As a nation, we seem to be evolving toward consensus that saddling employers with the responsibility of arranging and paying for health care is an inefficient system. Such a system demands companies develop expertise that has no relationship to their core business. This begs the question -- if not these corporations, then who? According to the GM-United Auto Workers negotiations, the answer could be, the unions that represent GM employees. Is this a good solution for the workers, the corporations, investors, and/or the country? My impressions to date are no, yes, yes, and no.
If I were a UAW retiree, I'd be very nervous about the likelihood that the UAW bean counters could do a better job than GM in allocating the right amount of money to cover future health benefits. Certainly, GM is going to sharpen its pencil in an attempt to fund this as leanly as possible, and even at that, the pot will no doubt stretch the corporation's wallet.
A complicating factor in the negotiations is the potential that the next federal administration will successfully push for a national health-care system. If such a system does come to fruition, GM may regret not toughing it out until then, because, if such a system were in place, it would be much easier to convince Congress to bail out companies such as GM by allowing their employees to fall into this safety net.
Failing a national health care plan, though, I see this move strengthening GM by removing one of the greatest unknowns from its business planning.
For the union, such a move would be a huge victory. In an era of world-wide outsourcing, American unions have lost a great deal of their leverage, reflected in their declining membership. Proving their ability to act as a concierge for health care could be a strong selling point in their attempts to unionize other workforces such as Honda of America.
For the country, I can't see any benefit in moving this responsibility from corporations to unions. Both add administrative costs, and while stockholders can and should hold corporation's feet to the fire, union members are notoriously lax in demanding accountability. Imagine Jimmy Hoffa as your health care provider.
The free market solution might be to divvy up the money amongst the GM employees and let them shop for their own coverage. Yeah, that might happen.
Failing a national health care plan, though, I see this move strengthening GM by removing one of the greatest unknowns from its business planning.
For the union, such a move would be a huge victory. In an era of world-wide outsourcing, American unions have lost a great deal of their leverage, reflected in their declining membership. Proving their ability to act as a concierge for health care could be a strong selling point in their attempts to unionize other workforces such as Honda of America.
For the country, I can't see any benefit in moving this responsibility from corporations to unions. Both add administrative costs, and while stockholders can and should hold corporation's feet to the fire, union members are notoriously lax in demanding accountability. Imagine Jimmy Hoffa as your health care provider.
The free market solution might be to divvy up the money amongst the GM employees and let them shop for their own coverage. Yeah, that might happen.
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Reader Comments (Page 1 of 1)
9-24-2007 @ 1:10PM
Paul Sparcello said...
Union negotiations are what created this situiation in the first place. Their strong arm tactics have saddled companies with burdens that the current market will not pay for. GM should offer the workers a set salary benefits exclusive. At a wage of $25 to $30 per hour anyone can afford to set up and fully fund their own Roth IRA plus buy any health insurance policy on the market.
The GM Solution: Move all factories to Southern States, Get huge tax breaks like the foreign automakers are getting and Hire a Non Union workforce.