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Senate cuts $5B from program to aid worker health funds

October 5, 2009

Senate cuts $5B from program to aid worker health funds

Detroit News Washington Bureau

Washington — The Senate Finance Committee’s health care reform bill cut in half, to $5 billion, the amount set aside to help the United Auto Workers’ health care trusts and other similar programs.

A bill approved by a House committee in July included $10 billion to defray the medical costs of union members and others in retiree group health care associations through a reinsurance program.

A plan proposed by Senate Finance Committee Chairman Max Baucus, D-Mont., would have eliminated the provision completely. But Sen. John Kerry, D-Mass., and Debbie Stabenow, D-Lansing, however, were able to get $5 billion restored. It’s not clear how long that money will last.

"It is enough to get it up and running. I think the big question is how long it lasts," Stabenow told reporters. "We will be obviously negotiating with the House and Senate and I certainly support a higher number, but it was very important to get the reinsurance program into this bill."

Alan Reuther, legislative director for the UAW in Washington, said Monday that a bill passed earlier by the Senate Health committee had provided $10 billion.

"The UAW obviously believes the $10 billion amount more accurately reflects the need for this program," Reuther said.

Employment-based plans must apply and be approved, and the health care plan would reimburse participating employment-based plans for 80 percent of the cost of benefits between $15,000 and $90,000. The plans are required to use the funds to lower costs borne directly by participants and beneficiaries for retirees age 55-64 and their families.

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 67.7 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.

"We have many, many early retires in Michigan, so this will help our employers, whether it’s the auto industry or whether it’s other industries, be able to lower their costs for their early retirees," Stabenow said.

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