Union-run health care may be the way of the future

Companies could reduce exposure to high benefit costs
By Gordon Sova
|hrreporter.com|Last Updated: 10/29/2007

Until General Motors and the United Auto Workers (UAW) tabled their talks – at least temporarily – about creating a retiree health fund, it looked as if a union-run health care trust might be included in their new collective agreement. GM has argued for such an arrangement, also know as a voluntary employees’ beneficiary association (VEBA), in order to restore profitability and regain a competitive edge against foreign car manufacturers.

A VEBA is a vehicle that allows companies to transfer the responsibility for providing a benefit to a trust, along with some, but not necessarily all, of the cost of providing the benefit.

Unions have a long history of providing pensions and benefits in Canada. One class of employees for whom this has been well-suited is construction trades. Because they tend to work for a variety of employers (many small and some transient) and have a stronger relationship with their hiring hall, allowing the employer to pay a rate per hour and have the union administer the benefit makes good sense. Other unions have sponsored their own pensions or health and dental plans in order to provide benefits for employees of small companies that don’t have the size or sophistication to do so.