GM, Union Agree To Cut Retiree Health Benefits In Exchange For Stock
GM's United Auto Workers health care plan will own as much as 20 percent of General MOtors Corp. stock after making concessions this week that will cut dental and vision benefits while increasing copays for some retired workers, The Detroit News reports.
"The union was eligible to own up to 39 percent of GM's equity through the independent health trust fund, called the Voluntary Employees' Beneficiary Association, that will assume responsibility for retiree health care. But the lower than 20 percent stake could mean that the company is attempting to appease unsecured bondholders, who charged that the UAW was getting a better deal."
"Dental and vision coverage and some prescription drugs for hourly retirees (are) eliminated, including erectile dysfunction medication. Low-income retirees who previously had no co-pay must now make an $11 monthly co-pay" (Aguilar and Shepardson, 5/27).
In addition to the health care cuts for employees, which mirrors many of the same cuts the UAW made with Chrysler last month, union employees will forgo cost-of-living allowances, bonuses and some holidays, The Wall Street Journal reports. GM will also offer buyouts to 60,000 more employees and will not strike before September 2015. In all, GM hopes to save $1.5 billion annually in active-worker costs, according to the article.
"While the UAW billed the revised retiree trust fund agreement as necessary to GM's survival, it will leave hundreds of thousands of retirees paying higher out-of-pocket medical expenses. For decades, these retirees paid only minor charges."
In addition, the UAW VEBA will get a $2.5 billion note, $6.5 billion preferred equity stake and a seat on the GM board in addition to 17.5 percent of GM's shares with an option for up to 20 percent. Because the share ownership figure is lower than the before estimated 40 percent of GM's shares, the VEBA fund will get a $585 million annual dividend to use for costs (Stoll, McCracken and King, Jr., 5/27).This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.