We provide health care coverage to about 570,000 employees or retirees and their dependents in the United States alone. In 2006, our health care expenses for U.S. employees, retirees and their dependents were $3.1 billion, with about $1.8 billion for post-retirement health care and the balance for active employee health care and other retiree expenses.
We are proud of our role in providing these benefits to individuals and families. However, the rising cost of health care coverage and our high proportion of retirees compared to more recent entrants to U.S. markets puts us at a competitive disadvantage. It is estimated that Ford's health care costs add about $1,200 to the cost of each vehicle built in the United States.
During 2005 and 2006, we took steps to have employees and retirees bear a higher portion of the costs of their health care benefits. Active salaried employees were asked to increase their health care contributions in both years. Salaried retirees have Company contributions capped at 2006 levels if they are under 65, while the Company contribution for salaried retirees age 65 and over is capped at $1,800 per member per year (effective January 1, 2008).
For hourly employees, we successfully reached agreement with the UAW to reduce health care costs in 2006, primarily through modifications to the Company's hourly retiree health care plan. While these actions did result in substantial savings, we still expect our total health care costs to continue to increase. For 2007, our trend assumptions for U.S. health care costs include an initial trend rate of six percent, gradually declining to a steady-state trend rate of five percent reached in 2011. These assumptions include the effect of actions we are taking and expect to take to offset health care inflation, including eligibility management, employee education and wellness programs, competitive sourcing and appropriate employee cost sharing.
To promote the health of employees and the Company's financial health, we are focusing on creating a culture of health and wellness for our employees and their families. We are providing resources and tools to help them make sound choices about health care services and coverage and help them understand the benefits of being a better health care consumer. Our efforts include:
- The introduction of an internal wellness campaign, with the tagline of "Good Health Isn't Automatic, It's Manual". We are encouraging and motivating employees to take control of their health by:
- Providing the skills that will help them understand their risks, and improve their health habits
- Encouraging them to be better health care consumers by using health care quality information
- The implementation of an employee health improvement program, called "Healthy Highway," to prevent and manage illness, which includes:
- Disease management
- Individualized wellness programs
- Health assessments
- 24-hour phone access to nurse and on-site screening services
This is an area in which we are collaborating with communities and government agencies. For example, we are:
- Promoting and investing in the adoption of health care information technology (HIT) through local initiatives, with funding assistance from various levels of government. HIT will enable physicians and hospitals to have access to all pertinent information needed to treat their patients so that patients may receive the most appropriate care
- Participating in regional health care quality measurement and public reporting initiatives, with potential data sharing and funding assistance from government
We hope that over time, these actions will support the health of our current and retired employees and reduce our competitive disadvantage related to health care costs.
