Thursday, July 20, 2006

Wagoner pushes Rx plan for U.S.

Thursday, July 13, 2006
Wagoner pushes Rx plan for U.S.
Today, CEO will urge Congress to make prescriptions more affordable.
David Shepardson / Detroit News Washington Bureau

WASHINGTON -- General Motors Corp. Chairman and CEO Rick Wagoner will call for universal access to affordable prescription drugs when he testifies before a U.S. Senate committee today. He'll also tout the automaker's efforts to reduce its soaring health care bills.

GM's prescription drug costs have more than tripled in the past 12 years to $1.9 billion last year. Wagoner will call for a "vigorous and robust competitive prescription drug market where everyone has access to affordable pharmaceuticals" including generic drugs, according to an advance copy of his remarks he'll deliver before the Senate's Special Committee on Aging.

Wagoner also will push for policies that give patients and their doctors better information about the effectiveness of specific drugs and treatments to help reduce inappropriate, ineffective and costly care.

GM is the largest provider of health care in the United States, spending $5.3 billion to cover 1.1 million people in 2005. The company expects its health care costs to rise to $7.4 billion by 2009.

Despite an agreement with the UAW to reduce its annual health care costs by $1 billion, Wagoner said the automaker "continues to incur unsustainable health care costs."

His testimony comes a day before he is to meet with Renault-Nissan CEO Carlos Ghosn about an alliance suggested by GM's largest individual shareholder, Kirk Kerkorian.

Wagoner will endorse several measures to improve efficiency in the health care system. GM, like other major companies, also wants the Bush administration to release Medicare data on the claims made by individual doctors, which would allow companies to determine which doctors do the best job and what they are charging.

"Quite simply, we need greater value for our health care dollar," Wagoner says in the statement. "We need a high-quality health system that is productive, efficient and error-free."

Much more can be done by business and Congress "to make health care more affordable, accessible and accountable on a comprehensive, national basis," Wagoner says.

GM will also disclose it has had some success in offering its salaried workers an alternative health plan unveiled earlier this year.

About 10 percent of its 45,000 active salaried employees have agreed to sign up for one of two high-deductible plans that include a health savings account -- and lower monthly premiums -- that proponents say give employees more control over their health care spending. Only about 3 percent of salaried retirees have opted for the program.

An analysis of Michigan health plans published in February by Nashville, Tenn.-based HealthLeaders-InterStudy, a leading researcher on managed care, found that health savings accounts aren't yet having a "break-out" year.

"In Michigan, the 2007 round of negotiations with the United Auto Workers will tell us how close consumer-driven health plans are to gaining broad acceptance," the report said. "If labor accepts them into one or all of its contracts with the Big Three automakers, a tipping point will have been reached," the report said.

Wagoner said one of GM's main pushes to cut health care costs is encouraging employees to live healthier lifestyles. Despite that effort, he noted that 20 percent of the people GM covers exercise less than 20 minutes a week, or not at all. The company has built in-house fitness centers and offers discounted gym memberships.

GM has barred smoking in many facilities to reduce heart disease and lung cancer and is offering healthier options at employee cafeterias to help reduce diabetes.

Wagoner also will call on Congress to help reform catastrophic care, noting that just 1 percent of the population accounts for 30 percent of the health care budget.

"We need a better public/private effort to address these high-cost cases to improve their care and reduce overall costs and to create a more competitive health care market," he said.

Wagoner will be introduced at the hearing by U.S. Sen. Debbie Stabenow, who has proposed reforming catastrophic health care and touts it as a way to sharply reduce the Big Three's health care burden.

Paul Ginsburg, an economist and the president of the Center for Studying Health System Change, said GM has done much to reduce costs, but still offers a much richer benefits package to employees and retirees than most companies.

"GM, like a lot of companies, believes the biggest opportunities for cost savings are lifestyle changes," Ginsburg said. "The problem is there is not a magic bullet that people can press to live healthier lives."

In March, a federal court judge in Detroit approved a deal struck with the UAW to reduce GM's health care costs by $1 billion annually. Retired hourly workers have begun paying monthly contributions, deductibles and co-payments for medical services up to a maximum of $370 a year for individuals and $752 for a family.

Those costs are expected to rise 3 percent a year. GM also hopes other items -- like charging $50 for retirees who go to the emergency room and aren't admitted -- will change behavior and reduce health care costs.

Under the deal, GM reduced its long-term health care liability from $74 billion to $59 billion. A similar deal with Ford Motor Co. awaits court approval.

GM also is reducing health care benefits for salaried retirees and restructuring its U.S. pension plan for salaried employees. The automaker plans to cap contributions for salaried retiree health care at 2006 levels beginning Jan. 1, 2007.

You can reach David Shepardson at (202) 662 - 8735 or

© Copyright 2006 The Detroit News. All rights reserved.


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