In its latest contract with the United Automobile Workers (UAW), General Motors got a green light on its plan to transfer employee and retiree health care to a voluntaryassociation, or VEBA. Pending SEC approval, the agreement makes the UAW responsible for funding and administering health care benefits through a trust established by GM.
The VEBA will remove from the company’s books an estimated $55 billion in liability for present and future health care costs. GM predicts the plan will significantly lower its labor costs, currently about $80 per domestic union worker, compared to Toyota’s $50.
Some see VEBAs as a win/win solution for companies and unions alike. Others aren’t so sure.
Assuming control over employee health care would certainly put the UAW and other unions, which recently have seen a decline in membership, in positions of greater power. No matter who wins, with health care weighing heavily on most employers, analysts expect the VEBA experiment to take off quickly in both union and nonunion companies.