Friday, September 28, 2007

Health Care Cost Turning Point

The new contract between GM and the UAW may be the turning point in health care costs in this country. In case you've been under a rock this week the deal turns over the liabilities for the health care of all GM retirees to a new trust that will be funded with $35 billion from GM. The catch is that it will be up to the trust to set and manage the health care benefits.

This is a radical break from the UAW's reliance on job-based insurance and it will be very interesting to see how this plays out in the future. It's a great deal for GM since it gets out from under a huge and growing liability so it can become more competitive. For UAW members, especially aging retirees, it may be the dawn of an unpleasant new day.

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