United States

VEBAs No! National Health Care Yes!

By Jerry Tucker

Historically, when the UAW sits down to bargain with the U.S. auto companies, wage, benefit, and working condition precedents are established which can affect workers in many industries. Once considered a good thing, this continuing reality now may increase risks for more workers than it helps. Prominent among the numerous corporate concession demands this year is one to let the companies walk away from their retired worker healthcare responsibilities and shift all the risk to those workers.

The domestic auto manufacturers still referred to as the “Big-3” have been calculatedly finding ways to refocus the legacy of their own mismanagement and poor product development on to the rank and file workers for a number of years. Some of the public and all of Wall Street buys this line. The “help us become competitive” refrain is several decades old in auto industry bargaining and too often the UAW leadership has accepted the corporate competitiveness prescriptions as their own. They called it “jointness” but jointness has essentially been a one-way street.

There are all kinds of “get healthy” schemes being floated by auto execs and their corporate cheering section these days and they all involve more sacrifices by the workers. Nobody’s seriously trimming executive compensation or blaming bad Board Room decision-making as the call goes out again for worker concessions. And the claims that worker productivity is at the heart of the problem is bunk. The UAW members and leaders have, if anything, been too willing to make both workplace changes and income compromising decisions that have increased per unit productivity.

Perhaps the most glaring injustice now under discussion is the scheme to create a union-managed special, defined contribution, trust fund or VEBA to cover healthcare and other benefits for retired autoworkers. Even former UAW President Douglas Fraser has publicly questioned this scheme. VEBA means Voluntary Employee Beneficiary Association and the IRS has issued explicit warnings regarding the risk involved in these plans. A VEBA carries huge dangers for the retired workers who have been guaranteed healthcare security in their later years by both the companies and the UAW. Workers over the years, paid for the healthcare protection by agreeing to diversions of significant wage increases in past contracts.

The VEBA is not the answer, but there is a more equitable and socially responsible solution. That answer would be putting the full weight of this still important sector of American industry behind the drive for a universal, comprehensive, single-payer national healthcare system. The legislation HR 676 introduced by Detroit’s own Congressman John Conyers will do nicely for that purpose.

It’s ironic that this same Big-3 in Canada is publicly on the record in full support of the Canadian Medicare-for-All Healthcare System and committed to work for its improvement. They also publicly acknowledge that Canada’s HC system saves them something like $1400 per unit (vehicle) of production over its production costs in the U.S.

The UAW has been supporting a form of Single-payer healthcare as public policy for years. GM, Ford, and Chrysler can’t continue to cry crocodile tears over a lack of “competitiveness” over health insurance costs in one place and champion the very public policy that radically relieves those costs a few miles away, across the Detroit River. They owe their shareholders, workers, and the American public better than that. Their top-deck corporate cronies in the Insurance and big Pharma Industries won’t like it but holding off is a betrayal of their own corporate interest. And, who knows if they PR it right they just might find a grateful American public more interested in putting their products back at the top of their shopping list.

And, as for the UAW, its obligation here is even more solemn. This issue provides an opportunity for the UAW to reassert its legitimate role in protecting its own members past and present, and helping to deliver a long overdue right to the American people. That obligation also extends to workers and unionists in all the other industries for whom U.S. Auto contracts have long been the bell cow of collective bargaining precedents.


Jerry Tucker is a former UAW International Executive Board Member. He currently directs the Solidarity Education Center and is a co-founder of the Center for Labor Renewal. A version of this article appeared in the Washington Post and in the September edition of Labor Notes.