Trading Healthcare for Jobs
American companies have long said the burden of escalating health plan costs puts them at a competitive disadvantage in today's global economy--and now General Motors might have wiggled free from the $50 billion liability of retiree health benefits. The United Auto Workers essentially traded the benefit for promises that GM invest in plants in the United States. The agreement calls for GM to pay $35 billion into a healthcare trust fund that UAW will manage. The deal is pending a vote by the 73,000 UAW-GM members, but union leaders have expressed confidence that members will go along. Look for other US companies to try to hammer out similar agreements. In fact, the New York Times reports that the UAW is already moving to negotiate similar deals with Ford and Chrysler. The healthcare industry hasn't yet seen much impact from the consumer-driven movement. But the GM-UAW pact could represent a shift in this direction.