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UAW backs reform, cites $10B to defray costs for retirees

Monday, August 24, 2009

UAW backs reform, cites $10B to defray costs for retirees

David Shepardson / Detroit News Washington Bureau

Washington — The United Auto Workers is urging its members to back efforts in Congress to reform health care coverage, citing a provision that includes $10 billion to defray the medical costs of union members and others in retiree group health care associations.

The bill, approved by a House committee late last month, includes Section 164, a reinsurance program for retirees, according to a summary of the bill from House Speaker Nancy Pelosi’s office. It sets aside $10 billion to establish a temporary reinsurance program to provide reimbursement to participating employment-based plans for part of the cost of providing health benefits to retirees age 55-64 and their families. A Senate version has nearly identical language.

Employment-based plans must apply to participate and be approved, and the health care plan would reimburse participating employment-based plans for 80 percent of the cost of benefits in excess of $15,000 and under $90,000. The plans are required to use the funds to lower costs borne directly by participants and beneficiaries.

"We need meaningful health care reform if we are going to get our economy going again," UAW President Ron Gettelfinger said in a statement posted on the union’s Web site Thursday. "Decent, affordable health care should be a right of every American, not a privilege."

The provision could provide badly needed financial support to hourly retirees, who have agreed to accept stock in exchange for billions owed in retiree health care at General Motors Co. and Chrysler Group LLC. The UAW’s voluntary employee beneficiary association, or VEBA, owns a 55 percent stake in Chrysler in exchange for billions Chrysler owed in health benefits. The UAW GM VEBA received a 17.5 percent stake in GM in exchange for billions owed. It also received a warrant for 2.5 percent of GM stock and a note for $2.5 billion.

As part of the deal at Chrysler and GM, it eliminated hourly retiree dental and vision coverage and some prescription drugs for hourly retirees. Low-income retirees who previously had no co-pay must now make an $11 monthly co-payment.

But the congressional provision could also boost other groups, including steelworkers, municipal workers and others with similar health care associations.

The UAW letter noted the health care bills "provide assistance to employers and Voluntary Employee Beneficiary Associations (VEBAs) to help them continue coverage for early retirees."

The UAW said the provision would benefit a "wide range of retiree health care plans, including those sponsored by large private-sector employers, by state and local governments, and by VEBAs," according to Bloomberg News, which reported the provision Friday.

The UAW was among a number of unions to meet with President Barack Obama at the White House on July 13 to discuss health care reform and other issues. UAW legislative director Alan Reuther said last week the UAW had already taken an active role in pushing for health care reform.

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