Japan's health care gives Toyota edge

[Globalist]

Japan's health care gives Toyota edge


By James B. Treece
Automotive News / March 28, 2005


TOKYO -- Imagine how much stronger General Motors would be if it launched three additional new-model programs every year, each costing about $1 billion.

It could, if it didn't have to pay for its retirees' health care.

That is one of the most fundamental differences between GM and Toyota Motor Corp. GM pays for the health care of 339,000 retirees - and the number grows every year. In contrast, Toyota pays for fewer than 3,000 retirees' health care in Japan, a number that remains fairly stable.

That difference gives Toyota and other Japanese carmakers a massive advantage over their American rivals.

"The cost of health care in the U.S. is making American businesses extremely uncompetitive vs. our global counterparts," says GM CEO Rick Wagoner.

Toyota and other Japanese carmakers benefit from a national health care plan that reduces its obligations to retirees to almost nothing.

Wagoner and other U.S. auto industry executives are increasingly vocal in seeking government action to address this competitive disadvantage. But Wagoner stops short of seeking a national solution as comprehensive as Japan's.

Day and night

A close look at the numbers at GM and Toyota shows diametrically different conditions.

About 1,200 of Toyota's Japanese employees will retire this year. Within two years, each will switch from the company-backed health insurance scheme to the national health plan. At that point, Toyota's spending on its retiree's health care drops to zero.

Toyota pays health care costs for its employees in Japan in the form of premiums for medical insurance. But it does not continue to pay those costs for retirees. Former employees of Nissan Motor Co. and Honda Motor Co. also turn to the Japanese government for health care coverage.

The American Big 3 pay - and pay and pay - for their retirees' health care.

GM covers the health care costs of approximately 125,000 active employees and 339,000 retirees. Health care costs for those retirees amounted to approximately $3.6 billion last year.

That's more than two-thirds of the $5.2 billion GM spent on health care and medical-insurance premiums last year. GM also contributed about $9 billion in 2004 to a trust fund set up to pay for health care costs.

In 2004, Ford Motor Co. spent $2.0 billion on health care for U.S. retirees.

The Chrysler group last year spent $1.3 billion on retirees' health care.

$1,525 per vehicle

GM says that its payments for retirees' health care - more than what the company spent for steel - add about $1,525 to the cost of every vehicle the company sells.

In contrast, Toyota must contribute to health insurance payments for only about 64,500 active workers in Japan.

Toyota's health care costs are so negligible that they aren't even a line item in the company's financial statements. Toyota benefits both from the Japanese national health plan's coverage of retirees' medical needs and from the way that plan is structured.

Source: http://automotivenews.com/

[Globalist]

Toyota is a formidable competitor, and I admire their steady growth.
However, GM really needs some help on the healthcare issue.
Billions of dollars over years can make a real difference product wise.

[86fleet]

National Healthcare is not the solution. Sure, it would help GM, but it would screw the country over as a whole. Etheir there will be sky high taxes, or more important government projects (an education system that actually educates, roads that aren't filled with pot-holes, national defense etc.) would lose money. Besides, the government would just screw it up (like social "security") What GM needs to do is subsidise its employees healthcare (not pay for the whole thing) and stop paying for useless things like viagra (I heard somewhere that GM pays for that). I don't want to pay $1500 extra on a car just so some old guy can have sex. Also, if UAW workers are being paid $16.50 an hour, you'd think they'd be able to pay for their own healthcare.

[RWD60]

yeah, but socialized health care evenetually comes back to bite the whole economy in the rear... see Europe's current situation (germany has upwards of 10% unemployment... Fiat is even worse than GM...). i think the biggest problem is how much cash those being payed for by GM are asking for... if every GM employee (and i include retirees who draw pension/health care in this as well) took a 15-25% (depending on income level and job) income drop, that'd be almost as much good as losing the whole retiree burden. also, someone still has to pay for gov. health care, and this still comes from corporate and personal income just like regular health care so it only shifts the burden slightly and greatly increases our national debt.

