UE-GE 2007 Contract Information: Negotiations Summary - Tuesday, May 29th (#4)

Summary #4
UE: GE Workers Deserve Improved
Health Care — Not Cost Shifting

NEW YORK – Tuesday, May 29

UE-GE bargaining resumed Tuesday at 1:00 after the Memorial Day weekend, with a UE presentation on GE health care and costs, and the union making its proposals for improvements to medical, dental and disability insurance plans. The UE committee was reinforced by the addition of Marcia Barnhart and John Payne from Local 731, Conneaut, Ohio.

UE President John Hovis introduced Local 506 Business Agent Pat Rafferty to present UE’s analysis of GE and health care, because of Pat’s extensive experience assisting and representing members of his large local with insurance issues. Pat led and narrated a PowerPoint presentation prepared by UE’s research department, which showed, among other things, that the company’s health care costs over the past four years have been far lower than the company predicted in 2002, and far lower than the company has publicly claimed even in more recent pronouncements.

One slide showed two 2006 quotes from GE CEO Jeff Immelt in which he exaggerated GE’s then health care expense and incorrectly claimed that GE was experiencing 10 percent annual growth in health costs. In fact, said Rafferty, GE’s health cost increases have been nowhere near 10 percent in any year during the term of the current contract. GE’s health care costs rose in 2006 by the smallest rate seen since 1996, and as a percent of sales, the company’s medical coverage costs have been "essentially unchanged" over the past decade. Similarly, as a percent of GE’s net income (profit), GE’s 2006 health care costs were at the lowest point in a decade.

GE has gotten off much easier than other large employers, with claims per family on GE’s HCP plan 7.7 percent below what the average large employer paid in PPO premiums. "Nobody is crying their eyes out over GE," said CEO Immelt of the company’s health coverage costs, in a more candid quotation displayed on the screen as part of Rafferty’s presentation. The slide show also highlighted the windfall GE derives from the federal subsidy to Medicare Part D drug costs. "This reimbursement caused GE’s PPDP costs to drop by 22.1 percent in 2006, effectively setting the clock back on PPDP costs to near-2002 levels," said Rafferty. Projecting the likely impact of this government handout over the next several years, the union concluded, "GE will have PPDP costs cut by around 6.8 percent by 2011. Costs will not surpass 2005 highs until 2009."


"In 2006, the increase in total cost for GE to insure its employees and retirees was only one percent," said Rafferty. "This is significantly lower than inflation for the year, which stood at 2.43 percent. By beating the CPI-W (consumer price index) for the year, GE’s effective costs dropped."

But while the company’s cost increases have been reasonable, increases in employee costs have been anything but. In HCP – the plan that includes the majority of GE workers – individual payroll contributions have skyrocketed over the term of the contract, said Rafferty. CMB has also rapidly become more expensive for participants, with both payroll deductions and plan deductibles rising substantially for UE members due to "bracket creep." "Over this contract, individuals with CMB saw their premiums rise by 142 percent, two-person by 81 percent, and three-person or more by 153 percent."

Yet despite these huge cost increases to workers, the cost differential for GE between CMB and HCP has narrowed significantly. CMB claims costs GE only 4.36 percent more than HCP, or $300, for the average participant in 2006, while the difference in employee costs, for a family of three or more, was 50 percent, or $1,200 per year. Both Rafferty and Conference Board Secretary Steve Tormey warned that this and other growing disadvantages are driving employees out of CMB and threaten to destroy CMB as a viable alternative plan to HCP, although for many GE workers and families, CMB is needed.

The union also focused on the big increases in prescription drug costs to workers. The average GE union family in 2006 had to pay out $416 for prescription drugs, and the average post-65 retiree paid $506. Many pay far more. In conclusion, said Rafferty, GE workers and retirees are paying much more for their health, while the company "makes out pretty good." Employee HCP premium costs for a family of three or more rose 168 percent from 2002-2006; employee CMB premiums jumped 118 percent in those same years, while GE’s cost increased only 22 percent and its profits were up 60 percent.

The next section of the UE presentation asked if GE is part of the problem or part of the solution. Jeff Immelt in 2006 bragged of GE’s $17 billion health care business that earns the company $3 billion, while, he said, its cost for insuring its own employees was $2 billion. GE is "very well positioned for the future," concluded the CEO. GE’s Medical Systems profit doubled over the term of the contract, from $1.5 billion in 2002 to $3.1 billion in 2006.


