And then There Were Three

by | Nov 5, 2007

This weekend the NY Times reported that the Ford’s UAW members will be voting on a negotiated contract agreement that is similar to the recent ones signed with GM and Chrysler wherein  Ford will hand over the responsibilities of managing retirees health benefits to the UAW.  In a previous posting I talked about the implications of GM’s agreement with the UAW, which was basically a watershed moment for the other two auto manufacturers.

While the auto makers can now wash their hands of having to deal with the rather sticky and ever more expensive costs of managing retiree health benefits, the UAW will now have to step up to the plate and hopefully do a better job of managing these multi-billion dollar trusts to create Voluntary Employees’ Beneficiary Associations, or VEBAs, having learned a thing or two since the infamous Caterpillar VEBA went bankrupt.

While some policy wonks are starting to run about saying the sky is falling, and calling for a form of Universal healthcare coverage via Medicare, it may not be all that bad.  These VEBAs are far better funded than the failed Caterpillar example and the UAW can leverage its experience to better manage these new VEBAs.

Obviously, their biggest challenge will be to keep rising costs under control.  With Caterpillar, the UAW saw increases of 16% per year over the six years the VEBA existed.  Even with billions at their disposal, these new VEBAs will not be able to sustain such increases in costs for very long.  As I mentioned in that previous post, the UAW will be motivated to get retirees to take more responsibility for their healthcare which may foster a Dossia like personal health record (PHR), or maybe the UAW will just join Dossia.

And as has been oft-quoted, 75% of all healthcare costs go to chronic care cases of which many can now be safely and adequately managed in a home environment via telehealth technology, if the proper incentives are in place to reimburse providers for delivering care over the Internet.  With numerous studies showing that telehealth does save money (click onto the report link in the text of Friday’s post), we may see accelerated adoption of this nascent technology in the future.

This is truly a case where the UAW , applying some creative thought, can really be a  progressive provider of healthcare to its retirees that is both safe and cost effective.  It will be interesting to see if they take up the mantle to deliver such new modalities of care.


  1. Mike Hoogerland

    John —

    I think you’re right that there’s a great opportunity for the UAW to drive telehealth. They could become a catalyst for others to follow if they do it right. I’d be surprised to see much success with a PHR, though. While the UAW has a very high percentage of retirees (read elderly) and the consequent higher percentage of healthcare users, the success rate of PHRs to date has been abysmal. Simply making one avaialbe, or even attempting to coerce use is not going to make it happen. Healthcare users need to see a benefit from a PHR. As yet, the PHRs out there aren’t offering one.

  2. hitanalyst

    Agree that telehealth has more potential here than PHRs and yes, the UAW can really take a lead here that may force some of the laggards to begin reassessing their own reimbursement policies regarding telehealth services.

    As a more general comment on PHRs, agree that the value proposition for most is simply not there. Will be doing a series on this topic over the next week or so.



  1. New PHR Business Model from Our More Socialist Neighbors up North « Chilmark Research - [...] that might work, especially for large organizations, such as Unions. For example, the recent agreements that the Untied Auto…
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