UAW may form co-op to negotiate directly with providers

Faced with rapidly rising costs for their healthcare, automotive workers may form a special cooperative to negotiate with providers directly for services, Crain's Detroit Business has reported.

The United Auto Workers (UAW) union is considering creating a co-op that would include about 300,000 of their employees, according to the article. It would function along the lines of the medical trust that is already in place for some 775,000 retired UAW members and their families.

Creating a co-op would actually bypass a thorny issue that the UAW has unwittingly created for itself: A collective bargaining agreement with the "Big 3" automakers that complicates cutting healthcare costs as a result of already negotiated labor pacts. As a result, the autoworkers face average annual cost increases of 8 percent or more over the next several years--about 60 percent higher than other employers in the Detroit region, according to Crain's. 

One automaker, Fiat Chrysler, has seen its healthcare costs rise 77 percent since 2011, Crain's reported separately, prompting a need to address the issue directly.

Meanwhile, any savings generated by a healthcare co-op could be returned to the workers in form of pay raises--hourly employee compensation has not budged since 2008.

Providers in Michigan were hit hard by the 2009 bankruptcy filing of General Motors. However, the state's hospitals are also highly organized themselves. A coalition of more than 100 acute care providers were able to shave $116 million in costs between 2011 and 2012. And Henry Ford Health System, one of Detroit's leading providers, won the Malcolm Baldridge Award for quality last year.

To learn more:
- read the Crain's co-op article
- check out the Crain's healthcare cost article