Possibility of Federal Bailout for General Motors, Ford in Response to Increased Health Care Costs, Other Issues, Wall Street Jour

Main Category: Public Health
Article Date: 28 Apr 2005 - 9:00 PDT

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The Wall Street Journal on Wednesday examined the financial problems faced by US automakers ...General Motors and Ford because of health care costs and other issues and how, "in a sign of a changed political climate, nobody in Washington is talking about bailing them out" (Harwood et al., Wall Street Journal, 4/27). GM last week reported a $1.1 billion first-quarter loss -- the largest quarterly loss for the company in more than ten years -- and cited the cost of health insurance for 1.1 million employees, retirees and their dependants as a large factor (Kaiser Daily Health Policy Report, 4/20). Ford posted a first-quarter profit but has predicted a full-year loss in the North American market. In the past, the federal government has "sprung to action" to help automakers, but currently "there's no sign that the White House or Congress is seriously contemplating any government-led resuscitation," according to the Journal. Neither GM nor Ford to date has requested specific financial bailouts from the federal government. However, GM has supported proposals that would have the federal government assume catastrophic health care cost to help reduce the $5.6 billion that the company spends on health care annually.

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"I don't think the government's going to step in and become a partner with every enterprise," John Engler, a former Republican governor of Michigan and president of the National Association of Manufacturers. Rep. John Dingell (D-Mich.) said, "There is no feeling in the halls of Congress that there is a need for a bailout." However, he said that lawmakers have considered proposals to address "a number of unfair, external pressures bearing down" on automakers, such as "establishing a reinsurance pool that would help all businesses reduce health benefit costs." White House spokesperson Trent Duffy said that President Bush favors proposals to make the United States "the best place in the world to do business," such as increased use of health savings accounts that could help reduce health care costs for companies such as GM and Ford (Wall Street Journal, 4/27).

"Reprinted with permission from kaisernetwork.org kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation . © 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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