[mgescuro]

I took a few minutes to check how the Japanese tax system works. Not that it's gonna mean a whole lot...

http://www2.gol.com/users/jpc/Japan/taxes.htm

It's 2001 data, but everyone pays 8.5% of taxable income to the National Healthcare system. And National Pension Insurance at 17.35% of taxable income.

People in teh US aren't gonna pay this on top of their current taxes.

[Erunion]

Instead of making the companys pay for health care, lets let workers pay for their own, via taxes.
Yay! Go Japan!

[The Oatman]

Although I would like to see GM get some help, I have to say that this is in part their own fault for being too willing to give concessions to the Union when times were better.

[ImajV]

If the workers contribute 100 dollars a month, it results in 410 million cost savings annually.(source: businessweek) They need to push hard during UAW contract negotiations

[New_Mexico_Sunset_on_Rt66]

What about the employees of Honda, Toyota and Nissan employed in America? What happens to them when they retire? Will Japans plan take care of 'em? I suspect the above companies will have to take care of 'em.

GM does need some help in that arena. But I don't think national health care is the solution. I dont' want some buearocrat telling me, "Sorry but your treatment is too expensive, you're gonna have to die".

It seems Detroit can't buy a break. The perception is that Toyota has a wispy clean @sshole with daisies and spring breezes emanating from it.

[banzai79]

Uhh, national health care is obviously the answer. That's why every industrialized nation in the world has it. I think Americans should be proud to stand with countries like Iran, Libya, and Nigeria. Guess what? The New England Journal of Medical Science recently found that the Veteran's Medical Administration provides the best quality of care in the entire U.S. That's right, your government funded, government ran medical system.

[tgagneguam]

Originally Posted by banzai79

...The New England Journal of Medical Science recently found that the Veteran's Medical Administration provides the best quality of care in the entire U.S. That's right, your government funded, government ran medical system.

Yes, at what cost, though?

I think people need to think about fending more for themselves, and that should come in the cost of contributions to personal pensions, whether it be healthcare or retirement. In this day and age, there is nothing sacrosanct about UAW retirement plans; unionized workers can contribute to 401K plans just like many millions of American workers already do. And they can just as easily afford to pay copays for their medications and contribute to their healthcare premiums. It's truly amazing how people become cautious and thoughtful about their decisions when they have something invested in the process.

Incidentally, while I do believe that Viagra is something people should pay for on their own (particularly when Pfizer charges on the order of $7-$10/pill), I don't think it's useless. Erectile dysfunction afflicts many men, and sex is a normal part of a healthy man's life. While Pfizer's efforts were certainly not altruistic, the medication does serve a useful purpose.

[Cortazzo]

Equal Work, Equal Pay. UAW members work as hard as the rest of us, they should have to pay the same health care copays and premiums as the rest of america. I read an article that stated the average US worker pays for 33% of their health care, GM white colar workers pay 27% (a 'good deal' according to bob lutz), UAW workers pay 7%. I deeply respect the right to unionize in this country, but if and when the big 3 put serious pressure on the UAW for concessions, I won't shed a tear for them.

[jbernie]

If GM can get a 20% per year saving from the UAW on health care costs as a trade off for not needing to cut (as many) jobs then it would be a fair deal, likewise, try and get some additional savings from non UAW workers and some other resonable savings then an extra $1.5 billion a year to apply to products and outstanding debt will make the outlook brighter.

James

[VivienM]

Originally Posted by New_Mexico_Sunset_on_Rt66

GM does need some help in that arena. But I don't think national health care is the solution. I dont' want some buearocrat telling me, "Sorry but your treatment is too expensive, you're gonna have to die"

You're assuming the government-run system would work like the private one, where the insurance company must approve treatment.

The way it works here is that if the treatment is on the existing approved list (which includes most things), the doctor (if you can find one in time... but a bit more money could solve this) just sends the government the bill, and the government pays it. No approval or such to wait for.

[jinushaun]

Yeah, the US has a bad health system in general. I learned in my German class that, despite not being socialised, the US has the most expensive health care in the world. We (companies and employees) pay more than the rest of the world by far.