VEBA in Spotlight of Health Care Reform

The fallout from the UAW-GM agreement shifting retiree health care benefits into a VEBA (Voluntary Employee Beneficiary Association) keeps coming.

In a quick, penetrating article, BusinessWeek reporters David Welch and Nanette Byrnes enlighten readers about how many VEBAs are already around (about 12,000 nationwide), who's using them (employers with large, unionized workforces), and how well they are holding up:

In 1998, the equipment giant [Caterpillar ] set up a similar type of health-care trust to defray increases in retiree medical costs. By October, 2004, it ran dry, and retirees saw as much as $281 extra taken from their monthly pension checks. Now the retirees, union, and company are in litigation.

The article quickly explains the benefits of VEBAs to both business and labor:

For employers with aging workers and lots of retirees, a VEBA may be the only way, short of an elusive national health-care plan, to strip crushing liabilities from their books... For unions, a trust can provide an opportunity to safeguard members from losing benefits in the event of a corporate bankruptcy.

Meanwhile, New York Post reporter Paul Tharp is taking a more jaundiced, historical look at VEBAs:

General Motors is saving its financial neck and ending a surprise strike by using a century-old shelter device originally invented to quell the labor riots of the 1920s... VEBAs were created as tax shelters for giant coal and steel companies at the turn of the century to help pay for worker injuries and widows' benefits.

One thing is certain, you'll be hearing a lot more about VEBAs on this blog and in the U.S. Presidential Election campaign in the months ahead.

SOURCE: "Is GM's Health Plan Contagious?" by David Welch and Nanette Byrnes, BusinessWeek, September 27, 2007.
SOURCE: "GM's $nazzy New Model: VEBA," by Paul Tharp, New York Post, September 27, 2007.
photo courtesy of Abandoned In Place at Flickr

Landmark Health Care Trust in UAW/GM Deal

The United Auto Works has called off its strike and 73,000 workers will return to work at General Motors Corporation as the two sides announced a tentative 4-year labor agreement this morning -- subject to approval by the union's membership.

A central piece of the compact between GM and the UAW is a "voluntary employees' beneficiary association" -- or VEBA -- a trust established for retiree health care benefits. The trust will be managed by the UAW, not GM, and could grow as large as $50 billion.

Speaking just hours after the tentative agreement was signed this morning, UAW President Ron Gettelfinger said retirees are

going to be secure in their retiree benefits... [and] will be especially pleased with this agreement because there's other things in the package for them.

The contract is considered a landmark in labor negotiations. In a statement today, GM said the Securities and Exchange Commission (SEC) would conduct a review of its accounting treatment for the VEBA fund.

Wall Street analysts have said establishing a VEBA could cut GM's annual costs by $3 billion in exchange for a one-off payment expected to top $30 billion.

The fact that health care has taken center stage over job security in this round of bargaining is a sign of the times, as employers struggle to remain globally competitive. For an astute analysis of the UAW-GM deal and what it implies for proposed health care reform legislation in California and elsewhere, check out Robert Laszewski's piece on the Health Care Policy and Marketplace Review Blog.


SOURCE: "UPDATE: UAW Chief: GM Health-Care Trust To 'Secure' Benefits," Dow Jones Newswire, September 26, 2007
SOURCE: "UAW, GM Settle Strike with New Health Care Deal," Reuters, September 26, 2007
photo courtesy of jm3's photostream on Flickr remixed under this Creative Commons license.

Deadlines Loom for Health Care Legislation

In Washington D.C., where the fiscal year ends on Sunday, September 30, President George W. Bush continues to threaten a veto of the State Children’s Health Insurance Program (SCHIP), while Democrats line up votes. Passage is expected in the U.S. House of Representatives early this week and in the U.S. Senate by the end of the week.

In an article for the Monday The New York Times blog, "The Caucus," journalist Carl Hulse explains why Democrats are not backing away from a showdown with the President:

Democrats like their position on this issue. They believe that the public supports making health insurance more affordable and that many families with middle-class incomes are struggling to provide coverage and care for their children. Some Republicans in both the House and Senate are expected to support the plan.

