Ford: Health costs could drive investment overseas Firm's vice chairman says rising fees hurt competitiveness

Tuesday, July 20, 2004
Ford: Health costs could drive investment overseas Firm’s vice chairman says rising fees hurt competitiveness
By Eric Mayne / The Detroit News

If U.S. health care costs continue to soar, Detroit automakers may be forced to invest overseas rather than the United States to remain competitive, Ford Motor Co. Vice Chairman Allan Gilmour said in a speech Monday.

Ford spent $3.2 billion on health care in 2003 for 560,000 employees, retirees and their dependents. The costs added $1,000 to the price of every Ford car and truck built in the United States — up from $700 three years ago.

The rising health care tab means Ford has less money to invest in new products.

“Our foreign competitors don’t share these problems,” Gilmour said Monday in a speech before the National Governors Association in Seattle. “These health care challenges have created a competitive gap, that if unchecked, will drive investment decisions away from the United States.”

Automakers and other manufacturers increasingly arelooking overseas to take advantage of lower wages and cheaper benefits, raising fears that U.S. auto jobs could be outsourced. But the vast majority of vehicles sold in the United States are still assembled in North America. Toyota Motor Co.p., Honda Motor Co. and other foreign automakers with U.S. operations enjoy lower health care costs because they employ younger workers and support fewer retirees. Nationwide, health care expenditures have grown 7 percent annually for five years — more than double the inflation rate — to $1.67 trillion in 2003.

Gilmour told The Detroit News in an interview Monday that he addressed the group because state governments must be involved in the process to fix the system. But meaningful progress can’t be made until after November’s presidential election, and Ford isn’t taking sides. Until then, Ford plans to adopt better management and consumer education to affect change. “We have to help Americans become better health care consumers,” said Gilmour, who has spent the last six months studying health care costs and their impact on Ford, the auto industry and the country.

He questioned why insurance companies cover the cost of visits to a doctor’s office. But insurance companies won’t pay for phone advice from that same doctor.

It is possible to cover the cost of such service, without compromising a patient’s needs, said Jim Morell, immediate past chairman of the American Association of Healthcare Consultants.

“If you look at somebody who sees a doctor on a regular basis, there probably aren’t many surprises,” Morell said. “But right now, everything is geared to a face-to-face encounter. We don’t have a handle on the record-keeping for (phone service).”

Ford is encouraging increased Internet use to streamline and lower the cost of delivering health care services — such as the transfer of medical records.

“We’re auditing everything we can find to audit,” Gilmour said.
 
Gilmour urged the governors to take decisive action.

“We, as employers, need your leadership — perhaps including the establishment of a broad-based coalition — to find a solution for the long term. Not a quick fix for the present.”

You can reach Eric Mayne at 313-222-2443 or emayne@detnews.com.