Detroit's car industry has been an engine of financial stability for Blue Cross and Blue Shield of Michigan. But if a new union contract moves forward, the health insurer might be rotated out.
The United Auto Workers and Fiat Chrysler Automobiles reached a tentative labor agreement last week, which outlined new wage and healthcare benefits for the company's unionized workforce. If employees ratify the deal, it could serve as a template for deals with Ford Motor Co. and General Motors Co.
FCA, Ford and GM are self-insured, meaning they bear the financial risk and pay out the health claims of their employees on their own. BCBSM has served as the longtime claims administrator for the companies, along with some regional plans.
However, those days could be numbered. Embedded in the proposed contract between UAW and FCA is a condition that states the two sides could choose another third-party company.
“The parties desire flexibility in determining the control plan partner and its functions, and have agreed that BCBSM will no longer be the mandated control plan under this agreement,” a letter within the contract reads. “Therefore, the company and union, by mutual agreement, expressly reserve the right to select another control plan carrier during the term of the agreement.”
Any change would likely not be immediate. If the union and car manufacturer chose another health plan to administer the self-insured benefits, both sides agreed there would have to be a smooth transition “without disruption” to its employees.
BCBSM will not comment on the healthcare provisions of the UAW-FCA contract, company spokeswoman Helen Stojic said.
It's unclear exactly how such a move would impact BCBSM's finances. However, “a significant portion of the corporation's customer base is concentrated in companies that are part of the automobile manufacturing industry,” the insurer said in its 2014 financial report. BCBSM ended 2014 with a net surplus of $272 million on $23.1 billion of revenue. Half of that revenue came from its self-funded business.
UAW and automaker executives have expressed willingness to pool all retired and active UAW employees who work at FCA, Ford and GM. The healthcare co-op concept made it into the FCA contract with a goal of providing benefits “in a manner that increases quality, lowers cost, produces less waste and provides better patient care and outcomes.”
