UAW Retiree Medical Fund Reports $20.7B Shortfall
A United Auto Worker retiree medical fund created to reduce healthcare costs and increase services for more than 700,000 people reported a $20.7 billion difference between assets and future liabilities, Bloomberg reported Wednesday (via Automotive News). The shortfall increased by more than $16 billion over the last report.
A similar system proposed for Fiat Chrysler Automobiles workers in the union’s first proposed contract — which was rejected by workers nearly 2-to-1 — was scrapped in the second contract.
Accounting for future inflation and longer average lifespan are to blame for the increased shortfall, according to the report.
When it was created in 2007, the fund for retirees was created to stem out-of-control healthcare costs for former workers and their families, and to move health care costs off of the automakers’ books.
Funded in 2010 by $59 billion from the union and automakers, Bloomberg reported that the $60 billion in assets reported by the fund for 2014, was roughly the same as what it started with when it began.
The Wall Street Journal reported that conservative accounting and discount rate projections by the fund led to the higher-than-expected shortfall.
“Both of these changes … impact all private pension and retiree medical plans in the country,” the fund said, according to the Wall Street Journal.
The retirees’ health care fund filings were not made public before FCA’s first round of voting on its proposed contract.
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So much of this discussion is future projections are being kept ultra-conservative for fiscal reasons. I'm pegging it at another 10-15 years and we'll switch to Single Payer Healthcare like the rest of the first and second world. We basically overpay for everything in health care and make no effort to curtail it because of some uneven love affair with capitalism that dictates this is somehow a productive model of approach. The research costs of new medicine can and should be footed by the government rather than private individuals because we've already seen what the private market will do if given access to life saving drugs...
I am humbled when I realize that while we gather to discuss cars, many of us are actually world experts on macroeconomics, politics, labor and constitutional law... I am in awe. But seriously, guys. I'm all for a little skepticism, but a lot of all-y-all's are just a touch too cocksure of yourselves.
The UAW will have their hand in the taxpayer coffers yet again on this issue. They have already tried to get taxpayer money to shore up their VEBA. When it runs out, and it will, they will be asking the taxpayer to fill the void for their private health care costs. The bailout isn't over yet.
That man was asked to demonstrate what rear visibility is like in the Camaro.