Summary #5
UE Responds to GE
“Unhealthy Choice” Proposals

New York – Wednesday, June 1

Most of Wednesday's bargaining sessions focused largely on two subjects. The morning session opened with a joint UE-IUE/CBC meeting with General Electric representatives at the nearby London Hotel in mid-town Manhattan and included a review of some of its business segments represented by the various unions in attendance. In the afternoon, negotiations resumed at the UE bargaining table and was dominated by a detailed union presentation on health care, in which the union systematically showed that GE’s Health Choice program is an effort to massively shift costs from the company to its workers.

The day opened with a presentation from GE Energy’s Larry Blystone, where he reviewed the profitable status of the large Energy division. Blystone reported that more than $7.3 billion profit was banked in 2010 from this company segment, which includes the capacitor plant in Ft. Edward, where the members of UE Local 332 are employed.

GE PRESENTATIONS

Blystone reviewed the various component parts of the Energy division, including the wind sector. This prompted UE President John Hovis to ask “is GE interested in the wind for the long term?” Blystone, responding in a roundabout fashion, claimed GE was interested in wind. But, large portions of his presentation led the UE committee to observe that GE’s inability to completely dominate the sector was diminishing its appetite for wind. The experience of UE Local 506 members performing wind gear work at the Erie plant indicates that GE seems intent on winding down this green business – not expanding it.

GE’s Blystone concluded by detailing the significant new R&D, plant, and equipment investments GE is making across the entire Energy division. He chronicled, once more, GE’s growing list of “competitor” companies, presumably intended to dampen any enthusiasm gained by union negotiators for this highly profitable GE business.

The second GE presentation of the morning to the joint group of union negotiators was given by Joel Berdine, GE Transportation’s Supply Chain General Manager. Berdine reviewed the rapidly rebounding Transportation division from its 2009 lows, offering an overview of the products and services comprising the Transportation division. UE President Hovis questioned Berdine on GE’s 2010 deal with China Railways and the possibility of a joint project to construct high speed rail corridors in the U.S.

Berdine emphasized without prompting that “GE is in Erie for the long haul.” His comment was obviously offered as a brief effort to allay concerns about the company’s heavily publicized plan to construct a locomotive assembly plant in Fort Worth, Texas. The GE manager specifically mentioned the new Ft. Worth GE locomotive plant in only the barest terms, even as he reiterated GE’s fear of competitor companies such as Caterpillar and its subsidiaries. Berdine obviously doesn’t consider the new plant as competition for GE Transportation flagship plant, a fact noted by the UE delegates from Erie UE Locals 506 and 618.

Erie and UE representatives were dismayed when Berdine raised unspecified product “quality” problems in the Transportation division. This was especially true as Local 506 and 618 leaders had spent a considerable amount of time in the previous afternoon’s session criticizing the company’s “farm-out” of work and its disastrous effect on overall plant quality at the Erie location.

UE ATTACKS GE HEALTH CHOICE

In the afternoon session, UE provided its detailed health care analysis. The presentation, given by UE International Rep. Gene Elk entitled “Healthcare and GE: Myths and Realities,” with vigorous debates interspersed throughout, consumed most of the afternoon’s three-and-one-half hour session.

GE’s Costs & Ours

The first section of UE’s presentation reviewed “GE’s Costs & Ours.”

Elk debunked GE’s claims that its health costs were skyrocketing. He likewise challenged Chairman Immelt’s threat that jobs may have to be moved out of the country, by reminding GE that it began relocating products overseas long before health care was an issue. Elk also charged that GE had used accounting gimmicks to overstate the true cost of providing such benefits to workers.

The UE representative cited a Kaiser Family Foundation study which showed that health care costs had risen by 67 percent during the period from 2002-9, but that GE - in sharp contrast to other companies - had enjoyed relatively stable medical costs.

GE’s actual medical costs increases were only 4.5 percent per year - less than half claimed by the company in its presentation - with virtually flat costs during the period from 2005-2008. Elk noted that companies around the U.S. are envious of GE’s stable medical costs and this was before GE’s costs plummeted when it imposed Health Choice on its non-union salaried workers.

In 2009, Elk reported, the company’s own cost figures showed that medical costs spiked as thousands of salaried workers felt the need to run to their providers for care before Health Choice was imposed in 2010. Confirming salaried workers fears of reduced benefits and massive cost shifting under Health Choice, the company’s 2010 medical costs in net claims dropped by a whopping 25 percent.

