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A Turning Point intended for Health Care

The labor agreement reached by General Motors Corp. is the most striking case of a larger trend sweeping U.S. health-care: employers renouncing their decades-old role as chief health-care buyer.

The automakerís iconic status in American industry, and the example it sets as one of the biggest U.S. employers, is likely to speed this shift and drive discussion in the presidential campaign about renovating the health system. Surveys find health care is the top domestic matter for voters, as more Americans are on the hook for getting their own coverage.

Maneuvers such as GM's are "driving greater uncertainty among the middle class, who are working but feeling like their health care is not safe," said John Rother, policy director for the seniors group AARP, which favors government action to look after universal health coverage.

The division of firms offering health benefits cut down to 60% from 69% in 2000 because of small employers move away from providing coverage, as per a survey released by the Kaiser Family Foundation. Moreover, Benefits packages are getting stingier. Last year, 38% of workers had deductibles of $500 or more, up from 14% in 2000, the foundation says.

The shift is not only about dropping coverage or making workers pay more of the bill. Like GM, numerous employers want to vaccinate themselves from the risk of rising health costs. In a number of cases, particularly for retirees, this means shifting to plans in which the employer provides a lump sum for health coverage and employees have to figure out how to spend it. That way, the employer makes out ahead of time precisely how much it is spending.

In GM's case, an independent trust will assume the task of providing health coverage to the company's unionized retirees and spouses. GM will put money in the trust, in so far as $35 billion, according to people familiar with the deal, to get it going. Nevertheless, it is up to the trust to set and manage the benefits.

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