United Auto Workers President Ron Gettelfinger said on Thursday that the union will not reopen a contract with General Motors to reduce the automaker's rising health care costs but that UAW will work with the company to reduce costs within the confines of the existing agreement, the Detroit Free Press reports (McCracken, Detroit Free Press, 4/15). Gettelfinger, who along with other UAW officials met with GM executives at an annual meeting, said he has not been asked to reopen the contract, which expires in 2007. GM executives earlier this week suggested that they "intended to outline a case to the union for action to reduce GM's health care costs," the Wall Street Journal reports. GM officials estimate the company spent $5.6 billion on health care in 2004. After the meeting, John Buttermore, GM vice president of labor relations, declined to say whether the company would ask UAW to reopen the contract but added that executives will do "whatever we can do" to reduce health care costs (Hawkins, Wall Street Journal, 4/15). Gettelfinger said, "I think our membership expects that we have a negotiated agreement in place and that both parties should adhere to the agreement." He added, "We'll make joint efforts to lower costs wherever possible, whether it pertains to health care or other measures" (Hakim/Peters, New York Times, 4/15). Buttermore said "there's a lot" that GM can do to reduce costs within the contract, "but there's also a lot we need. We're looking at all the options" (Garsten/Mayne, Detroit News, 4/15). He added, "There are so many things you can do about prescription drugs, and what's in network and what's not, or how HMOs work" (Detroit Free Press, 4/15). Officials for GM and UAW reiterated the need for national health care reform (Wall Street Journal, 4/15).

Financial Effects
On news that UAW will not agree to reopen the contract, GM shares declined 5.9% on Thursday to $1.67 per share -- the lowest closing price since Jan. 8, 1993. According to David Healy, an analyst at Burnham Securities, "Wall Street was building some kind of relief on health care into [investors'] hopes, if not their expectations. I guess there are some things they can do in the current contract, but I don't think they go very far" (New York Times, 4/15). GM next week is expected to report an $847 million first-quarter loss (Detroit News, 4/15).