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?

Ezra Klein sums up the theme of today’s White House Fiscal Summit: “Fiscal responsibility, in other words, is no longer a stand-in for entitlement reform. In Obama’s Washington, it means health reform.”

Indeed, for decades, so-called budget hawks have argued that growing Medicare spending will bankrupt the nation. To save ourselves from pools of red ink, we must either cut benefits, increase the eligibility age, or increase the amount beneficiares pay for services.

But blaming Medicare for the fiscal crisis ignores the fact that private health care spending grows at the same rate as public spending:

The real problem then, is not “entitlements” but rather skyrocketing health care costs as a whole (we’re spending too much money on each beneficiary). Obama is arguing that until you contain the health care spending of the entire health system, you won’t set the nation on a sustainable fiscal path.

One could start controlling costs eliminating the extra reimbursements for private health insurers that operate Medicare Advantage plans, re-orienting Medicare reimbursement rates to reflect value instead of quantity, addressing the enormous variation in service under Medicare across geographical areas and investing in coordinated care, but any cost savings must be reinvested into health care reform.

Thankfully, Obama is willing to address the actual root of the ‘budget crisis’ — rising per capita cost of health care — and put the choice honestly to the public: “accept limits on health spending or pay for the care you insist on having.”