In my very first post on this blog, roughly two years ago, I suggested that unions had committed a grievous error back in the 1950s by agreeing to accept corporate financial promises, in lieu of cash on the barrelhead.
As I reflect further on this week's GM-UAW settlement, featuring the transfer of the former's healthcare liabilities to the former, in the shape of a $51B trust fund, described here, I believe that, once again, one of my contentions is being proven correct by realities of the marketplace.
As I reread yesterday's Wall Street Journal articles on the tentative pact, still to be approved by the UAW membership, I noticed a brief description of the failure of a similar provision, established between Caterpillar and the very same UAW in a recent contract. The healthcare trust fund is already bankrupt, and the union and Caterpillar are now locked in a legal battle over it.
Frankly, I'm surprised by three things. First, that Gettelfinger would resurrect this approach after it failed at Cat. Second, that Gettelfinger would try to somehow justify how the GM trust fund will be different, and not fail, where the Caterpillar one did, i.e., what has changed in two years? Third, that the UAW-Cat healthcare trust fund debacle was not a page one story on the day of the GM-UAW pact, as well as the featured story on CNBC.
Instead, I read it in the latter part of the Journal's long piece on the strike and pact, buried in the final columns of an inside page.
The more I think about this GM-UAW settlement, and the apparently-failed Cat-UAW 2005 settlement, of a similar nature, the more I see big labor slowly being forced to move in the direction of my post of two years ago- take cash, not promises.
Sure, right now, it's a lump sum, special/single-purpose trust fund. But how long is it until the companies lobby to give individuals a tax deduction on healthcare, and simply execute a one-time swap of policies for dollars, thus safely exiting the health insurance business?
With one fell swoop, they can argue for consistency, i.e., why pay today's employee's healthcare, when we just offloaded yesterday's to you in a trust fund? Let us just pay you what we pay for your healthcare, and you, the interested party, can, say, band together with your union buddies and all present as a single group to some insurer.
It's funny how policy sometimes occurs from the strangest sources. After all, our current third-party payer medical insurance is the unanticipated result of Harry Truman's Senate Committee freezing wages during WWII. This necessitated non-cash compensation competition by firms, in the form of 'fringe benefit,' i.e., non-cash promises- pensions, medical care, vacations, etc.
Who knew that this sort of wacky compensation would take root and completely warp American usage of healthcare, not to mention taking responsibility for their own health to begin with?
If for no other reason than perhaps sparking a trend that will make HillaryCare 2.0 irrelevant, the GM-UAW tentative agreement might just be a landmark deal, and we don't even know it yet. Would it not be ironic if, twenty years on, both the company and the union are shrunken remnants of their former selves, but the revolution in healthcare insurance payment arrangements they forged near the end of their influential phases becomes the legacy for which they are best known?
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