Official says agreement relieves fears

Health-care deal eases concern that GM is headed for bankruptcy.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
General Motors retirees breathed a sigh of relief when they heard they probably will be paying more for health care, an official said.
The retirees don't want the extra expense, but they hope their sacrifice will lessen the chance that GM will file for bankruptcy, said Mike Sullivan, chairman of the retirees committee of United Auto Workers Local 1714 in Lordstown.
"They'd rather pay a little than lose it all," he said.
Few details have been announced on the agreement that GM and the UAW reached Monday, but the automaker said it would save the company $1 billion in cash a year.
The UAW plans to explain how the deal will affect retirees and workers at a meeting Thursday with local union presidents. A ratification vote will be held later.
Retirees concerned
Sullivan said retirees are on edge because Delphi Corp., the nation's largest automotive supplier, recently filed for bankruptcy, saying it needed to cut wage and benefit costs. Industry analysts then began speculating on whether GM would be the next to file.
Retirees are concerned that a bankruptcy filing would end health-care benefits and drastically reduce pensions if they were turned over to the federal Pension Benefit Guaranty Corp., Sullivan said.
Ray Hassay, who retired 10 years ago after 28 years at Lordstown, said he thinks the threat of bankruptcy is real. While he thinks much of GM's problems are the responsibility of its management, it's clear that the company can't afford the benefits it's paying workers and retirees, he said.
"There's no doubt this was going to happen," said Hassay, 75, of Boardman.
Jim Wellington, who retired six years ago after 30 years at the plant, said he also has expected to pay more for his benefits. It's hard to say how the cuts will affect him until the details are released, said Wellington, 56, of Austintown.
"You just have to roll with the punches, and right now, the punches are coming our way," he said.
Sullivan said he expects retirees to begin paying a co-pay on their insurance premiums for the first time.
Current system
Retirees and hourly workers don't pay any of the cost of their premiums, but they do have other costs. Those who choose to be in a PPO, or network of doctors, pay 50 percent of office visits but have the cost of major procedures fully covered. The cost for mail-order prescriptions is $5 for a 90-day supply.
Once retirees reach 65, however, they must go on Medicare, Sullivan said. GM pays for supplemental insurance, which covers expenses not picked up by the government.
Pensions wouldn't be affected by the proposals. Sullivan said workers with 30 years service who are under 62 receive a monthly benefit of $2,750.
Once retirees reach 62, the pensions are calculated differently. Pensions then are based on years of service, and when combined with Social Security payments, usually come out to about $3,000 a month, Sullivan said.
The proposed health care changes were negotiated in advance of the UAW's labor contract expiring in 2007. Analysts expect GM to seek further cost savings in those negotiations.
GM pays for health care for 750,000 U.S. hourly employees, retirees and their dependents. The company expects to spend $5.6 billion on health care this year.
Late Tuesday afternoon, UAW President Ron Gettelfinger and Vice President Richard Shoemaker issued a statement, urging approval of the agreement.
"We believe it is clearly in the best interests of UAW-GM active workers, retirees and their families," their statement said.
shilling@vindy.com