The Wall Street Journal is reporting that Ford “has reached a tentative deal over unionized retiree health benefits”:
Ford, which faces $13.6 billion in legacy health costs, said up to half of its future payments to a retiree fund could be made in stock rather than cash under the terms of the pact. The proposed terms mirror those contained in the federal loan guarantees extended to GM and Chrysler, which the auto makers have to meet by March 31. Ford has not sought U.S. government aid.
At first glance this agreement is just another example of the UAW accepting serious concessions on health care benefits. Allowing Ford to substitute a cash contribution for stock seriously undermines the security of the health care fund. Should the value of the stock decline sharply, the union “may have to make up the shortfall over a relatively short period of time in order to continue to pay benefits.”
But on the whole, this entire arrangement screams for health care reform. The automakers are complaining that financing retiree health in cash undermines their liquidity and weakens “their competitive position versus overseas auto makers.” Now, they’re throwing workers health benefits under the bus to receive government assistance.
Need we still argue that allowing Americans to purchase affordable and comprehensive coverage outside of the employer system is a net positive for businesses and their workers?