In California, compromise -- not confrontation -- is the top story. The San Francisco Chronicle reports that Governor Arnold Schwarzenegger is close to a compromise with Democratic leaders on a health care reform bill. Schwarzenegger wants to pass the bill before the end of the special legislative session. In a Sunday article outlining the financial interests of a dozen key players, Chronicle journalist Tom Chorneau comments on the surprising civility of the public debate at this late stage:

Absent from the airwaves are the attack ads from insurance companies and doctor groups that many feared would have materialized by now. Massive protests from labor unions or consumer groups intended to push the talks one direction or another have also been largely put on hold.

This should be an exciting week of twists and turns in the effort to pass health care reform legislation. Do you think the California bill or the federal SCHIP program will pass? Do you think President Bush will really veto SCHIP? Do you think the U.S. Congress will have the votes to override a presidential veto? We'd love to hear your comments.


SOURCE: "Democratic Leaders Close to Deal on Health Care Reform," Tom Chorneau, San Francisco Chronicle, 09/23/07
SOURCE: "Congress Tackles Child Health Care," by Carl Hulse, The Caucus, Political Blogging from The New York Times, 09/24/07
photo courtesy of U.S. White House

Let The SCHIPs Fall Where They May

The State Child Health Care Insurance Program (SCHIP) is a major bone of contention between President Bush and the United States Senate. There is never a lack of strident debate when it comes to issues as polarizing as health care has become. Sources large and small are weighing in on the subject everywhere from major networks to the blogosphere.

Political correspondent John Fout talks about SCHIP and examines the brewing confrontation for The Street in his Market Features column:

The program provides coverage to poor children who are ineligible for coverage under Medicare and who lack private health insurance, and according to a Senate report, it's been a big success. According to the report, the number of uninsured children has decreased from 14% in 1997 to about 9% in 2005, bucking the opposite trend for adults.

Fout then proceeds to examine both the funding source for the new expansion and the President's rationale for his threatened veto:

The expansion of the SCHIP program would be funded by a small tax increase on cigarettes. A recent poll by the American Medical Association found that 70% of Americans support a tax hike to pay for children's health care. In addition, incremental increases in cigarette prices are thought to have played a role in decreases in smoking. This sounds like a win-win situation for public health.

Bush, however, prefers to fight expansion of the program. He favors funding care for poor children only -- rather than the lower- or middle-class families who'd be covered under the Senate bill -- and suggested that expansion would cause middle-class families to cancel private policies in favor of public policies. The expansion only affects people presently lacking coverage.

President Bush went on to characterize the bill as "federalization" of health care and to accuse Democrats of using the issue "to score political points." He has also promised to veto the bill once it reaches his desk. (As pointed out in our Aug. 3 post, it passed the Senate with a 68-31 margin -- sufficient to override a veto.)

SOURCE: "Bush Fights Losing Battle Over Kids' Health Care" 09/20/07
photo courtesy of Tenuda on Flickr

SCHIP

Karl Rove, The Wall Street Journal, and Health Care

Yesterday's Wall Street journal contained a 788-word opinion piece by Karl Rove, former advisor to President George W. Bush:

As the latest government-heavy plan announced by Hillary Clinton yesterday once again shows, the answers politicians offer on health care highlight the deep differences between liberals and conservatives. This is a debate Republicans cannot avoid. But it is one we can win -- if we offer a bold plan. Conservatives must put forward reforms aimed at putting the patient in charge. Increasing competition will ensure greater access, lower costs and more innovation.

He goes on to present his ideas for reform, which include greater transparency of health care costs and data portability for health care records. The vast majority of his points stress using the forces of the free market to drive down health care costs through competition between providers.

The extensive similarities between Rove's ideas and presidential hopeful Mitt Romney's health care plan are noted in many places across the blogosphere, including Romney's campaign blog *:

After reading the entire article by Rove, does any reader of this blog doubt Governor Romney's strategic brilliance and his ability to execute against a strategic plan?

