Automaker Bankruptcies Would Require Taxpayers To Pay $3B Annually For Health Care, UAW President Gettelfinger Says

Main Category: Health Insurance / Medical Insurance
Also Included In: Seniors / Aging
Article Date: 20 Nov 2008 - 11:00 PDT

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Taxpayers would have to pay at least $3 billion annually in the event that the Big Three automakers -- General Motors, Chrysler and Ford -- have to file for bankruptcy and no longer pay for retiree health care, United Auto Workers President Ron Gettelfinger said on Tuesday during a Senate Banking Committee hearing, the Detroit News reports. During the hearing, Gettelfinger, as well as the CEOs of the companies, testified about the need for emergency assistance for the auto industry (Shepardson, Detroit News, 11/18).

Officials from UAW last week in a meeting with congressional leaders asked for $25 billion in additional federal loans for health care payments for retirees. The loans would help cover the contributions from the companies to a voluntary employees' beneficiary association for UAW retirees. Officials for the companies also asked for $25 billion in loans to maintain operations (Kaiser Daily Health Policy Report, 11/14).

In prepared testimony, Gettelfinger said, "GM, Ford and Chrysler are burning through their cash reserves at an unprecedented rate. As the recent earnings reports indicate, this scenario is not sustainable," adding, "If the government does not act to provide immediate assistance, GM, Ford and Chrysler could be forced to liquidate." He said that, in such an event, the "federal government would be liable for a 65% tax credit to cover the health care costs of pre-Medicare auto retirees costing about $3 billion per year."

Gettelfinger also rejected new concessions by UAW on wages or retiree benefits as some lawmakers have demanded as a condition of emergency assistance for the auto industry. He said, "We do not believe there is any justification for conditioning assistance to the Detroit-based auto companies on further deep cuts in wages and benefits for active and retired workers" (Detroit News, 11/18).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

© 2008 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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