Managing retiree health costs

The cost of retiree benefits, especially healthcare, continues to be a major issue for automotive employers and employees, especially throughout the U.S. Spending on healthcare is projected to grow on average about seven percent for the next 5-8 years compared to expected growth in the US GDP of about five percent. Although rising healthcare costs are a global problem, OEMs and suppliers in the U.S. automotive industry have been particularly hard hit due to the sheer number of auto industry retirees. It has been estimated that the cost of healthcare alone can add nearly $1,500 to the cost of some US domestic vehicles. Overseas automakers are typically not burdened with retiree “legacy costs”, putting additional pressure on US manufacturers struggling to compete.

Faced with an aging workforce and significant pension and healthcare liabilities, part of the solution lies in attacking the underlying causes of escalating healthcare costs — health risk factors such as obesity, diet, stress, and lack of exercise; variability in the availability and consistency of care; and a lack of “transparency” in the purchase of healthcare.

How PricewaterhouseCoopers (PwC) can help you

While there are no “silver bullets”, PwC is using its unique position in the healthcare industry to assist the auto industry in addressing this major business and benefits concern. Our knowledge of the automotive industry combined with our diverse healthcare resources can provide valuable insight in developing, executing and enhancing a company’s healthcare strategy consistent with business objectives and realities. Whether it is assisting you in developing a vendor performance and management strategy, engaging directly with providers and hospitals, designing consumer strategies, or implementing a disciplined approach to improving the health and productivity of the workforce, PwC can provide an effective solution for your company.