UAW Contract With GM Would Create Health Care Reform Institute

The tentative contract between United Auto Workers and General Motors that would establish a voluntary employees' beneficiary association also would create a health care reform research institute, the New York Times reports. According to contract language regarding the VEBA -- under which UAW would assume retiree health care liabilities from the automaker -- the health care institute would be financed by GM through $15 million paid over five years in increments of $3 million annually. UAW likely will push for additional funds for the initiative from Ford Motor and Chrysler Group, which both are still in the process of contract negotiations.

The National Institute for Health Care Reform would be "dedicated to understanding, evaluating and developing thoughtful and innovative reform measures" in health care, according to the agreement. It is uncertain who would manage the institute, and it is not clear whether it would have "more influence than the numerous organizations already focused on the health care issue," according to the Times. GM spokesperson Michelle Bunker said the automaker has not called for a government-run single-payer health care plan specifically. She added that GM "believes that all Americans should have access to insurance, and we are working with key players to make sure that everyone has high-quality care at low cost."

UAW Local 602 President Doug Rademacher said, "We did the VEBA, we handled what the crisis was in GM's eyes, so I'm glad they've committed" to researching and advocating health care reform (Maynard/Chapman, New York Times, 10/6). GM's UAW members likely will ratify the tentative contract, with at least 23 local branches approving the deal and three rejecting it by Monday's end, the Detroit Free Press reports. Voting is expected to finish on Wednesday (Merx, Detroit Free Press, 10/9).

Strike Deadline Nears for Chrysler
UAW over the weekend informed Chrysler it would no longer extend its current contract with the automaker, giving the required 72-hour notice and setting a strike deadline of 11 a.m. on Tuesday, the Wall Street Journal reports. On Sept. 13, UAW extended contracts with Chrysler and Ford indefinitely while negotiations with GM were under way. With that contract resolved, the union has turned its attention to Chrysler (Stoll et al., Wall Street Journal, 10/9).

According to USA Today, several questions about Cerberus Capital Management -- which purchased Chrysler from DaimlerChrysler earlier this year -- "have surrounded the negotiations." Uncertainties include what Cerberus is willing to do to cut labor costs; whether it is more financially capable of withstanding a strike than the other automakers; and if it will delay addressing long-term issues, including health care, with the intent of selling or spinning off the company (Silke Carty, USA Today, 10/9).

A person close to the talks said one sticking point in the negotiations is that UAW and Chrysler have not come to an agreement for the automaker to receive the same health care concessions given to GM and Ford during the 2005 mid-contract talks, which would be worth about $340 million annually. Several analysts also said that UAW and Chrysler likely are not in agreement on a VEBA deal, which would take about $18 billion off of the automaker's books (AP/Baltimore Sun, 10/9). One person familiar with the negotiations said that Chrysler wants to put in less money than GM did in its VEBA agreement and that the automaker wants to fund more of it with a bond convertible into equity, rather than cash (Wall Street Journal, 10/9).

Chrysler spokesperson Michele Tinson said that the deadline could be extended hour-by-hour if negotiations are still under way and making progress (AP/Atlanta Journal-Constitution, 10/9).

Editorial
The VEBA deal between UAW and GM is a "sensible compromise," but "it will also add GM to the growing list of companies that are reducing employer-sponsored health coverage and transferring more risks and costs to their workers," according to a Times editorial. The Times continues that the "deal does nothing to restrain the underlying escalation of medical costs driving the problem" but "simply shifts responsibility." The editorial says that the UAW-GM deal is a "further sign of why there has to be a government-led effort to solve the country's health care problems," concluding that the "problems require lasting national solutions" (New York Times, 10/7).