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GM Raises Retirees' Health Premiums

By David Goodman
 
The Washington Post, November 5, 2002

DETROIT –– Hit by fast-rising prescription drug expenses that cost General Motors Corp. about $1 billion last year, the automaker is substantially increasing premiums for 164,000 retirees in 2003.

Effective Jan. 1, salaried workers who have retired from the world's largest automaker will see their health care premiums jump by about $25 a month on average. The increases will range from $9 to $51 a month, company spokesman Tom Wickham said Tuesday.

Current premiums depend on the insurer the retiree chooses. The increases in some cases will double the monthly premium.

GM paid $998 million on 18.9 million prescription drug claims last year. Prescription drug costs for GM have risen from $700 per person in 1998 to $1,164 in 2001, Wickham said.

"That far outdistances the inflation rate, and there's no relief in sight," he said.

Retirees account for the "vast majority of the prescriptions we write," he said.

In June, Ford Motor Co. began charging health insurance premiums to 50,000 white-collar retirees and their spouses.

White-collar retirees at DaimlerChrysler AG's U.S operations and at most other major U.S. corporations long have paid monthly premiums for health coverage.

GM recently wrote its salaried retirees about the increase. The move does not affect the company's 528,000 hourly retirees or their surviving spouses, whose benefits are protected by United Auto Workers and other union agreements.

The UAW's national contract with GM comes up for renewal next year.

In all, GM provides health insurance to 692,000 retirees and retiree spouses and to 491,000 active workers and their families. It spent $4.2 billion last year on health care, and most of those covered are retirees or their spouses, Wickham said.

Even with the higher premiums, GM's white-collar retirees remain among the best-insured in corporate America, Wickham and others say.

"If you work for or retired from the Big Three, you've still got a really good health care plan," Mary Lee Corrado, executive vice president for the American Society of Employers, told the Detroit Free Press. "Most companies charge far higher premiums than the automakers are, even with this move by GM."

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