That stands for Voluntary Employees Beneficiary Association, you guys! And it’s what the UAW just recently agreed to for management of their employee health and retirement benefits.
By definition, a VEBA is nothing more than a federally recognized non-profit 501 © (9) corporation set up to insure that health care, pension, unemployment or other benefits are routinely paid out to workers who are covered by the trust. And, according to Guidestar, a non-profit monitoring service, there are as many as 2,700 VEBAS already in existence for union and non-union employees in industries ranging from steel to utilities and telecommunications.
The trust (VEBA) is generally funded up front by the employer entity in return for a release from responsibility, from the employee entity, for the current and future health and retirement benefits of their workers. The funding is usually about 60 – 70% of what businesses project they will spend on health and retirement benefits for these employees presently and in the future. Maybe not a bad option, providing that the trust is adequately funded, that the economy continues to grow and that stock market advances outpace health care cost increases. Pushing the VEBA option in the particular case of GM was worker fear of seeing their jobs outsourced if the automaker continued to be hamstrung by the health care premium burden. And in the case of bankruptcy, a real threat for GM, everything would be gone anyway, job and benefits. No small wonder that VEBA ruled.
Have your eyes glazed over yet? It gets easier…or maybe harder depending on your perspective.
For those of you in union shops with hardcore benefits contracts valiantly negotiated through long days and nights, I predict that VEBA’s are the wave of your future. With the highly publicized UAW joining of the crowd already 2700 strong, businesses and manufacturers are going to jump on this bandwagon because health benefits are one of their most expensive operating costs. As for those of us with a verbally negotiated promise of health insurance at the time of our hire, we are sure to see a lessening of benefit, as well as, an expectation for us to assume increasingly higher percentages of the premium, until the obligation is moved entirely to our shoulders. No more employer-based health care. Instead we can have HSA’s or some equivalent. That is a Health Savings Account. Any amount that you contribute will likely be from pretax income and that is all the preferential treatment you will get. Period. For really serious illness, you will also carry a high deductible insurance policy that you will purchase at an equally high premium. See, it got easier, didn’t it. It is what David Brooks of the NYT calls “the new social contract”.
The Republican noise machine will shout that eliminating employer based insurance and giving individuals a tax benefit with which they must purchase insurance and care via their HSA will miraculously lower costs and improve health care access. It will repeat endlessly the talking points about Democratic Socialized Medicine plans and how they will be the ruination of our good friends, the “in charge of everything including all the money” insurance industry.
But according to TruthDig;
None of the leading Democratic contenders proposes a federally run system-such as Medicare to solve the coverage dilemma. If anything, most current Democratic plans are weaker than anything the party has offered since Harry Truman proposed national health insurance.
Still, this development just might turn the proposals of these Democratic contenders upside down because just who will have the wherewithal to purchase the alternative private insurance laid out in their plans. Most everyone might opt for the government plan. If so, would that more quickly lead to a single payer system as envisioned by John Edwards. Or would the feds pay a subsidy to insurance to ensure perpetuation of the private system. These are unknowns. But for now, the Democratic Party is directly on course to nominate a candidate for President who will not propose the single payer plan that we need, but instead propose a plan to maintain the health insurance industry’s place at the table and condemn Americans to another fifteen years in health care hell.