Testifying before the House Financial Services Committee today, General Motors CEO Rick Wagoner said that his company has spent over $103 billion over the last fifteen years on pensions and post-retirement health care benefits. “Obviously if we had the $103 billion and could use it for other things, it would enable us to be even farther ahead on technology or newer equipment in our plants or whatever,” Wagoner said.
Considering these enormous costs, Rep. Gwen Moore (D-WI) asked Wagoner whether he would support “a national health care program in order to stay viable.” Wagoner agrees that serious health care reform would “undoubtedly” help the Big Three stay competitive with foreign automakers:
GWEN MOORE (D-WI): Wouldn’t this have been a great time for GM to say, we need a national health care program in order to stay viable? You correctly identify the problem, that other markets — China, Latin America, Russia where GM does not have the burdens of those costs. Why did you stop short of saying that this kind of initiative would help our industry?
WAGONER: Well it undoubtedly would help level the playing field for the industry. … We’ve then tried to we have been very active in the health-care debate since here in Washington. … Our competitors do in most other countries have a significantly greater government role.
Indeed, the United States’ broken health care system puts enormous burdens on all employers — and has both helped create the Big Three’s current financial troubles as well as fueled the overall economic downturn. Health care costs add $1,525 to the price tag of every GM car; the company spent $4.6 billion on health care in 2007, more than it paid for steel. Warren Buffet has called GM “a health and benefits company with an auto company attached.”
Enormous — and rapidly increasing — health care costs cripple the Big Three’s ability to stay competitive with foreign automakers. For instance, Toyota, which benefits from Japan’s universal health system, “paid $1,400 less per vehicle on health care” and makes $2,400 more per car than American manufacturers. In both Japan and Germany, the government, employers, and individuals all share in the responsibility of paying for health care, leaving American companies at a competitive disadvantage.
In fact, just yesterday Toyota cut the ribbon on a new plant in Ontario, Canada. Committee Chairman Barney Frank (D-MA) pointed out that the only cost difference between operating in the U.S. and Canada “has got to be entirely on health care.” Though GM had supported President Clinton’s health care reform efforts, Frank scolded the entire industry for remaining silent. “Among the mistakes the auto companies made was in 1993, when there was an effort by President Clinton to do something about health care, you didn’t help him,” Frank said.