Thursday, September 27, 2007

Does the GM Deal Reshape Healthcare?

Getting the UAW to take control of it's healthcare may be the turning point for the US. Good for GM (GM)

GM is going to fund a $35 billion health care fund that will finally take all present and future health cost away from the auto maker. Why do you care? Right now $3,000 to $5,000 of the cost of an auto you buy from GM is the cost of it's healthcare program. Can you imagine what type of value or additional options or improved quality we may get now that the cost is gone? Is it any wonder they cannot provide the types of autos to Japanese do whose similar costs are just a fraction of that?

More importantly, GM may have started a sea-change without knowing it. What company sponsored health plans have done is taken the free market out of the equation. When that is done, waste and inefficiency reign. If GM is not footing the bill, anyone want to bet the UAW will take a much closer look at where the money is going? Do we really doubt that "concern" will inevitably trickle down to the rank and file?

Why are we not able to shop for health insurance like we are for auto insurance? Why do us healthy people who have almost no claims pay as much as those who are 300 pounds overweight, smoke, eat lousy drink too much and have astronomical medical bills? Ought it not be more correlated to the frequency of our claims? Why does a company pay as much for insurance for a couple as they do for a family of 5, just because they are both a family?

If we want to get healthcare costs down, let the market in. It works everywhere else and this GM deal may have opened that door, at least we can hope.

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