Should companies bear the healthcare costs for citizens? Does making companies pay for healthcare put an unfair burden on small companies (who dont have enough workers to amortize the costs) and on old companies (who have too many retired workers to pay for)? Does shifting the burden of health care costs onto employers make them even less competitive in the global marketplace?
Would it be better for healthcare to be a citizen's right, provided to every citizen and paid for every citizen by the federal government? Should health care be a matter of social welfare like the freeway system or national defense?
I was surprised by the bankruptcy of Delphi but the fate of those US workers and retirees looms in my mind as a matter of great significance. The financial status of GM and the other US auto manufacturers could be the tipping point on the health care debate in our country. The competitiveness of Detroit has been on a slow simmer for years but it feels like it is finally starting to boil.
As GM continues to lose billions of dollars a year, their main complaint about why they cannot compete is the cost of healthcare, largely for retirees who no longer even work for the company. What will it take before politicians do something the people can support about healthcare in this country?
Delphi Bankruptcy Filing Expected
U.S. Auto Industry Faces The Painful Restructuring Seen in Aerospace and Steel
October 8, 2005
Now tens of thousands of former and current auto workers will deal with the uncertainty of seeing a bankruptcy judge make decisions about labor-negotiated wages, pensions and benefits at the same time Delphi management moves aggressively to close plants and shed thousands of jobs.
U.S. auto makers have vastly more retirees than transplant auto makers like Toyota or Honda Motor Co., paying an estimated $1,500 more per vehicle for health care. GM, for example, expects to spend $5.6 billion on health care this year.
The burden of health care and pensions only grows on U.S. auto makers as their share of the U.S. vehicle market shrinks. GM, which will likely have to dole out billions of dollars for retired Delphi workers, will spread that burden across fewer vehicles this year than in previous years.
"GM's burden per car will only grow," said Peter Morici, former chief economist at the International Trade Commission. "The auto makers are like airlines or steel in that they make bad decisions: in the case of auto makers it's being too reliant on trucks and SUVs. At the same time they have a high-cost structure that makes them vulnerable to new competition."
