Voluntary pilot program. Ford hopes to make it mandatory for all U.S. hourly workers in 2015.
Ford, UAW seek healthier workers with pilot program incentives
Fri, May 31 detroitnews.com
Detroit autoworkers have long been stereotyped as hard-drinking, overweight smokers. But Ford Motor Co. and the United Auto
Workers hope to help dispel that image and lower the automaker’s health care costs through financial incentives to factory employees who make healthy lifestyle choices.
Details are still being hammered out, but the two sides hope to announce the voluntary pilot program next month, according to people close to the talks. Other American automakers are watching what happens in Dearborn closely and could follow Ford with wellness incentive programs of their own as the industry struggles to rein in rising health care costs.
“As part of the 2011 collective bargaining agreement, Ford and the UAW agreed to further discuss health initiatives,” Ford spokeswoman Kristina Adamski said in a statement to The Detroit News. “We have nothing further to announce at this time.”
But sources said the program is similar to one already in place for Ford’s U.S. salaried employees. As part of that program, some health insurance plans reward employees with lower premiums if they make lifestyle changes such as quitting smoking and losing weight.
While the pilot program being put together for U.S. hourly workers will be strictly voluntary, one source told The News that Ford hopes to make it mandatory for all U.S. hourly workers in 2015.
The salaried program already is. Employees and their spouses are required to get annual physicals to identify wellness goals. Salaried workers generally pay more for their health insurance than hourly workers do.
Group LLC has a similar program in place for its salaried employees, and says it is following the talks between Ford and the UAW closely.
“Chrysler Group is supportive of programs that support the health and wellness of our employees and their families,” said Chrysler spokesman Michael Palese. “We are aware of this effort and hope it will evolve into a viable program we can consider and evaluate for our employees.”
Wellness services offered
All three Detroit automakers offer wellness services to their factory workers. General Motors Co., which has about 50,500 hourly workers in the U.S., says it is satisfied with its existing voluntary program, which provides free on-site health screenings and health coaching.
“We feel this is an effective program and it’s been well received, and we’re not in any active discussion to modify it,” said GM spokesman Bill Grotz. “We’re always open to new ideas, and improvement and approaches.”
The UAW did not comment, but the talks on the pilot program are taking place under the auspices of the existing contract between Ford and the union. That deal left the door open to further negotiations aimed at lowering the company’s health care costs while improving the health of UAW members.
The move comes in advance of the full implementation of the Affordable Care Act, also known as Obamacare, which takes effect in 2014. That is bound to make health care a major topic in the next round of contract talks between the UAW and Detroit’s Big Three in 2015.
Health insurance is the single largest benefit to UAW hourly workers aside from hourly wages, and the cost of providing it is expected to increase dramatically in coming years — particularly after the so-called “Cadillac tax” goes into effect in 2018. That will impose a 40 percent tax on the value of health insurance plans above $10,200 for individuals and $27,500 for families. The insurance plans for most veteran hourly workers exceed those totals.
“The Affordable Care Act and the Cadillac tax are going to play a big role in 2015 at the bargaining table,” said Kristin Dziczek, director of the Labor & Industry Group at the Ann Arbor-based Center for Automotive
Research, adding that health care costs already grow at between 8 percent and 10 percent annually.
Ford, GM and Chrysler spend about $5 an hour on health care for new hires and other second-tier hourly workers. For veteran factory workers, who enjoy more generous benefits, the cost is about $8 an hour. By 2015, the average for all hourly workers could reach $11 an hour.
More than 70 percent of American manufacturing and production workers are obese, according to the 2012 Gallup-Healthways Well-Being Index.
Automakers and the union have taken steps to help factory workers improve their health. Many plants offer fitness facilities and offer smoking cessation and weight loss programs, Dziczek said. But providing financial incentives has already been proven far more effective.
More incentives expected
Approximately 83 percent of large and midsize businesses offer employees incentives for participating in programs that help employees become more aware of their health status, according to a study of 800 companies by global human resources firm Aon Hewitt. Nearly two-thirds of those businesses offer monetary incentives of $50 to $500, and nearly one in five offers more than $500.
And the incentives, according to the study, work a majority of the time. Four in five workers who took the minimal step of filling out a health risk questionnaire and receiving suggestions to improve their lifestyles took action to improve their health.
U.S. employers are expected to increase incentives for employees beginning next year with the complete rollout of the Affordable Care Act. The act will allow employers to use 30 percent of employees’ health care insurance premiums on incentive programs — or $4,012 for the average family — up from 20 percent, or $2,675, today.
The maximum incentive could reach as much as 50 percent of premiums for those wellness programs designed to prevent or reduce tobacco use, according to the U.S. Department of Health and Human Services.
But incentives are not a surefire way to lower health care costs, said Aon Hewitt health care analyst Stephanie Pronk.
“Incentivizing is just a component,” she said. “It isn’t the end-all be-all. It’s not a silver bullet.”