how will a retiree manage their healthcare?

Last week, GM avoided a long and costly strike with the United Auto Works Union (UAW) by reaching agreement on a number of issues but what is seeing the most interest is the agreement for GM to hand over responsibility for managing retiree health benefits to the UAW. In short, GM will establish a trust with an estimated value of $35B which will come under direct UAW management for all future retiree healthcare costs.

Investors love this agreement as it puts a clear limit on GM’s future exposure (liability) to runaway healthcare costs. And of course, there are all sorts of investment advisors now courting the UAW to assist them in managing this massive healthcare trust.

Longer term though, the UAW will be faced with the same tough decisions that GM was projected to face: How to provide benefits that were promised to employees years ago when the state of healthcare was much different from what we have the pleasure to experience today? People are living longer, healthcare costs continue to rise and the ability to manage such expenses is near impossible.

In short order, the UAW will be left with no choice but to adopt similar cost saving tactics as employers starting with assisting its retired members in establishing Health Savings Accounts (HSA). Such actions will leave it incumbent on the retiree to take more responsibility in managing their healthcare expenses. This will create a need among retirees for solutions to help manage their HSA and more broadly, the care they chose and receive. Personal Health Records (PHR) could play an important role here.

Employers have already begun putting PHRs in place for their employees, most notably the Dossia platform which is sponsored by among others, AT&T, Intel and Wal-Mart. Will Unions such as the UAW be next? Is there a Dossia in the future that will be funded by Unions such as UAW on behalf of their members? It would be a logical next step in the evolution of healthcare in the US.