Harold Spencer, an apparatus shop worker representing Local 1009 in Anaheim, CA – who travels routinely for GE – reported that he has talked extensively with GE salaried workers throughout the U.S. and has yet to meet one GE employee “who had anything good to say about Health Choice.” Angel Sardina, Local 332, recounted that salaried workers throughout the Ft. Edward facility were very unhappy with the new plan. UE Conference Board Secretary Steve Tormey reminded the company that the union still has not received the satisfaction surveys on Health Choice that the company promised to provide last week during its own medical presentation. “We’re very interested in seeing those results,” he said.

While GE’s share of medical costs have been flat or declining, Elk showed a graph indicating that contributions have increased sixfold in the past decade for workers in Health Care Preferred (HCP) in which the vast majority of UE and CBC members are enrolled. Nevertheless, contributions from pay are even more under the inferior Health Choice plan. With respect to post-65 retirees, Elk showed a number of charts and graphs illustrating that company medical costs in this area had been flat. Moreover, the company had enjoyed substantial savings from Medicare Part D (prescription drugs) government subsidies. GE retirees by contrast have suffered sharp increases in costs.

GE - Part of the Health Care Problem

Elk charged that the company, despite its heavy advertising through the “healthy imagination” initiative, is not an honest broker on health care. GE is, in fact, a profit maker in the healthcare system and has numerous conflicts of interest. The company, he charged, wants to “curry favor with hospitals and insurance companies because it’s good for its health care business.” During the recent national health care debate, the company was missing in action and missed opportunities to shape a decent bill that actually controls costs.

Showing a slide taken from a GE “webcast” which advertises its imaging products, the UE International Representative charged that GE was more interested in showing its customers how to “maximize profits” than offering care where it is actually needed. Elk remarked: “It is incredible that last week the company complained to us about the high cost of MRI and CT scans for GE workers, but at the same time it aggressively markets these products to doctors and hospitals by showing them how to maximize their profits from the equipment.”

Similarly, GE’s Patient Channel is offered to a captive audience of patients in hospitals and doctor’s office. While some of the shows provide helpful information, the advertising is designed to push consumers to use products that may not be medically necessary. The UE presentation also blasted GE Money’s Care Credit financing racket and recounted that the former New York State attorney general had investigated its use of “fast talking sales pitches and deceit” to convince consumers to finance procedures not covered by insurance.

While showing a graph of recent huge profits racked up by the Big Seven insurance companies, Elk reminded the company that the architect of its Health Choice plan – Dr. Robert Galvin, who ran GE’s medical operations in Fairfield – had sung the praises of those companies and called them a “sustaining part” of the health care system. Insurance companies, according to the UE presenter, bring nothing to the party, do not provide care, and make huge profits by finding ways not to insure people they can’t make a profit from.

Consumer Directed Health Care ...
Who is Being Consumed?

GE touts its Health Choice program as being “consumer directed.” Wendell Potter, the UE presentation noted, is a former top health insurance executive who is now critical of the industry. Weighing in on this relatively new “approach” to health care, Potter said “Consumer Driven” was certainly not invented by consumers ... it was invented by executives of insurance companies and big corporations who see this as a way to shift more of the cost from their firms to consumers.”

The UE presenter recounted that advocates of ‘consumer directed healthcare” like GE claim that overall health costs would be lower if U.S. consumers had more exposure and responsibility for costs. Elk said that in the U.S., residents already have the second-highest out-of-pocket costs among 27 industrialized nations and that fact has not caused overall health costs to decline. To the contrary, among those industrialized nations, U.S. total health care costs are easily the highest, more than one-third higher than Norway - which had the second highest cost.

Elk reminded GE that even though our “consumer driven” health care system is the most expensive, our health care outcomes lag far behind. The U.S. ranks 46th in the world in infant mortality rates and 36th for life expectancy. “The argument,” Elk continued, “that market-driven healthcare is ‘the way to go’ is not supported by any evidence and in fact, the data suggests that the further away health systems diverge from an open market, the better health outcomes actually are.”

