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GM Union Retirees Said to Cede Dental, Prescription Benefits

GM Union Retirees Said to Cede Dental, Prescription Benefits

 

By Jeff Green and Katie Merx

May 13 (Bloomberg) — General Motors Corp. union retirees will give up coverage of dentist visits and some prescription drugs such as Pfizer Inc.’s Viagra under a proposed United Auto Workers contract, people familiar with the talks said.

Those changes would match reductions that start as soon as July 1 for Chrysler LLC retirees, said the people, who asked not to be identified because the details aren’t public. Cuts in unemployment benefits and work-rule changes at GM also would mimic the Chrysler concessions, the people said.

GM, surviving on $15.4 billion in U.S. loans, needs to win ratification of a new contract before June 1 as one of the conditions to avoid a government-ordered bankruptcy. UAW local leaders were briefed on the plans today by Vice President Cal Rapson in Cleveland.

The proposed accord also eliminates retirees’ coverage of vision care and ulcer medications such as AstraZeneca Plc’s Nexium and includes higher co-pays for drugs and doctor visits, the people said. GM has about 522,000 union retirees and dependents and 62,000 active UAW members. Only current workers vote on contracts.

Sherrie Childers-Arb, a GM spokeswoman, said the Detroit- based company hasn’t completed its UAW agreement and isn’t discussing details. Roger Kerson, a union spokesman, didn’t have an immediate comment.

Debt, Health Costs

Shrinking spending on retirees is among GM’s efforts to pare labor costs, debt and obligations to a union-run health- care fund known as a Voluntary Employee Beneficiary Association. GM and the union agreed to changes in work rules, bonuses and jobless benefits after UAW officials walked out of talks on the VEBA on Feb. 13.

GM has proposed that the UAW swap $20 billion in the automaker’s obligations to the VEBA for $10 billion in cash paid out over an unspecified period, as well as equity equal to 39 percent of a restructured company.

Like earlier agreements with Chrysler and Ford Motor Co., GM’s tentative UAW contract would reduce so-called supplemental unemployment benefit pay, which gives laid-off workers most of their take-home wages, the people said. The benefit would dwindle the longer a worker is off the job, based on seniority. The UAW first won the benefit in 1955.

Workers would agree to reduced classifications of so-called skilled trades such as electricians and pipefitters, give up bonus and cost-of-living increases, and cut some holiday and break time.

The coverage for erectile-dysfunction drugs, which also has included Eli Lilly & Co.’s Cialis and Bayer AG’s Levitra, would be restricted to retirees with previously diagnosed cases of pulmonary arterial hypertension, the UAW told members.

Prescriptions for ulcer drugs such as Takeda Pharmaceutical Co.’s Prevacid and other such antacids would be limited to prior cases of Barrett’s esophagitis and Zoellinger-Ellison syndrome, according to the union documents.

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