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GE Presentation
Says Health Care
Too Costly
NEW YORK, May 22 — A company presentation on insurance benefits dominated the Thursday session. A battery of GE
benefits specialists reviewed the company’s insurance programs, describing the company’s programs as extensive,
comprehensive and costly. In particular, the presentation on health insurance attempted to lay the basis for GE contract
demands for further cost-shifting. UE representatives rebutted company arguments. President John Hovis warned the
company, "If there’s going to be a train wreck, this is the issue."
GE’s Jennifer Edwards called to union members’ attention GE’s concerns with Dependent Life Insurance, in a
review of life and other insurance programs. The company’s issues are the flat rate structure, enrollment and
coverage, she said. Dependent life has become heavily weighted with older workers as a result of a decline in the
enrollment population and high premiums for newer employees, Edwards said. GE sees a problem in everyone paying the same
rate, with the consequence that younger participants are subsidizing an older population. Her presentation suggested a
coming GE proposal to charge higher rates to older and retired workers for the program.
Pat Rafferty, Local 506, reminded the company that retirees made plans based on the availability of this insurance,
and argued that fracturing the age pool will worsen any existing problems. President Hovis said that hourly employees
have indicated that they will resist additional costs on those who are already retired. He said to the company,
"You want to be able to sell a higher level of insurance to younger employees, particularly exempts."
Kathy Sanchez reviewed the company’s various disability programs. GE employees pay for long-term disability,
prompting Bob Brown, Local 332, and other UE committee members to suggest that GE consider "reasonable levels of
cost-sharing" with regards to that program. Commenting on short-term disability, Steve Tormey pointed out that
there has been a considerable erosion of its replacement value over the years. The contract calls for 60% of pay up to
$475 a week, but $475 has become the effective value. By contrast, Tormey said, exempt employees are granted salary
continuation, a benefit that is far more generous and costly to the company. Pat Rafferty, Local 506, told Sanchez that
the administration of disability benefits has improved over the last six years, although the explanation of denial of
benefits for disability pensions is often inadequate.
GE health care associate Ginny Proestakes reviewed the benefits and costs of the company’s health insurance—and
faced repeated questions from the union side of the table. The company projects a 15% increase in its health care costs
next year, and expects to spend $1.6 billion this year. Given the plan design, escalating costs will erode the
percentage of employee contributions, Proestakes said. She presented statistics which suggest that GE contributes more
to health care than other large employers. Even with this January’s HCP co-pay changes, GE employees pay less and have
fewer restrictions than the company’s competitors, Proestakes said, stating that employees are now paying only about
18% of the total bill.
GE health benefits are among the best offered, Proestakes said. She added that the company has concerns that employee
contributions are not linked to family size, drug costs for employees and retirees continue to escalate; and retiree
health insurance costs in general are growing. Prescription drugs is an area in which "some employers are making
tough choices," she said. A majority of companies selected for a GE survey do not offer post-65 prescription-drug
coverage, Proestakes said, and those that do require substantially higher co-pays.
How will forcing employees and retirees to pay more for health care delivery address the problem of profit-hungry
pharmaceutical companies, hospitals and doctors driving up costs, the union committee wanted to know. Proestakes said
that "greater participation" would make employees and retirees "wiser" consumers of health care.
Bob Brown, Local 332, argued that GE is part of the health cost inflation problem as a major manufacturer of
high-priced medical technology. Research Director Lisa Frank reminded the company that technology is a big factor in
cost increases. "The company is a walking conflict of interests when it comes to medical care and medical
costs," observed Steve Tormey. "The company is looking to health care ever more aggressively as a profit
center." GE Capital assists in the for-profit sector’s acquisition of hospitals. GE works with the major drug
companies in the health-care coalition Leapfrog, Tormey pointed out.
GE’s never joined with us in saying the system is broken, said President Hovis. In Canada, GM and Ford joined with
union leaders in defending that country’s not-for-profit health care system.
Union members questioned the company’s figures, pointing out the GE numbers assume no further reduction in
employment. The company’s response was that no one should assume static employment levels. Tormey pointed out that GE’s
aggregate health-care costs declined 1994-97 as a result of job losses, and only returned to 1992 levels last year. He
also objected to the inclusion of workers compensation and RCA medical costs in GE’s total claimed
"expenses."
"We’ve been hit with increases in every negotiations since 1985," Tormey said, and the company’s
rationale continually changes. He reiterated the union’s contention that there really are no competitor companies that
can be compared with GE. Company employees as a whole are dissatisfied and want to seek improvements to the medical
plan, not more cost-shifting. Referring to a 1991 GE presentation which showed employees paying 6% of total medical
costs, Tormey stated that employees’ burden has tripled since that time. He also noted that matching the January HCP
increases to CMB would threaten the viability of CMB altogether. Contributions and deductibles for family coverage
already total $1,300 a year on average.
Responding to UE concerns, John Curtin, the GE spokesperson, said the company was not going to eliminate
Comprehensive Medical Benefits, the traditional GE health-care plan. "We will propose some changes," he said.
"We are very concerned where the costs of health care benefits are going. We will expect some reasonable levels of
cost-sharing."
"Both sides know, this is the issue," President Hovis said. "Let me just caution you about
over-reaching," he told the company representatives. "We’ve been able to find solutions before, and we hope
to find solutions this time. This is the issue that will wreck the train."
Bob Brown, Local 332, declared that the company side of the table could afford higher insurance costs much better
than his members could. Pat Rafferty said that as Local 506 business agent, he and Local President Frank Fusco met last
month with GE CEO Jeffry Immelt and told him the company needs to join with the union in working politically for reform
of the health-care system. Immelt told the Local 506 officers to bring their concerns to national bargaining, Rafferty
said, "and that’s what we’re doing."
Negotiations recessed until 1 p.m. on Tuesday, May 27.
Representing the union during the first week of negotiations were General President John Hovis, Director of
Organization Robert Kingsley, Conference Board Secretary Steve Tormey, Research Director Lisa Frank, Bob Brown, Local
332, Frank Fusco and Pat Rafferty, Local 506, Lynda Leech, Local 618, Ed Baran, Local 751, and Coordinated Bargaining
Committee participants Bob Roberts, IBEW international representative, Gary Jordan, UAW Local 647, Wayne Reynolds, UAW international representative, Mike Barrow and
Terry Ogg, American Flint Glass Workers. International Representative Chris Townsend represented UE at the IUE table.
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