The maelstrom of debate and press releases continues as both parties attempt to assert dominance on the health care issue. Political commentator Susan Estrich of the Nashua Telegraph observes that the political jockeying is often seen as more gripping than the issues themselves:

It is a commentary on the state of American politics that more attention is being paid to the strategic goals that might loom behind Rove's comments than to the substance of the comments themselves.

Politics today, and political coverage, is much more about tactics than ideas, more focused on where candidates stand in the polls - even before anyone has actually voted - than where they stand on the issues.

* CORRECTION: Many thanks to Nate Gunderson of the Utah for Mitt Web Log for pointing out in the comments that this is actually an independent site and not the official campaign site. We apologize for allowing the error to slip through and appreciate the correction!

SOURCE: "Republicans Can Win on Health Care" 09/18/07
SOURCE: "Karl Rove: Republicans Can Win on Health Care" 09/18/07
SOURCE: "Rove's Parting Shot at Hillary Raises Questions" 09/20/07
photo courtesy of DoctorWho on Flickr remixed and used under this Creative Commons license

Clinton Care Chaos

The media and blogosphere are abuzz about what many are calling "HillaryCare 2.0." The presidential hopeful laid out her approach to health care reform yesterday in Iowa. It was shortly afterwards that her new ad debuted.

The attacks and analyses began immediately, with a frequent refrain being about Clinton's stance on the insurance companies. Clinton makes many references to not allowing the insurance companies to control health care prices. That adversarial tone is seemingly quite at odds with the way her plan is being assessed in some quarters. This excerpt from The Nation is a good example:

The Clinton plan maintains the current system of for-profit, insurance-industry defined health care delivery. The only real change is that, in return for minimal requirements regarding coverage of those with preexisting conditions, the government would pump hundreds of billions in federal dollars into the accounts of some of the country's wealthiest corporations. The plan's tax credit scheme would buy some more coverage for low-income families, which is good, but it would do so at a cost so immense that, ultimately, Clinton's plan will be as tough a sell as the failed 1993 "Hillarycare" proposal.

America is ready for health care reform.

But it is not ready for more bureaucracy, more expense and more revenue for insurance companies.

Criticism abounds from all sides of the debate with both Republicans and her fellow Democrats rushing to add their own critiques. Does this avalanche of criticism denote a defensive posture amongst her detractors?

ABC News summarizes the reactions from other candidates and comments on the overall state of the playing field:

Clinton's plan is "European-style socialized medicine" (Mitt Romney); straight out of Michael Moore's "Sicko" (Rudy Giuliani); an "imitation" advanced by a flawed saleswoman (John Edwards); inadequate and advanced by a flawed saleswoman (Barack Obama -- but how would he cover more people without requiring coverage?); and automatically bad because Clinton herself "set back our ability to move toward universal health care immeasurably" back in 1994 (a very aggressive Chris Dodd).

All the attention is a form of flattery; just about any other candidate would have had himself hospitalized (maybe even in Cuba) to be attacked like this when he offered his plan. The obsession with "Hillarycare 2.0" speaks to the control that Clinton exerts over the entire field, as the one person who at this moment looks like she has the best shot of being elected president (and who represents the match-up the Republican base craves the most).

SOURCE: "Clinton's Prescription for Another Health Care Reform Failure" 09/17/07
SOURCE: "Hillary '07 Battles Hillary '93" 09/18/07
photo courtesy of valentinapowers on Flickr.

Employers Back CHIP Electronic Medical Records Program

Gary McWilliams writes in The Wall Street Journal this morning that six major corporations are backing the Children's Hospital Informatics Program (CHIP). CHIP is the latest effort from the Dossia Network -- a nonprofit consortium of large employers -- to deploy an online health records management tool.

The Dossia Network will adopt the "Indivo" electronic medical record (EMR) developed at Children's Hospital Boston. In a detailed article in today's Information Week, Marianne Kolbasuk McGee describes a falling out between Dossia and previous tech partner Omnimedix. The new partnership between Dossia and CHIP will hopefully get the EMR back on track. McGee interviews several key players in her piece.

