Theirs are the skies all dark with bombers/And mine is the peace we knew/Between the wars

Wireless is still dead. What I want to fix it doesn’t seem to exist, and I as as thoroughly soaked while returning from CompUSA as I’ve ever been. I’d rather just sit here and finish Death on the Nile than work. Still.

In yesterday’s IHT (a newspaper I seem to read more on my mobile phone than anywhere/how else) I learned that General Motors (now routinely called GM – and why not, given that cars aren’t exactly buttering their bread these days. England has had some recent experience with their financial services arm), Ford and Chrysler are planning on going into the health insurance business together. They are in talks, secret – but involving at least 5 people who are telling tales out of school – to do something about what we are told is a combined (future) retiree health care cost of USD114bn. The combined cost across the 3 companies last year was USD12bn.

Not bad, not bad at all. We are routinely (for me, anyway) reminded over here how these costs add something like USD1500 per car. I’m a jerk, me. I tend to feel little sympathy for a company that should have been saving money for this instead of playing with it or giving it to shareholders and CEOs (you’ll notice those stories kind of dry up a couple of years ago).

Unless they were actually gambling on all their workers dying before retirement, having retirees on employer pension plans is kind of easy to foresee, when you’re the employer. But back to the story.

As a reference piont, Reuters refers to the steel industry, wherein the steelworkers union managed to stitch together a trust (so that billionaire Wilbur Ross could buy up bankrupt steel makers without getting stuck with these costs, to be fair). Frankly, given I teach in the home of the former Bethlehem Steel, I’m not so sure I’d use them as a model for anything. But like I said. I’m a jerk.

It’s going to be a casino now, by the way.

Very little about the deal, if there will be one, is known (not surprising). The thing about it that strikes me interesting is that 3 auto makers coming together to form a trust for the provision of health care benefits for retires into perpetuity, say, is the absence of risk pooling/spreading at either end. I don’t really know what auto workers do (if you say “make autos”, you die). I don’t know whether or not they are more likely to suffer specific health problems as they age. But suppose they do. It would surely be better to spread that amongst a bundle of companies in other industries, but make each contribute an actuarially fair sum?

Alternatively these are 3 American auto companies – that doesn’t do much to minimise the risk that they’ll all suffer hard times at the same time – and the trust will lose some contributions. The point, I know, is that once it is a trust, unlike pension funds previously, Peter can’t be robbed to pay Paul and leave Peter’s children destitute (too stretched? I wasn’t sure. See, Peter’s children are the workers. Oh forget it). I’m not saying it’s a bad idea. I’m saying it’s a good idea that could be implemented brilliantly, or reasonably poorly.

Optimally, I’d like to see government involvement. No, seriously, and not just because I’m a social welfarist. Health care fraud costs American taxpayers. So do personal bankruptcies, of which health expenses are the primary cause (this was before the utterly nasty, unforgiveable Bankruptcy Bill, so I don’t know now – are you even allowed to go bankrupt anymore?). Finally, we’ve all heard about Walmart employees being on Medicaid, but retirees are, like as not, hooked up to Medicare (the American one) one way or another. That is it’s purpose, after all. And Medicare has the expertise, such as it is, on administration.

It seems to me that an efficient solution would be one managed broadly that included risk-spreading in terms of contribution, pooling in terms of expenditure and health care utilisation, that included public contribution, possibly oversight and that was administered on a non-profit basis. At least sufficently such that (i) it doesn’t siphon off great slices of the money in fees (see: privatising medicare), or (ii) go belly-up itself, leaving workers with nobody left to sue.

Who knows, perhaps that is what’s being cooked up behind those closed doors.

Advertisements

No comments yet

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: