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Detroit 3 back move for clearer health care costs

From Reuters| January 30,2007

The heads of the Detroit 3 pledged today to support a federal initiative aimed at increasing the transparency of health care costs and help the money-losing industry come to terms with its own rising medical bills.

General Motors CEO Rick Wagoner, Ford Motor Co. Chairman Bill Ford and Chrysler group CEO Tom LaSorda all signed on in a show of support for the health care at a joint appearance with U.S. Department of Health and Human Services Secretary Michael Leavitt in Detroit.

The automakers joined a number of other major companies that will push health care providers and insurers to improve electronic record-keeping, increase reporting on costs and reward employees for choosing the best options.

The steps are intended to make the market for health care more efficient and control cost increases for the private companies that remain the largest source of health care for most Americans.

The issue is especially pressing for the U.S. auto industry, which has called the rising cost of providing health insurance a crisis and is expected to seek concessions on benefits from its major union in a key round of contract talks this summer.

The automakers have pressed the Bush administration to help the industry reign in health care costs and exert pressure on Japan to allow the yen to move higher, steps they say are needed to allow them to compete more fairly against Japanese automakers.

The Detroit 3 say health care costs for employees and retirees add more than $1,000 to the price of each vehicle they build, putting them at a disadvantage with foreign rivals. GM's health care costs average $1,500 per vehicle, compared with about $200 for Japanese rival Toyota Motor Corp.

"This is an initiative where we have common ground," LaSorda told the Detroit Economic Club, adding that pricing in the health-care industry should be as transparent as those in the auto industry.

"Let's get the competition back and let's get costs lower," he added.

GM's Wagoner said a joint effort by the Detroit 3 to move toward allowing electronic prescriptions for drugs in some markets had shown the value of such cooperative efforts to bring down costs.

U.S. President George W. Bush, in his State of the Union address before Congress this month, proposed a tax deduction for people who buy private health insurance as one of several top domestic priorities for the year.

Bush's proposal would provide a new tax deduction of $15,000 per family and $7,500 for individuals who purchase private health insurance.

Health care figures to be a major issue in the 2008 U.S. presidential campaign.

When asked if the Detroit 3 CEOs had expressed support for Bush's pending health care proposal, Leavitt said they had shown interest.

"I had informal conversations with a couple of them and they expressed a real interest, but wanted to find out more," he said.

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