Word: careful
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...Assuming the deals survive bankruptcy court - and experts expect it will - the change marks a new direction in health care for GM retirees, putting them in much the same camp as Chrysler retirees. Each group will now receive health-care benefits from two underfunded vehicles known as VEBAs (Voluntary Employee Benefit Association), which will have ownership stakes in the auto companies and representation on the corporate boards. Though the VEBA for each company was set up prior to bankruptcy, health-care administration largely remained with the automakers. Now it's all VEBA, all the time. (See "General Motors: 10 Milestones...
...into this with an equity value of zero," he added, referring to the virtually worthless stock that both VEBAs are getting in lieu of cash that was owed them by the automakers. Then, pointing to his next battle, he said, "We've got to keep pushing for national health care...
...sure, the VEBA financial responsibilities are daunting. As the automakers wind down their involvement with retiree health care, both GM and Chrysler have stopped revealing details of their related costs. However, GM vice chairman Robert Lutz recently noted that GM has spent more than $103 billion on health care in the past 15 years - one big reason the company is in its current predicament. (See TIME's photo-essay "Detroit's Beautiful, Horrible Decline...
...Future cost projections are even more chilling, since money to meet those projections is dwindling fast. In 2007, GM and the union estimated that it would require an investment of $57 billion to provide future health care for GM's blue collar retirees, even after trimming some benefits. GM's VEBA is more than a little shy of that number. It had $14.4 billion in the middle of 2008, and now has only $9.4 billion in assets, which is beyond the reach of creditors but would barely last three years in the face of escalating health-care costs. Gettelfinger describes...
...Gettelfinger insists that the union has already made substantial cuts to health-care costs. In less than four years, blue collar retirees have gone from modest co-pay fees and deductibles to footing 25% of the bill for their health care. The new UAW contracts also include reductions in benefits: dental and vision coverage will be dropped, effective July 1. "The UAW has always been willing to sacrifice to help these companies," Gettelfinger says. "When this started, we were on third base before the other stakeholders were even in the ballpark...