The Health Benefits At The Center Of The United Auto Workers Strike

A key issue in the contract dispute between General Motors and the United Auto Workers is health benefits. Workers have had famously great health plans, paying just 3% of costs.

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The United Auto Workers strike of about 50,000 General Motors workers is about to enter its third week. A key issue in the contract dispute is health benefits. The company argues that it cannot shoulder rising health costs. Union members want to hang onto their famously great health plans. Workers mostly pay no premiums, $25 for a doctor's visit and just a few dollars for prescriptions. NPR's Selena Simmons-Duffin wondered how'd they get those plans.

SELENA SIMMONS-DUFFIN, BYLINE: To answer that question, let's go back to 1950. The country had just made it through the Depression, two world wars...

ERIK LOOMIS: By 1950, the economy is pretty much booming.

SIMMONS-DUFFIN: Erik Loomis is a history professor at the University of Rhode Island.

LOOMIS: It creates a massive consumer market for a lot of products in the United States, very much including automobiles.

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UNIDENTIFIED PERSON #1: More and more people are driving this car and buying this car.

SIMMONS-DUFFIN: Automakers were scrambling to meet the demand, but they had to bargain with the unionized workforce. The UAW was well-organized, had connections in high places. And what it wanted to get with this leverage was a role in automakers decisions - how many workers to hire, what kind of cars to make, whether to keep factories open.

LOOMIS: And the companies totally resisted this.

SIMMONS-DUFFIN: So the UAW called lots of strikes, which were costly. Finally in 1950, a historic agreement.

LOOMIS: The Treaty of Detroit. And that is a compromise between the UAW and the Big Three automakers that basically says that the UAW will give up its demands to open company books and have control over production decisions. In exchange for that, the workers themselves will get massive wage increases and significant benefit packages.

SIMMONS-DUFFIN: One of those benefits, health insurance, which was kind of a new-fangled idea. Medical care was just starting to be something that might cure you and cost you. Insurers were cropping up saying, hey, why not pay a little at a time instead of all at once.

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UNIDENTIFIED PERSON #2: What I don't worry about is our health care. We've joined Cigna Health Plan.

SIMMONS-DUFFIN: These benefits were actually a good deal for employers. There were tax advantages. More and more companies began to offer health plans to their employees. And union autoworkers, with their benefits, got back to building cars.

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UNIDENTIFIED PERSON #3: Modern assembly is timing and teamwork as well as organization.

SIMMONS-DUFFIN: Loomis says back in the 1960s, the idea of a company covering the full cost of health benefits wasn't that unusual.

LOOMIS: You don't really see workers have to begin to cover large chunks of their health care until the 1980s.

SIMMONS-DUFFIN: The incredible thing is that the UAW hung on to their low-cost benefits as the rest of us began to pay more and more. Today, workers on employee plans pay about 30% of their health care costs. UAW workers pay about 3%. Not that it's been easy for the unions, says Kristin Dziczek. She's vice president of the Center for Automotive Research.

Is it a struggle in every contract negotiation or is it...

KRISTIN DZICZEK: Yes, absolutely. Every time this is a big struggle.

SIMMONS-DUFFIN: Especially as health care costs have gone up for everyone. Dziczek says today GM and other automakers argue the cost of these health benefits is unsustainable. GM told NPR it cost $900 million in 2018.

DZICZEK: The impression is that the employer is paying. But in reality, the employees, the union is paying here as well because the increasing costs of medical care and benefits is eating into their ability to get wage or other benefit gains. It eats up a bigger and bigger share of the amount of money that's on the table.

SIMMONS-DUFFIN: Even if this time the union manages to preserve their enviable health benefits, next time the contract is up, they'll have to fight to keep them once again. Selena Simmons-Duffin, NPR News.

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