Steps to Reduce Health Care Costs

The delivery of high-quality, cost-effective health care is important to the success of Ford. The One Ford Health Strategy complements the corporate ONE Ford vision by targeting a culture of wellness that aligns incentives to help our employees become more informed and engaged in their health. We are providing resources and tools to help people make sound choices and to understand the benefits of being healthy.

Ford aims to build a culture of personal accountability in which knowledgeable, motivated people consistently work safely and make the right health choices to help deliver the ONE Ford plan. The One Ford Health Strategy is based on the following key concepts:

• Benefit designs that encourage healthy behaviors and appropriate use of care
• Tools and social support systems to enable wellness and help people become better health care consumers
• Partnerships for sustained and systemic improvement
• Measurement of results against benchmark companies and programs to ensure competitiveness

The One Ford Health Strategy and its central theme of building a wellness culture are globally focused. Though national systems of care vary from country to country, high-quality, cost-effective health care and a healthy, productive workforce are common goals. In the United States, for example, the Patient Protection and Affordable Care Act (PPACA) recently signed into law by President Obama expands access to care and makes real progress to reform. Though the law also includes various measures intended to manage cost increases, we need to continue to develop ways to control rising costs while providing high-quality services – areas where Ford continues to actively participate in designing solutions.

In the meantime, we are encouraged that the PPACA includes provisions that address three key areas that we had previously identified as essential elements for maximizing the value of health care service through a combination of quality, appropriateness and costs:

• Wellness and Prevention – As a country, we must focus on prevention and wellness, and make sure that employers can offer creative incentives that work to engage people in healthy behaviors. We need to shift the focus from paying for sick care to preventing illness. This requires allowing employers greater flexibility for incentives that reward people who meet important health goals or demonstrate meaningful effort, not just agree to participate in a program. At Ford, we are doing our part to spread education and tools that effectively encourage people to take an active part in their health care. Salaried health care plans, for example, now integrate financial incentives linked to engagement in improving health behaviors and in making informed choices as a health care consumer. The PPACA increases employers' flexibility in designing wellness and prevention programs.
• Health Information Technology – We need a national technology infrastructure that allows the consolidation of a patient's medical records, so that the most appropriate care is given wherever treatment is provided. To accomplish this, we need electronic medical records at every doctor's office and hospital, and they all need to be connected. We also need tools to improve the accuracy and safety of prescription drug dispensing, such as electronic prescribing (ePrescribing). Ford is a key participant in the Southeast Michigan ePrescribing Initiative, one of the largest employer-driven ePrescribing initiatives. This initiative has helped move Michigan into the top five of ePrescribing states. The PPACA includes a provision that addresses the need for national standard and protocols for health information technology implementation.
• Understanding What Works – By studying the cost and quality of health care and its effect on health status, we can deliver more effective care. New innovations in technology and drugs are key drivers of cost increases. Therefore, before new innovations are widely implemented, they must be compared to the standard practice to really know whether and how much additional value they bring. The comparative effectiveness study provisions in the PPACA are a good start, but findings must be translated for consumers and combined with cost considerations to help inform their decisions.

We have taken steps to reduce our own health care costs. Effective January 1, 2010, for example, we are no longer obligated to provide retiree health care benefits to hourly UAW employees, retirees and their dependents. Effective January 1, 2007, and January 1, 2008 respectively, Company contributions for U.S. salaried retirees who are not eligible for Medicare are capped at 2006 levels, and Company contributions for U.S. salaried retirees who are eligible for Medicare are capped at $1,800 per member per year. Since 2005, health care contributions paid by Ford's U.S. active salaried employees have increased each year.

Our focus on prevention and consumer engagement, along with actions relating to the One Ford Health Strategy, are intended to help us control health care cost increases, support the health of our active and retired employees, and reduce our competitive disadvantage related to health care costs.