GE’s attempt to impose a high-deductible “consumer driven” plan without offering other choices to its workers, Elk reported, is not normal. Companies typically offer choices, and according to recent studies, only 12 percent of workers actually enrolled in such plans if given the choice. Other studies have reported that satisfaction levels among workers in traditional plans is very high, but almost 2/3 of the participants in high-deductible plans are dissatisfied.

“Consumer driven” plans like Health Choice do little, if anything, to cut overall health costs. Citing a 2008 Milliman Associates report, Elk charged that employers like GE save big by switching to high-deductible plans, shifting 50% of their cost onto their employees.

GE’s Unhealthy Choice

GE claims it promotes healthy lifestyles, but GE’s own data obtained by UE about the early experience of salaried workers in 2010 strongly suggests that those workers are forgoing necessary health care because they can’t afford it.

The UE presentation revealed that hospital admissions under Health Choice were down by almost 14 percent, radiology scans declined by 23 percent for active employees, emergency visits were off 19 percent, and prescription drug costs tumbled by 26 percent. UE-GE Conference Board Secretary Tormey cited study after study which revealed that participants forgo care under plans like Health Choice because it’s too expensive. “It’s insulting for GE to claim that lower usage rates under Health Choice show that people were going to the emergency room on a whim or running out and getting unnecessary scans,” Tormey said.

Wayne Burnett, Local 506 Business Agent, disputed GE’s claim that many emergency room visits were unnecessary. Burnett said that adults were not going to emergency rooms for colds or the flu as GE charged. He stated that parents have legitimate concerns about their children when taken ill.

A number of union committee members also scoffed at GE’s contention that they were undergoing MRI scans unnecessarily. Tormey told the company that “people just can’t wander in off the street and get a scan, they have to get a prescription from a doctor.”

Elk told GE that the cost shift on prescription drugs alone under Health Choice is massive. The average GE family - according to the company’s data - purchases 22 prescriptions per year and their costs will soar under Health Choice to more than $1,600 per year just to pay for those drugs - and no other medical costs. Pre-65 retirees whose prescription drug usage is higher than active employees will suffer even greater out-of-pocket costs.

Under Health Choice, Elk revealed that a family of three choosing the least expensive plan – Option 3 – will pay $4,425 before the new GE insurance plan pays any health care costs.
Additionally under Option 3 for a family of three, the company will only start paying 100 percent of health care charges after deductibles and total medical bills equaled $31,500 in any given year. Elk called the plan a “100 percent catastrophe.”

Retirees will also suffer greatly under Health Choice. A married pre-65 retiree with an annual pension of $20,000 will pay contributions of $2,200, more than double the current cost of HCP for far inferior coverage. A medicare disability retiree who has 25 years of service will pay more than $6,000 annually until the plan covers him or her at 100%. “That’s 40 percent of his pension,” Elk exclaimed.

GE’s Health Choice cost-shift gives the company incredible savings and burdens active and retired employees with huge new payments. In 2009, GE’s health care costs per employee (contribution plus claims) was $8,700. Under Health Choice in 2010, its average medical care costs declined to less than $5,000 per employee.

UE President John Hovis questioned whether GE actually believed it was helping to create better medical consumers. “If you really believed that’s what you are doing, you wouldn’t have to sock it to people in their wallets.”

Gene Elk concluded UE’s medical presentation by telling the company that we want collective responses to collective problems – such as Social Security and Medicare – and that we do not choose to be separated into individual winners and losers based upon age, luck, or wealth. “We want benefit plans not personal investment schemes.”

Negotiations will resume on Thursday, June 2 at 9:00 a.m. in New York City.

UE was represented in the Wednesday session by President John Hovis, Conference Board Secretary Steve Tormey, Secretary-Treasurer Bruce Klipple, Wayne Burnett, Roger Zaczyk, and Leo Grzergorzewski of Local 506, Mary Stewart-Flowers of Local 618, Scott Gates and Angel Sardina of Local 332, Harold Spencer of Local 1009, Ron Flowers of the Retirees Association of General Electric, and International Rep. Gene Elk. Political Action Director Chris Townsend represented UE at the IUE-CWA bargaining table. Also participating on the UE committee were and Rudy Gomez of the UAW, Tom O’Heron of the IAM, Mike Barrell of the Steelworkers, and Randy Middleton of the IBEW.

Updated June 2, 2011, 11:48 AM