I covered the auto industry for many years, and one thing that always stuck with me was that no matter how difficult a job auto assembly work was, no matter how grueling and monotonous, workers always found comfort in knowing they’d be okay in the future. When I say “okay” I mean as far as health care coverage and a pension when they were too broken down to work anymore.
Well, all things must come to an end I suppose. The United Auto Workers and General Motors are nearing what could be an unprecedented deal to hand over control of retirees health benefits to the union, so GM could get the liability off its balance sheet. It’s just gotten too expensive for the nation’s largest automaker and they don’t want to carry the $60 billion albatross anymore.
If the UAW and GM agree, it could alter the playing field for unionized auto workers across the country. Right now, under the union contract, GM has to pay for its retiree benefits no questions asked. The money to foot the bill comes out of the auto giant’s botton line.
Creating a trust to fund such benefits is risky. We’ve seen similar trusts at other manufacturers lose tons of money, leaving retirees and workers left holding the bag in the shape of paying more for benefits, benefits they thought would always be there for them. And could the UAW handle such a herculean task? Experts say the union will probably want to play it safe when investing the money in a trust, but will safe investment provide enough of a return to cover the escalating health care bill?
This is just yet another sign that the health care system in this country is out of control as far as costs. It looks like we indeed need a wholesale change. But should that change come to union contracts? Or to the health care system as a whole?