Big Three Automakers Reduce Health Care Spending by $2.1B From 2005

The Big Three automakers -- General Motors, Ford Motor and Chrysler Group -- spent $8.9 billion on health care in 2007, compared with a record $11 billion in 2005, the Detroit News reports. According to the News, the "dramatic reductions end an era when automakers saw yearly double-digit increases in health care costs in large part because they offered generous benefits at little or no cost to workers."

A large portion of the reduction in health care spending resulted because automakers provided health insurance for 190,000 fewer individuals in 2007 than in 2005. In addition, automakers shifted more health care costs to employees and retirees.

Both GM and Ford in 2005 received concessions from the United Auto Workers that allowed them to charge hourly retirees as much as $752 annually for health care and make other changes to reduce health care costs. Chrysler received similar concessions from UAW in 2007. In 2007, all three automakers negotiated agreements with UAW to establish voluntary employees' beneficiary associations, or VEBAs. The VEBAs will begin to assume retiree health care liabilities from the automakers in 2010 (Shepardson, Detroit News, 3/6).