Corporations signing on include Wal-Mart, Intel, AT&T, BP, Pitney Bowes, Applied Materials, Cardinal Health, and drug maker Sanofi of France.

In chapter 2 of his book, Health Care Reform Now!, George Halvorson says, "fewer than one in ten doctors makes use of electronic health records." Halvorson cites the lack of standardized EMRs as a major impediment to continuous quality improvement in medical care.

There are 2.5 million employees represented by the CHIP partners. The group hopes to have capacity to handle 1 million EMRs within a year. The Wall Street Journal article mentions that employers hope the electronic system will reduce costs. That's the carrot for adoption. The stick?:

They also intend to require hospitals, doctors and pharmacies to update employee records in order to remain preferred health-care providers.

SOURCE: "Employers Back Development Of Web-Based Health Records" 09/17/07
SOURCE: "Intel, Wal-Mart, And Others Refocus To Get Worker E-Health Record System Running" 09/17/07
photo courtesy of tillwe on Flickr using this Creative Commons license

Report Card on the Legislative Session

Even though a special session looms in California, the lack of progress on the health care issue has spawned criticism, anxiety and unease across the state.

Steven Harmon at the San Jose Mercury News examines the situation:

"They had the stars and the moon properly aligned, with the governor re-elected, and there were no election worries for the Legislature," said Tony Quinn, a GOP political analyst. "This was the year to do something. I expected to see more substantive stuff. But the governor didn't use the large mandate he got. It just petered out."

Left on the cutting room floor were hot-button issues such as health care reform, sentencing and parole reform, assisted suicide, water storage and redistricting reform.

[Gov. Arnold] Schwarzenegger has called lawmakers into special session in hopes of accomplishing what couldn't be done in the regular session: health care reform, and water storage and flood protection legislation.

But not everyone is optimistic, especially given the partisan divide that dominated a session that produced mostly tweaks to state laws, not memorable change.

A common thread in many articles is the idea that the seven-week long budget standoff was a primary factor in health care issues remaining unresolved.

Ted Lempert, former California State Assembly member and President of Children Now, comments in the Capitol Weekly:

California's recent budget battle did more than just heighten political friction. The two-month-long stalemate monopolized precious time needed to fix California's desperately broken health-care system, which leaves millions of Californians uninsured--including over 760,000 children. Uninsured children often miss the preventive care that decreases health-care costs borne by the public over time.

Now, with just a few weeks left on the legislative calendar, Democrats and Republicans alike have a responsibility to address their unfinished business--namely health-care reform. This is not a problem that can wait until the next legislative year. California, which always has prided itself on leading the nation in social and economic issues, today ranks 43rd among states in the percent of insured children. As families, businesses and the rest of the public are demanding immediate action, it is not hyperbole to say that health care reform is a life or death issue.

SOURCE: "Hopes for Major Achievement Dashed as California Legislature Wraps Up- 2007 Session in Review" 09/13/07
SOURCE: "Children's Health Care: Unfinished Business" 09/13/07
photo courtesy of A. Belani on Flickr remixed and used under this Creative Commons license

Votes and Vetos: AB8 Passes

All eyes in California are focused on Sacramento.

From the San Francisco Chronicle:

The state Legislature approved an overhaul of California's health care system Monday, but even before the votes were tallied Gov. Arnold Schwarzenegger vowed to veto the bill and call lawmakers into a special session after the current session ends this week.

Schwarzenegger said he would reject AB8, by Speaker Fabian Núñez, D-Los Angeles, because it puts too great a financial burden on employers and does not address the needs of 2.8 million of California's estimated 6.8 million uninsured residents.

Despite the vote's outcome, there is still a long road ahead for reformers. Schwarzenegger's veto will bring a return to the ongoing debate, while the special session will keep it in the public eye.

Jordan Rau at the Los Angeles Times speculates on the content of possible resolutions:

An agreement would be likely to include a requirement that employers provide health coverage for workers or pay a fee to the state, which would then arrange for insurance for those workers. That proposal forms the heart of the Democratic bill.

