UE-GE 2011 Contract Information: Negotiations Summary - Thursday, May 26 (#3)

Summary #3
UE Committee Blasts GE's
“Unhealthy Choice”
Medical Presentation

New York – Thursday, May 26

Thursday’s half-day session was spent on two GE presentations, one on “External Trends” by GE Union Relations Representative Bill Bussa and the other a presentation on “Health Care at GE,” which included its description of their “Health Choice” insurance plan.

Bussa’s presentation surveyed bargaining settlements with certain other companies, some of which compete with GE in certain product lines. GE’s chief negotiator, John Gritti, did concede under questioning that one of the “competitor” companies listed, Harley-Davidson, was not a GE competitor. Bussa stated that the trends indicate that GE wages and benefits are “significantly above market.” He presented slides in which GE claimed that it's wages were $7 to $14 greater than the national manufacturing average, and that there was a trend to more wage freezes and lump sums in wage settlements.

Bussa further stated that healthcare cost shares for employees of other companies surveyed averaged 30-40%, and that the majority of these employers are now offering high deductible health care plans while providing no pre-65 or post-65 retiree health coverage. On pensions, the GE spokesman argued that there was a recent trend to “transition” to defined contribution plans for new hires.

The brief fifteen minute presentation made it clear that GE is laying the groundwork for attacks on wages, new hire pensions, and medical insurance for both active employees and retirees.

However, since GE has made no proposals as of yet, and has scheduled further presentations on these subjects, the presentation elicited no response from the UE committee. Moreover the “external trends” presentation made no reference to GE’s superior financial strength and profitability compared to all of the “competitor” companies surveyed, as documented in UE’s review of GE finances given during Wednesday’s bargaining session.

The main business of Thursday’s half day session was a presentation by GE’s Health Care Program leader Virginia Proestakes, who presented the company’s views on medical insurance, and specifically detailed GE’s Health Choice medical plan, which GE imposed on its exempt salaried workforce beginning in 2010. The Company clearly wants to impose this plan on the hourly workforce.

What followed was three and one half hours of intense discussion and debate, which illustrated the dramatically different perspectives and approaches between the Company and Union with respect to the healthcare issue.

Ms. Proestakes’ contention that GE’s medical costs have skyrocketed was challenged by Conference Board Secretary Steve Tormey who noted that GE’s cost increases were very modest, and at times flat, during the period of the current contract, even before plummeting by double digits in 2010 with the advent of the Health Choice Plan in the exempt salaried ranks.

When Ms. Proestakes characterized the Health Choice Plan as helping employees become more aware of the costs of medical care, be better consumers, and lead healthier lifestyles, she was again challenged by Tormey who called it “old wine in new bottles.”

Reading from a 1991 GE document, Tormey demonstrated that all the current GE catchphrases about better educated consumers, coverage for “catastrophic” medical coverage, and healthier lifestyles, etc. are, in fact, decades old. The new element, he stated, was that the proposed cost shifting Health Choice represents is unprecedented in its scope. He stated the Company can offer “all the coaching and internet tools” it wants, “but you don’t need to charge me a $2,000 deductible.” The Health Choice Plan in fact contains deductibles of $2,000 to up to $4,000 for a family of three or more, in the salary range of most UE-GE members, depending upon which of three options or “choices” an employee makes.

UE Exposes Massive Cost Shifting To Workers

Both Tormey and UE President John Hovis charged that Health Choice was really all about a massive money transfer from employees to the Company. Tormey noted that at the conclusion of the 2007 negotiations, GE employees paid about 19% of overall medical costs. That cost has increased to about 21.5% according to GE’s John Gritti. When the Union asked what the cost split was for salaried workers under Health Choice, Gritti stated it was about 35%. John Hovis commented, “last time you wanted a 70/30 split, and now you want to jump even further to 35%.”

GE’s Proposal Offers “No Choice”

Ms. Proestakes further stated that trends in industry were in the direction of high deductible plans such as Health Choice. However under questioning from the UE committee, she did concede that most other employers offering such plans also offered more traditional plans as alternatives, making GE something of an “outlier” in its attempt to have Health Choice as the one and only plan to be offered to GE workers.

