Federal Judge Approves Cuts in GM’s Retiree Health Benefits

A federal judge on Friday approved General Motor's plan to require hourly retirees to pay more of their health care costs, the Lansing State Journal reports (Wieland, Lansing State Journal, 4/1). In an effort to reduce the company's costs by $1 billion per year, GM last year reached a deal with the United Auto Workers to cut health care spending. GM and UAW sought court approval to prevent legal challenges, as the union cannot bargain on behalf of hourly retirees. Under the agreement, retired hourly workers will start paying monthly deductibles and copayments for medical services, up to $370 per year for individuals and $752 for families (Kaiser Daily Health Policy Report, 3/7). In addition, the agreement requires active hourly workers to contribute $1 per hour in future pay increases to a fund to help pay for retirees' health coverage. GM will contribute $3 billion to the fund through 2011, the Journal reports (Lansing State Journal, 4/1). U.S. District Judge Robert Cleland had to wait at least 90 days after GM notified its retirees and state attorneys general of his preliminary approval in December 2005 before issuing a final decision (Bloomberg/New York Times, 4/1). Cleland wrote, "The delay and risks of litigation have an impact not only on GM, UAW and the Class, but also on the families, businesses and communities that depend on GM's continued competitiveness and viability. Those interests are advanced by the Settlement Agreement" (Lansing State Journal, 4/1). According to Sharon Baldwin, a spokesperson for GM, about 20 GM retirees and dependents objected to the agreement at a March 6 hearing (Bloomberg/New York Times, 4/1). Cleland pointed out that fewer than 1,250 of the 476,000 affected by the settlement objected to it. An attorney who represents plaintiffs opposed to the agreement said he has filed an appeal to Cleland's decision (Lansing State Journal, 4/1).

Broadcast Coverage
CBS' "60 Minutes" on Sunday examined future challenges for GM, including rising health care costs. The segment includes comments from Gary Chaison, professor of industrial relations at Clark University; David Cole, chair of the Center for Automotive Research; Ron Gettelfinger, president of UAW; Bob Lutz, vice chair of GM; Rick Wagoner, chair of GM; and current and retired GM workers (Kroft, "60 Minutes," CBS, 4/2). A transcript of the segment is available online.

A video excerpt of the segment is available online in RealPlayer.