The deal probably would also incorporate a tax on hospitals that would help California capture an extra $2 billion in federal aid. The California Hospital Assn. endorsed such a tax last week after Schwarzenegger lobbied hospital executives.

SOURCE: "Health Care Bill Passes Legislature, But Governor Says He'll Veto It" 09/11/07
SOURCE: "Governor Plans Health Care Veto, Talks" 09/11/07
photo courtesy of Fronco Folini on Flickr remixed and used under this Creative Commons license

Universal Concerns About Universal Health Care

In California, the legislative calendar is coming to an end, and still the debate on health care reform seems far from resolution. As competing plans are dissected and debated on the floor, citizens and business groups are stepping up to make their feelings known. Health providers and small businesses are putting out press releases to make their stance on the issue a matter of public record, and the one constant throughout is the sense of urgency that is felt on the subject.

Among others making their position known, the California Association of Physicians Groups stresses the lack of attention to preventative services in any of the current legislation:

California's network of 150 medical groups applauds the leadership in producing their pending health care reform proposals, but a critical factor necessary for these to succeed is glaringly missing -- namely, an express requirement for an affordable, coordinated benefit plan that emphasizes prevention, disease management, and increased access to healthcare.

Small businesses overwhelmingly support universal coverage according to the San Diego Business Journal:

Eighty percent of those surveyed also believe that businesses should provide their employees with health care, according to the survey released Aug. 24 by Small Business for Affordable Healthcare, a coalition of the Small Business Majority, a progressive nonprofit organization based in Sausalito.

The California Primary Care Association joins the bandwagon, invoking the "year of health care reform," which draws to and end soon:

The California Primary Care Association (CPCA), which represents over 650 community clinics and health centers throughout the state, today delivered a letter to Governor Schwarzenegger and legislative leaders calling on them to move now to enact meaningful, comprehensive health care reform that fixes California's malfunctioning system of health care. With just days remaining in the legislative session, the window of opportunity is closing fast on what was proclaimed to be the year of health care reform in California.

SOURCE: "Media Statement From Don Crane, President, California Association of Physician Groups" 09/10/07
SOURCE: "Despite High Cost, Small Business Says It Supports Universal Health Care" 09/10/07
SOURCE: "Act Now to Fix Our Broken Health Care System" 09/07/07

photo courtesy of HeyPaul on Flickr remixed and used under this Creative Commons license

A Populist Prescription from Barack Obama

Health care is the subject on everybody's lips, especially those running for office. Members of both major political parties have laid out their platforms on this issue as they either campaign for office or prepare to do so, but there is dissent within each party as well. Barack Obama created quite a stir yesterday with his reaction to comments on Hillary Clinton's failed attempt at reform back in 1993. The Associated Press provides a relevant quote from his Sac City, Iowa, appearance:

"It was a closed process and not everybody understood what was taking place, so when the insurance companies and the drug companies started running those 'Harry and Louise' ads, nobody really knew what was what. That's why the American people have to be involved."

After Clinton's plan was proposed, special interest groups ran the commercials, featuring a fictional couple worrying about losing their ability to pick their own doctors and warning that the government would take control of the health care system. Support for the health care expansion evaporated and the effort was eventually dropped.

Obama said the lesson to be learned was to involve the American people in the effort. Without political support, no health care expansion can be approved, he said.

Obama then followed the announcement of his more populist approach with the statement that he would announce outlines of a health care reform package in his first 100 days as President. The details of this package would then be drafted by a bi-partisan commission. Alec McGillis at The Washington Post takes note of the tactical change this represents within the overall debate:

The remarks were a new twist on the health care debate that has played a dominant role so far in the Democratic race -- until now, most of the candidates have focused on the differences between their plans, not how they would go about actually getting reform enacted. The comments also represented a variation on a theme that Obama first introduced in an interview with The Washington Post last month -- that he would be in a better position to unite the country than would Clinton, given her polarizing reputation among many voters. And it is a rebuttal of sorts to the argument Clinton has been making on the trail in recent days -- that she, unlike Obama, has the experience to know how to work within the system to get things done. In Clinton's highest-profile bid for reform, Obama is reminding voters, the system won.

