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INTERNATIONAL AUTOMAKERS WON'T SHOULDER BIG THREE HEALTH CARE COSTS, AIAM SAYS

 WASHINGTON, June 3 /PRNewswire/ -- The Association of International Automobile Manufacturers has asked the White House Health Care Task Force not to endorse the General Motors, Ford and Chrysler proposal to integrate the new American automobile factories established by international automakers into a single, separate health insurance purchasing cooperative with the Big Three companies.
 In a letter addressed to Task Force Leader Hillary Rodham Clinton, AIAM called the Big Three plan, "an automobile competitiveness issue masquerading as a health care issue."
 "Their true goal," wrote AIAM President Philip A. Hutchinson, "is to shift their higher health care costs to new U.S. automakers in order to avoid their corporate responsibilities for managing their own costs and to gain an even greater competitive advantage in the marketplace."
 Hutchinson's letter charged that the Big Three proposal contradicts a fundamental principle of health care cost containment -- to increase the awareness, responsibility, and incentive of health care recipients to hold down costs. The Big Three plan, Hutchinson wrote, eliminates "any incentive for them or their employees, including retirees, to hold down costs."
 Hutchinson also pointed out that the Big Three plan, calling for a nationwide consortium of automotive manufacturers in a single plan, would fracture the proposed system of geographically-based health alliances. Should the Big Three secure an industry cooperative, he warned, "other mature industries, such as steel, telecommunications, and the airlines might also demand a similar right to shift their health care costs to new industry entrants."
 Hutchinson also leveled the charge of hypocrisy against the Big Three, which had complained to a Senate Subcommittee that 28 percent of U.S. manufacturers' health care costs were the result of cost shifting, and had called for the elimination of cost shifting. "Yet, the Big Three's proposal," he said, "is nothing but cost shifting, from their companies to ours."
 The text of Hutchinson's letter follows:
 The Association of International Automobile Manufacturers, Inc. (AIAM) is a trade association that represents the U.S. subsidiaries of international automobile companies. AIAM member companies distribute passenger cars and light trucks that are either imported or manufactured in the U.S. Altogether, the international automobile industry represented by AIAM supports more than 400,000 U.S. jobs in such areas as manufacturing, the supplier industry, dealerships, transportation, port and R&D facilities.
 The members of AIAM are very interested in the efforts of your White House Health Care Task Force to improve the availability of affordable health care for every American. In this context we have concerns regarding a proposal being advocated by General Motors, Ford and Chrysler which would place all U.S. automakers, including the Japanese (and soon to be European) companies manufacturing in this country, into a single, separate health insurance purchasing cooperative. The members of AIAM believe that the creation of such an industry health insurance purchasing cooperative is bad health policy and bad economic policy.
 We understand that the Task Force is currently developing a proposal consisting of geographically-based health alliances to control health care cost inflation and increase access to affordable health care. While this model should help to control the growth in health care costs for employers and employees, the Big Three are not satisfied with this approach. Their true goal is to shift their higher health care costs to new U.S. automakers in order to avoid their corporate responsibilities for managing their own costs and to gain an even greater competitive advantage in the marketplace. The Big Three proposal is an automobile competitiveness issue masquerading as a health care issue.
 The Big Three health care proposal should be dismissed as it runs counter to the goals of health care reform.
 1. The Big Three's proposal contradicts a fundamental principle of health care cost containment. A key principle of virtually all plans to restrain the rate of growth of health care costs is to increase the awareness, responsibility and incentive of recipients of health care to hold down costs. The Big Three's proposal moves in just the opposite direction, eliminating any incentive for them or for their employees, including retirees, to restrain costs.
 2. The Big Three's proposal would fracture the framework of a system of geographically-based health alliances. It would pull large groups of individuals out of various geographically-based cooperatives, especially in Michigan, Ohio, Tennessee, Kentucky, and California. Should the Big Three secure an industry cooperative, other mature industries, such as steel, telecommunications and the airlines, might also demand a similar right to shift their health care costs to new industry entrants.
 3. The Big Three's proposal is hypocritical. The American Automobile Manufacturers Association testified before a Senate Subcommittee on March 2, 1993, and cited a study by The National Association of Manufacturers which concluded that fully 28 percent of U.S. manufacturers' health care costs were the result of cost shifting. As a result, one of the key principles of the Big Three's joint position on health care reform is that "cost shifting must be eliminated." And yet, the Big Three's proposal is nothing but cost shifting, from their companies to ours.
 The White House Health Care Task Force should not endorse the proposal advocated by Chrysler, Ford and General Motors because it does not offer a real solution to escalating health care costs and will cause additional problems. Members of our association would welcome the opportunity to amplify these concerns to you and your colleagues on the Health Care Task Force. We look forward to your recommendations on this vital, national issue.
 -0- 6/3/93
 /CONTACT: Kathleen Mordini of the Association of International Automobile Manufacturers, 703-525-7788/


CO: Association of International Automobile Manufacturers ST: District of Columbia IN: AUT HEA SU: EXE

IH-TW -- DC016 -- 4946 06/03/93 11:40 EDT
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Date:Jun 3, 1993
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