Ford, UAW tackle blue-collar healthcare costs with new program

Ford Motor is launching a two-year pilot program with the United Auto Workers and a UAW-affiliated retiree trust fund aimed at lowering the cost of providing medical care for the company’s active and retired hourly workers.

The program, open to workers and retirees in southeastern Michigan, is designed to help “bend the cost curve” of healthcare by treating chronic diseases early on, rather than risk having workers and retirees wait until those issues grow more severe and expensive, Ford, the UAW and the UAW Retiree Medical Benefits Trust said on Monday.

It is the latest attempt by Ford and the UAW trust to cope with healthcare costs, which are rising faster than the value of the assets used to pay for them. The UAW trust was short US0 billion during its first year in 2010. By 2011, the most recent period for which data is available, that shortfall grew to US3 billion.

If successful, the program could be expanded to other areas such as Kansas City, Missouri, and Louisville, Kentucky, where Ford has a concentration of retirees and workers.

“We’ve never done anything like this before,” said Rick Popp, Ford’s director of employee benefits. “If the process and this kind of arrangement works for this program, that could be leveraged for a broader solution.”

The pilot is modelled on a program at Boeing, where Alan Mulally was a top executive before he joined Ford as chief executive in 2006. Ford officials declined to estimate the potential savings of their pilot program, but said medical costs for the participating Boeing workers fell by about one-fifth.

Ford spends US$7 an hour to pay for healthcare for its 44,500 UAW-represented workers in the United States. This amounts to between US$600 million and US$700 million a year, the bulk of the US$1 billion that Ford spends annually on healthcare for its entire workforce.