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Big Three Sign on to Health Initiative

By JEFF KAROUB

Associated Press

January 29, 2007

DETROIT — For the domestic automakers, supporting a set of national health care standards that aims to lower costs and improve the quality of health care won't solve all of their problems. But they say it represents several small steps in the right direction.

Rick Wagoner, General Motors Corp. chairman and chief executive; Tom LaSorda, president and CEO of DaimlerChrysler AG's Chrysler Group; and Bill Ford, executive chairman of Ford Motor Co., joined U.S. Health and Human Services Secretary Michael Leavitt at a Detroit Economic Club meeting Monday to support his department's Value-Driven Health Care initiative.

By signing on to the plan, automakers pledged to provide quality and price information about doctors, hospitals and other medical providers for all employees in their health care insurance programs. The plan also calls on them to encourage the use of electronic medical records and develop incentives for those who buy or provide high-quality, competitively priced care.

"Is it going to mean that health care costs are no longer the single biggest fixed cost in the car-making business? Not a chance," said DaimlerChrysler spokesman David Elshoff. "But can it reduce the trend, or ... can we do something about the rate of inflation? Possibly."

Retiree health care and other so-called legacy costs have been cited by automakers and many other manufacturers as an economic burden that makes the companies unable to compete with foreign companies.

Wagoner, LaSorda and Ford CEO Alan Mulally met with President Bush in November after several delays to talk about health care and other costs. They have sought changes to the nation's health care system.

Michigan's congressional delegation released a letter to Bush in November that said the domestic automobile industry spends about $10 billion a year providing health care benefits to more than 2 million U.S. residents. Encouraging use of generic prescriptions drugs and a new way of dealing with catastrophic health care costs could reduce the financial burden for automakers, the delegation said.

Leavitt said the support of the Big Three, as well as 30 other Michigan companies, covers about 2 million people.

Bush signed an executive order in August that committed federal health programs to the standards. Leavitt moved the program into the private sector in November.

The auto executives on Monday said the national effort builds on the success they have had in the Detroit area with an electronic prescribing initiative launched in 2004. The program, which also includes the United Auto Workers and the state of Michigan, has increased the number of prescriptions filled electronically.

Besides reducing paperwork and time, the program has also prevented misread prescriptions, the automakers said. Of the 1.7 million prescriptions logged in the program, 150,000 have been changed because the system detected dangerous drug interactions.

"We've seen firsthand what can be accomplished when the public and private sectors come together to support value-driven health care," Wagoner said. "That's the kind of improvement we need to see through America's health care."

None of the automakers could say how much money adopting the federal standards would save. But GM spokeswoman Michelle Bunker said joining the effort is important nonetheless.

"These (standards) fundamentally fix part of the broken system that we're dealing with," she said. "You have providers, the government and the public all speaking a common language."

Ford spokeswoman Marcey Evans said signing on helps the automaker strike a necessary balance.

"We have to work together to try to improve the quality while also helping to control costs," she said. "This gives us an opportunity to do just that."

Article link: http://www.businessweek.com/ap/financialnews/D8MV8DF00.htm