Health care and the UAW

There's an excellent — and eye-popping — article on the upcoming negotiations between the UAW and the big three US automakers. I didn't realize just how much is at stake just on the healthcare issue:

Before the 2005 "givebacks," the Detroit Three companies picked up the entire health-care tab for all their hourly workers — active, retired, dependents and, incredibly, even laid-off workers till they found other jobs. Workers were not required to pay any premiums, deductibles or co-pays-except for routine physical exams and prescription drugs. The 2005 deal left these benefits virtually untouched for retirees with pension incomes below $8,000. But for the first time ever it began requiring more well-off retirees to cough up $252 in annual premiums for family coverage and another $500 in total annual deductibles. In short, for a grand total of $752 in out-of-pocket annual costs, UAW retirees and their spouses get full medical coverage for life. Given the huge retiree population that the Big Three support — GM has three times more retirees than active workers — this has saddled them with a combined unfunded health-care liability exceeding $100 billion.

By contrast, 90% of retirees in other American companies don't get any employer-provided coverage after 65, when they become Medicare-eligible. Such couples, according to an analysis by Fidelity Investments last year, are typically on the hook for $10,000 in out-of-pocket annual costs for Medicare co-pays and other expenses not covered by the program, or 10 times more than UAW couples.