GE makes money from the health care crisis in ways other than selling MRI and CAT scan equipment. GE Performance Solutions is paid by hospitals to show them ways to maximize profit; the service also encourages its customers to buy GE imaging machines. GE finances hospitals and other medical ventures through GE Health Care Financial Services, an arm of GE Capital. The Patient Channel – an NBC venture – is installed in hospitals at no cost and advertises to both patients and providers, on behalf of, among others, pharmaceutical companies, pharmacy chains and insurance companies.

Steve Tormey reiterated his remark from the previous week that, when it comes to health care reform, "GE is a walking conflict of interest." GE has a legitimate interest as an employer in holding down health costs, but it profits handsomely from the out-of-control U.S. health care system.

Cost shifting to employees does nothing to solve the U.S. health care crisis. Adopting single-payer national health insurance in place of private health insurance companies, as most other countries have done, would make a huge difference. The U.S. pays far more for health care than other industrial countries – roughly doubled – but leaves 47 million Americans uninsured, and is 45th in the world in life expectancy. The union presentation showed very specifically how GE would benefit from a single-payer solution. GE’s cost-per-employee for health care in the U.S. in 2006 was $12,270; in Canada that cost – including the taxes GE pays for Canada’s national health insurance, was only $5,687. The union presented calculations that show that, were single-payer national health insurance enacted in the U.S., it would save GE nearly $1 billion a year.

Pat Rafferty pointed out that in another period of crisis – the Great Depression of the 1930’s – GE played a somewhat progressive role. GE’s CEO at the time, Gerard Swope, "supported the New Deal," – the social and economic reforms proposed by Pres. Franklin Roosevelt – "while most other companies were opposed." Rafferty called on GE to play a progressive role in the health care crisis of today by putting its weight behind single-payer national health care.

GE spokesperson John Gritti responded, "GE believes the system we have today is a pretty decent one," to which John Hovis replied, "If this is the system the company wants, the company ought to be willing to pay for it. We’ll never ask you to ‘partner’ with us on anything, except maybe in supporting HR 676," the Conyers National Health Insurance Bill.


The union then presented its proposals for improvements in the areas of medical insurance, disability, dental, and retirees’ coverage. The union proposed several changes to prescription drug coverage, including coverage of combination drugs. The union called for improvements in several areas of preventive coverage, and for updating allowances under the CMB plan. Frank Fusco discussed a problem of the company withholding coverage recommended by a cancer patient’s doctor, because it considered it "experimental."

Among other proposals, UE called for fully covering ongoing therapy under HCP after one co-pay; substantial increases in vision benefits, not updated since 2000; and substantial updates to the schedule of dental benefits. The union proposed to eliminate the dental premium option and substantially boosting the orthodontia maximum.

On disability, the UE committee proposed a substantial increase in STD benefits; increasing the LTDI minimum monthly benefit, and for the company to begin contributing to employees’ LTDI coverage. The long-term plan is currently 100 percent employee paid, and is in danger of becoming non-viable because of declining participation caused by its high cost to workers. Both Tormey and Rafferty emphasized the need for this change, and John Payne, Local 731, spoke on personally experiencing the inadequacy of the current short-term disability benefits.

The union made a number of proposals to improve retiree coverage, including the addition of dental and vision coverage and a substantial increase in benefits of the Medical Care Plan for Pensioners (MCPP), which supplements Medicare Part A.

UE also called for reinstatement of GE benefits counselors at major locations and proposed improvements in how GE updates the information on employees’ "personal share statements." Eric Snedaker, Local 1010, said only because of the plant closing did he and other members see their information, and Bruce Reese, Local 332, said one new employee who was single mistakenly enrolled in the family plan due to inadequate company communications.

UE was represented in Tuesday’s bargaining by President John Hovis; Secretary-Treasurer Bruce Klipple; Conference Board Secretary Steve Tormey; Scott Gates and Bruce Reese, Local 332; Marcia Barnhart and John Payne, Local 731; Lynda Leech, Local 618; Eric Snedaker, Local 1010; Pat Rafferty and Frank Fusco, Local 506; and Ed Baran, Local 751. Also participating on the UE bargaining committee were Tom O’Heron of the IAM, Bob Roberts of IBEW, Rudy Gomez of UAW, and Bill Courter of the Steelworkers. Chris Townsend, UE political action director, represented UE at the IUE-CWA bargaining table.

Bargaining resumes Wednesday morning, with the company expected to make a presentation on its proposals to change benefit coverage of new hires.