On the subject of choice, Wayne Burnett, Local 506 Business Agent, asked GE spokesmen John Gritti whether if given a choice he would prefer to stay on the HCP plan or move to the new Health Choice plan. Gritti candidly answered that he would choose HCP. The Erie union leader and others on the committee also related how salaried employees loaded up on medical procedures in the latter part of 2009, under Health Care Preferred, and before Health Choice was to go into effect beginning in 2010. Local 618 Business Agent Mary Stewart-Flowers remarked that “we’re hearing horror stories in Erie from salaried employees, and they are complaining about the high deductibles.”

Socking it to Smokers

UE’s negotiating committee vigorously challenged GE’s proposal to charge smokers an additional $625 per year for health insurance under Health Choice, which they describe as “lower rates for non-smokers.” Tormey reminded the company that smokers are the victims of a “very calculated campaign” by the tobacco companies to addict people. He asked GE if they were taking any other measures to attack tobacco use, like isolating tobacco companies and kicking them out of the manufacturers’ and trade associations in which the company participates, or refusing to buy tobacco stocks. Ron Flowers, Retirees Association of General Electric (R.A.G.E.) asked whether GE’s media outlets had refused advertising dollars from companies that produce cigarettes.

John Gritti responded that tobacco is legal, and that GE was attacking high-risk behavior. Tormey charged that the company keeps on segregating people and asked whether GE will, in the future, charge higher health care premiums for workers based on their body mass index or other “unhealthy” characteristics, to which GE had no reply.

GE’s Proposal Puts Retirees at Risk

Ms. Proestakes presentation included a number of slides which purported to demonstrate that GE was generous in its medical coverage for pre-65 retirees compared to other companies, noting that many had eliminated it altogether. President Hovis expressed his opposition to any attempt to eliminate or render unaffordable medical insurance for pre-65 retirees. “I can’t imagine GE coming to the table proposing to change the retirement age to 65, but by proposing to eliminate pre-65 retiree coverage you are effectively making that same proposal.” The UE President reminded GE that our members do not sit at desks, but perform physical labor which takes its toll.

Ron Flowers criticized the company’s proposal, noting that it would have a devastating effect on current pre-65 retirees: “In Erie, you encouraged people to retire early and their nest eggs were wiped out by the crash in GE’s stock prices. Now they’re out on fixed incomes, their savings have been wiped out, and you’re going to hit them with huge deductibles and co-pays.”

Steve Tormey stated that undermining medical care for retirees was “pulling the rug out from under them” after they left GE with certain assumptions about the conditions under which they could retirde. This also includes disability retirees, who must wait two years to qualify for Medicare coverage, and in some cases are ineligible for Medicare. Tormey reminded the GE committee that GE Chairman Immelt had stated he did “not want to hurt people” as a result of medical insurance changes. “People will be profoundly hurt by some of what you are talking about here,” stated the UE-GE Conference Board Secretary.

There was also contentious debate over how to interpret some of the experience of salaried employees under Health Choice. There have, for example, been substantial drops in the salaried ranks for certain medical services from emergency room visits to MRI scans. GE contended that it reflected the fact that awareness of cost was reducing the use of unnecessary medical services. The UE committee drew the opposite conclusion, namely that high deductible plans such as Health Choice cause employees to forgo needed medical care, noting that people don’t go to the emergency room or get MRI scans frivolously or in order to have a good time. Tormey also noted that with most drugs subject to the deductible, GE pharmaceutical costs in 2010, the first year of Health Choice, had declined by a whopping 26%.

John Hovis summed up the discussion by cautioning the company against over-reaching and reminded its representatives that “whatever we reach here has to be ratified.” “We’re concerned that the company is layering on too much here” and there will be real opposition among our members to your medical plan. GE spokesman Gritti responded that the company is here to negotiate.

The two sides agreed to resume negotiations after the Memorial Day weekend on Tuesday, May 31 at 2:00 p.m.

UE was represented in the Thursday session by President John Hovis, Conference Board Secretary Steve Tormey, Secretary-Treasurer Bruce Klipple, Wayne Burnett and Roger Zaczyk of Local 506, Mary Stewart-Flowers of Local 618, Scott Gates and Angel Sardina of Local 332, Ron Flowers of the Retirees Association of General Electric, International Rep. Gene Elk, Research Director Karl Zimmerman. UE News Managing Editor Al Hart was present to report on negotiations and Political Action Director Chris Townsend represented UE at the IUE-CWA bargaining table. Also participating on the UE committee were Wayne Reynolds and Rudy Gomez of the UAW, Tom O’Heron of the IAM, Mike Barrell of the Steelworkers, and Randy Middleton of the IBEW.