for GM, Ford and Chrysler to compete on BOTH quality AND price with thier Japanese counterparts. Since they need to compete on price, the quality that could be added for additional cost gets squeezed out, resulting in "cars that nobody wants to buy, cars that are big and clunky and get lousy gas mileage, cars that fall apart quickly and are cheaply built".

Posted by: Lewis Carroll | Apr 21, 2005 2:32:52 PM

My mind is like a fog. Oh well. My life's been really dull today. Eh. Today was a total loss. I've more or less been doing nothing , but I guess it doesn't bother me.

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Posted by: peter.w | Sep 15, 2007 7:40:18 AM

Prejudice will always be a part of society

Posted by: Sandra | Oct 4, 2007 8:20:29 AM

I've basically been doing nothing worth mentioning. Not that it matters. I just don't have anything to say these days. I've just been hanging out waiting for something to happen. Not much on my mind these days.

Posted by: Sandra | Oct 4, 2007 1:26:24 PM

Not much on my mind right now. I haven't been up to anything. Today was a complete loss. That's how it is. Not much exciting going on these days.

Posted by: john | Oct 4, 2007 9:06:53 PM

The comments to this entry are closed.