Fritz Henderson, the driven president of General Motors ( GM), replaced cautious lifer Rick Wagoner as chief executive officer at the behest of President Barack Obama.

Henderson, credited with turning around GM's Brazilian operations, now has the challenge of developing a restructuring plan that addresses GM's massive costs, including health care. There will likely be dramatic and bold proposals from Henderson, in contrast to Wagoner's incremental approach.

Obama, while pledging support for GM and Chrysler, said he would include bankruptcy as a restructuring tool. GM acknowledged Obama's support for the industry, saying that, although its strong preference is to complete a revamp out of court, bankruptcy is a possibility.

Bankruptcy would inevitably have an effect on the way the company views costs, such as a health-care burden of $103 billion for the past 15 years. Despite GM having reduced labor costs by 26% in the past four years, Henderson will have to come up with a radical solution if he wants to hold on to his job for more than 60 days. General Motors has 1 million U.S. employees, dependents, retirees and their spouses, and surviving spouses who depend on its health-care benefits, making it the largest private provider of health care in the U.S.

Removing health-care and retiree benefits in bankruptcy would drastically reduce GM's costs. A bankruptcy judge recently allowed Delphi, a car-parts supplier, to cancel health-care and life insurance benefits for retirees, calling the moves "good business judgment."

The mere possibility of the cancellation of health care and other benefits will generate enormous objections from retirees, especially former salaried staff not represented by unions.

Aside from the potential bankruptcy of GM or Chrysler and fears that it will inevitably raise, Ford ( F) would be under pressure as its competitive position would be undermined. A GM bankruptcy could force Ford into the same difficult position.

It remains to be seen if Obama's inclusive health-care reform plans, supported by Wagoner in testimony before Congress last December, could replace the largesse of the automakers and allow them to prosper as competitive organizations.

Gavin Magor joined TheStreet.com Ratings in 2008, and is the senior analyst responsible for assigning financial strength ratings to health insurers and supporting other health care-related consumer products, including Medicare supplement insurance, long-term care insurance and elder care information. He conducts industry analysis in these areas. He has more than 20 years' international experience in credit risk management, commercial lending and analysis, working in the U.K., Sweden, Mexico, Brazil and the U.S. He holds a master's degree in business administration from The Open University in the U.K.

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