Health of the uaw veba

this is from my locals paper Sept. 09 issue
(this information is prior to the hearings on the bill)

Health of the UAW VEBA
In late August, Gannett News Service
reported the direction of the health care
debate could determine success or failure
for the UAWís plan to insure 850,000
retirees from Detroitís automakers.
Due to GM and Chryslerís bankruptcies
and other concessions, the UAWís
Voluntary Employee Benefit Association,
or VEBA, had to take stock of unknown
value for $24 billion in claims, while
adding thousands of early retirees to its
rolls.
Outside experts estimate the funds have
about 30 cents in cash for every dollar of
future claims, with no guarantee of what
its stock assets will be worth. Lance Wallach,
a New York-based VEBA expert,
said if the funds ìdonít get something,
theyíre out of business in 12 years.î
That something may be national health
care reform.
Key provisions in House and Senate
proposals set aside $10 billion to pay
some claims for early retirees covered
by employers and VEBAs, before other
cost-saving measures kick in.
ìWe want to see the whole reform
package succeed,î said Alan Reuther,
the UAWís chief lobbyist. ìThereís substantial
overall benefits to the American
people and our members that includes
benefits to retirees and VEBA.î
The cost of care for early retirees aged
55 to 64 is skyrocketing, and this group is
too young for Medicare. President Barack
Obama and congressional Democrats
expect coverage will be less expensive
once, and if, the reform measures kick in
several years from now.
John Sheils, vice president of the Lewin
Group, a health care research firm owned
by a United Healthcare subsidiary, said
the money probably will run out in less
than two years. Then, like with the recent
Cash for Clunkers clamor, Congress
could feel obligated to add money to the
program.
The union has taken on about $90 billion
in health care liabilities for its retirees
from the three Detroit-area automakers.
According to outside experts, the UAWís
VEBAs have only about 30 percent of
the cash needed to cover retirement
health benefits for about 850,000 people.
This makes it the second biggest retiree
insurance pool in the nation, with only
Californiaís pension plan larger. Shares
in Chrysler Group, Ford Motor Co. and
General Motors Co. will add to the bottom
line, but itís impossible to say how
much.
The VEBAs will have the power to cut
coverage and raise costs to make their
money last, and have already warned
retirees that cuts are likely next year.
The VEBA expert Wallach said the UAW
VEBAs resemble the plans the UAW
set up for workers at Detroit Diesel and
Caterpillar in the 1990s, both of which
later ran short of money.
ìI really thinkî the UAW ìwas gambling
there would be some health care
nationalization,î he said.
Kristin Dziczek doesnít agree with
Wallach that the UAW took such a risk.
Dziczek is head of the Ann Arbor, Mich.-
based Center for Automotive Researchís
Labor and Industry Group. She said getting
help now with the expensive coverage
required for pre-Medicare claims could
help greatly in the short term. In the long
term, any success in lowering health care
costs could be a windfall for the VEBAs
and help ensure their survival.
Stephen Diamond, a professor at Santa
Clara (Calif.) University and a VEBA
expert, said the UAW helped get Obama
elected. He said now the union owes its
membership to make sure that whatever
reform is crafted ìprotects the interests of
their members and their retirees.î
Itís not just the UAW fighting for the
funding. The provision has the backing
of the United Steelworkers of America
and the Communications Workers of
America. The AFL-CIO also pushed for
the program in congressional hearings.
Reuther said retirees too young for
Medicare often face problems in getting
or maintaining health insurance, since
theyíre typically far more expensive to
insure than younger workers. The reinsurance
provision, he said, is needed to
maintain coverage, which is the $10 billion
being considered by Congress in the
health care reform bill.
ìWe think itís important so that we keep
the employer- and VEBA-sponsored coverage
for these retirees,î he said.
Thatís especially true of the retirees
age 55 to 64 without employer- or unionbased
insurance coverage. People in that
group are among the most expensive to
cover with health insurance. They face
high premiums if forced to seek their
own policies and often have pre-existing
conditions that can make finding coverage
difficult.
The Time To Act Is Now
Call your Congressman and Senators
and ask them to support health care reform
with a public option.
Congressman Kildee can be reached
locally at (810) 239-1437 or outstate
1-800-662-2685. Senator Stabenow can
be reached at (810) 720-4172 or (202)
224-4822. Contact Senator Levin at (989)
754-2494 or (202) 224-6221.

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