SOURCE: "Obama Vows Open Health Reform Process " 09/05/07
SOURCE: "Obama Draws Clinton Contrast" 09/05/07
photo courtesy of SEIU International on Flickr remixed and used under this Creative Commons license

Six Figures Is Not Enough

The ongoing debate about health care centers mainly on the 47 million Americans who are unable to afford the costs of insurance and medical treatment. In an observation that throws things into stark relief, as well as shatters preconceptions, the Daily News opens a recent editorial with this:

When White House spokesman Tony Snow announced his resignation Friday, he cited financial reasons. In his high-profile job as the president's mouthpiece, he was paid $168,000. But even that wasn't enough for him to afford to support his family of five and pay the bills for his cancer treatment.

Certainly Snow's situation is far removed from most of America's blue-, white- and pink-collar workers. But if one of the well-paid close aides to the president can't afford health care costs, how does that bode for the rest of us?

After that attention getting example, the editorial goes on to compare the bills currently up for the vote in California, pointing out that the primary differences are partisan in nature. The column ends by exhorting the state government to resolve the ideological differences on this issue for the good of everyone:

California's leaders owe it to the state's hard workers to spend this Labor Day holiday working together on a compromise bill that both Republicans and Democrats, workers and businesses, can support.

SOURCE: "A Labor Day Gift: Where Did the Year of Health care Reform Go?" 09/02/07
photo courtesy of davidsilver on Flickr remixed and used under this Creative Commons license

Healthy Voices Across The Nation

From the halls and meeting rooms of Capitol Hill to the offices and press conferences of governors around the country, proposals and ideas for reforming our health care system are being announced and argued. A vast array of approaches and plans are being put forth as people on both sides of the partisan fence attempt to find an equitable and implementable solution to the current state of affairs.

Across the nation, citizens are being consulted on the subject as the politicians evaluate possible support for their various plans.

East Coast: In Vermont, the state Legislature's Health Care Reform Commission is consulting its constituency for input. According to the announcement in the Rutland Herald, some questions the Commission put forth in their open hearing were:

What do you believe the next steps should be in health care reform?

What specific suggestions do you have for expanding the state's new Catamount health insurance program for people without coverage?

In addition to expanding affordable coverage, which of the options being considered by the commission are most important to successful health care reform?

Midwest: In Iowa, the consultation with the voting public continues, as reported by The Journal. Their article focuses on Kay Ciha, a resident who has had constant issues with the Medicare system since her husband suffered an accident:

Ciha was one of about 20 county residents from all walks of life - seniors, businesspeople, physicians - that took part in a forum for the Legislative Commission on Affordable Health Care Plans for Small Businesses and Families, a bipartisan group of legislators working to provide a cost-effective health care to Iowans. Sen. Becky Schmitz and a representative for U.S. Congressman Dave Loebsack attended the meeting to hear the wish lists of people who were present.

West Coast: eMax Health reports, the findings of CaliforniaSpeaks, a 3,500 person statewide conversation that took place simultaneously across Sacramento, San Diego, Humboldt County, Fresno, Los Angeles, San Luis Obispo, Oakland and Riverside on August 11:

The eight sites were linked by satellite, so that participants could see and hear what other attendees said across the state. Skilled facilitators led face-to-face discussions at each location while ideas were recorded, considered and voted upon throughout the day with personal voting keypads. To ensure that attendees spanned all different ages, ethnicities, and socio-economic backgrounds, CaliforniaSpeaks used a random selection process to invite most of the participants to take part in the conversation.

While there is a diversity of opinions on the subject, concern over the issue seems nearly universal.

SOURCE: "Public Input Sought on Health Care Reform" 08/29/07
SOURCE: "Citizens Voice Concerns on Health Care" 08/30/07
SOURCE: "How Californians View Current Health Care Reform Proposals" 08/30/07
IMAGE SOURCE : public domain map