Automaker Bailout Debate Brings Mixed Feelings

November 17, 2008 7:51 a.m. EST

Washington, D.C. (AHN) - There are mixed feelings about a bail out for the nation's auto industry with many blaming car makers for the predicament they are in, but GM is the nation's largest provider of health insurer coverage.

Nationwide, about one third of all companies don't offer employees health insurance. The nation's big three automakers always have offered health insurance, but the cost of that health insurance is factored into the price of vehicles, making them more expensive than foreign automaker's products.

Congress is debating what, if anything, to do to help the nation's automakers.

GM, Ford Motor Co and Chrysler LLC all say that bankruptcy reorganization is not an option to survive. The nation's big three automakers have lost market share to foreign competitors and continued to crank out large, expensive, gas guzzling vehicles even as their competitors honed smaller, less expensive, fuel efficient vehicles.

The auto companies are viewed as inflexible and non-competitive and opponents to a bail out express doubts that the big three could adapt swiftly enough to survive even if they were given money.

But proponents say that too many jobs, especially living wage jobs, will be lost if the automakers go under, not just at production plants and auto dealerships, but also at the many businesses that supply the auto industry.

Even worse, more Americans will lose their health insurance.

GM provides health insurance coverage to approximately 1.1 million employees and retirees, making it the nation's largest supplier of health insurance. The costs of that insurance have added to the price of its cars, compared to foreign auto makers who don't provide health insurance for employees.

But allowing GM to go out of business would likely add another 1.1 million Americans to the estimated 49 million who already lack health insurance.

Also at issue is the fact that GM gives generous health insurance benefits to its retired workers, which was common in 1988 when 66 percent of companies that offered health insurance did so. However, by 2004 fewer than 36 percent of large companies offering health insurance covered their retirees with the same benefits, according to a Kaiser Family Foundation survey of employers.