* Encourages workers to treat chronic illnesses earlier,
* Five diseases account for 61 pct of Ford's healthcare
* Ford spends $7/hour on blue-collar workers' healthcare
* Ford, UAW pilot modeled after Boeing program
By Deepa Seetharaman
DEARBORN, Mich., June 24 Ford Motor Co is
launching a two-year pilot program with the United Auto Workers
and a UAW-affiliated retiree trust fund aimed at lowering the
cost of providing medical care for the company's active and
retired hourly workers.
The program, open to workers and retirees in southeastern
Michigan, is designed to help "bend the cost curve" of
healthcare by treating chronic diseases early on, rather than
risk having workers and retirees wait until those issues grow
more severe and expensive, Ford, the UAW and the UAW Retiree
Medical Benefits Trust said on Monday.
It is the latest attempt by Ford and the UAW trust to cope
with healthcare costs, which are rising faster than the value of
the assets used to pay for them. The UAW trust was short $20
billion during its first year in 2010. By 2011, the most recent
period for which data is available, that shortfall grew to $33
If successful, the program could be expanded to other areas
such as Kansas City, Missouri, and Louisville, Kentucky, where
Ford has a concentration of retirees and workers.
"We've never done anything like this before," said Rick
Popp, Ford's director of employee benefits. "If the process and
this kind of arrangement works for this program, that could be
leveraged for a broader solution."
The pilot is modeled after a program at Boeing Co,
where Alan Mulally was a top executive before he joined Ford as
CEO in 2006. Ford officials declined to estimate the potential
savings of their pilot program, but said medical costs for the
participating Boeing workers fell by about one-fifth.
Ford spends $7 an hour to pay for healthcare for its 44,500
UAW-represented workers in the United States. This amounts to
between $600 million and $700 million a year, the bulk of the $1
billion that Ford spends annually on healthcare for its entire
The UAW trust spends $4.5 billion a year on healthcare for
800,000 unionized retirees from General Motors Co, Ford
and Chrysler Group LLC.
About 61 percent of annual healthcare costs paid by Ford and
the UAW trust stem from five chronic diseases: diabetes, asthma,
coronary artery disease, congestive heart failure and chronic
obstructive pulmonary disease.
GM, CHRYSLER IN TALKS WITH UAW
Between 1,200 and 1,500 unionized workers and retirees are
expected to join Ford's voluntary program on the recommendation
of their doctors. Only retirees who are not eligible for
Medicare are allowed to join.
Participants will be assigned one of 12 personal care nurses
who will them help navigate the healthcare system and treat
their chronic conditions.
"I would think that most reasonable people would look at
this as a really great opportunity," said Marty Mulloy, Ford's
vice president of labor affairs. "You get healthcare provided to
them at a level that isn't normally available."
Each nurse will handle a maximum of 125 cases.
The UAW is in talks with GM and Chrysler about a similar
program for their hourly workforce, said Susanne Mitchell,
director of the UAW's Social Security department.
The participation of retirees differentiates the Ford
program from Boeing's. The trust was created in 2007 during
labor talks with the UAW to take on the retiree healthcare
burden from GM, Ford and Chrysler.
The landmark deal was designed to protect UAW retiree
benefits if the companies' finances deteriorated and to remove
an ever-increasing liability that the automakers said added as
much as $2,000 to the cost of a vehicle.
Ford and the UAW trust will pay for the salaries of 12
personal care nurses and consultants who are part of the pilot
program, which kicks off on July 1.