UAW could spark shift in retiree-health benefits

The UAW could hold down costs by encouraging its members to exercise, take their medicines and limit unnecessary doctor or hospital visits, experts said.

"They all go down together if it doesn't work. They've got organizational cohesiveness on their side where they didn't have it before," said Silvers.

Carter, of the Detroit Medical Center, said his nine-hospital group wants to work with the union, potentially scrapping the traditional model of employers contracting with insurance companies.

"They probably need to be looking at how to bundle this stuff up and get good pricing," Carter said.

With patient and health care provider on the same side, the union could use new technology to end duplication of services, treat people in their homes and encourage patients to comply with doctors' instructions, he said. That could help cut down on costly emergency room visits and hold down costs, Carter said.

But other experts say cutting costs won't be easy. If it was, efforts by GM or the federal government would have been more successful, said W.C. Benton Jr., a management professor at Ohio State University who specializes in health care economics.

The union says the boards that run the trusts will contract out investment and health care duties, but Benton said the fees will be expensive and the nonprofit UAW will have to quickly learn the nuances of health care finance or risk being manipulated by more savvy insurance companies or health care providers.

"For-profit entities will just hover over the UAW now," he said. "In most cases I've studied, the for-profits always prevail over the nonprofits."

It also costs more to care for retirees, and although Medicare will pay many of those bills, the UAW won't be able to offset its costs with a younger population as insurance companies do, said Kenneth Lee, associate dean of finance and administration at the Wayne State University Medical School in Detroit.

The UAW can make gains by negotiating, but Lee noted retirees often undergo expensive treatment for life-threatening conditions. And no one wants to make the decision against treating them.

"Who's going to make those kinds of tough decisions?" he asked. "That's where the real cost of the health care dollar comes, in those end-of-life issues."

UAW spokesman Roger Kerson wouldn't comment, but even the summaries handed out to members warn VEBA projections are based on reasonable expectations of medical cost inflation and investment returns, and trustees "may need to make benefit adjustments to maintain long-term solvency."

Russell Kula, 58, retired in 2001 from the Chrysler truck plant in Warren, Mich., after 30 years with the company. Standing outside of his union hall recently he said he isn't worrying about the trusts running dry.

"There's nothing you can do about that," Kula said. "If they run out, they run out."

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