The G Note Granholm Goofs; GM Has Proof

October 24, 2005
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The Delphi debacle notwithstanding, Gov. Jennifer Granholm's hurried huddle with Michigan's congressional delegation this month centered on a federal bailout, of sorts, for manufacturers facing "legacy costs," health-care benefits for retirees. Not just for Michigan, but for all U.S. manufacturers. The only good in that is recognition on the part of government leadership that the big issue is health-care costs now skyrocketing to 17 percent of the GDP, not China. And such recognition is more than 10 years late as consecutive years of double-digit health-care benefit increases have pulverized businesses of every size.

There is a redundant theme on this and other pages of the Grand Rapids Business Journal, a message delivered to area teachers' unions, to the Michigan Education Association, and to local governments severely strained for lack of revenue in a state with the highest unemployment rate in the country: The days of "free" health-care benefits ended a decade ago.

Most mid-size and especially small businesses (the great majority of all employment) have been forced to share greater and greater costs for those benefits with employees. The number of uninsured workers grows each year. And that will create another type of "legacy" cost, especially as the Baby Boomer millions retire.

It is almost unnecessary to point out that Granholm's plea begs rationale: The federal deficit is at historic proportion; how many businesses, and which ones, would qualify for the Band-Aid bailout proposed? Further, Granholm, and her predecessor John Engler, were told by Detroit's Big Three that legacy costs could not be paid. The entire state legislature has been so informed. The governor's plea only uses the current event to cover (find a scapegoat) for an issue she knows is looming with terrifying certainty.

Unions have only exacerbated the problem. Perhaps now, however, people "get it." GrandValleyStateUniversity employees started paying attention just last week when General Motors and the UAW reached agreements to lower health-care costs. An analogy: Most of the forest already has been clear-cut, but the big tree just fell. There is no sympathy for the teachers' unions when the parents of their students have already suffered benefit losses and greater costs.

In August of this year, the Automotive Industry Action Council clearly laid out the issues impacting the global supply chain, and hosted as one of its "heavy hitter" speakers Robert Moroni, who directs health-care plans for GM. Moroni not only reported that the "health-care costs" for every car made in America is $1,525 more than those manufactured in Canada, he also compared the quality of health care in the U.S.: "… though we're paying more, on the 16 health indicators that are used to commonly rank health-care systems across countries, we come in as the second from the lowest," whether those comparisons are made with Canada, Japan, Germany or the host of other countries included in the study.

Those shocking statistics prompted GM and other employers to form Leapfrog, dedicated to improving the system. New members are welcome. Perhaps government leaders should participate.    

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