While the Obama Administration is still pumping resources and taxpayer money into the implementation of Obamacare, the initial disbursement of pork included in the bill was successfully doled out almost a full two years ago. And the main recipient of taxpayer largess was, once again, the UAW.
The Obamacare pork came in the form of a program called the Early Retiree Reinsurance Program or ERRP. $5 billion of taxpayer money was allocated to help pay for healthcare costs to retirees between the age of 55 and 65. Number one on the union-dominated list of recipients was the UAW, which received $387.2 million for its VEBA fund, which was set up to pay UAW retiree health care costs. This amount was still not good enough for the UAW as they penned a letter to Congress in February of 2012 requesting an increase in ERRP funding to $10 billion.
General Motors also got a small piece of the pie ringing the seemingly bottomless taxpayer register for another $19 million. Since new GM does not have much in the line of non-UAW early retiree obligations, I’m not quite sure what the money was needed for. I guess no one is really going to question “only” $19 million when GM usually hits the taxpayer moneybag to the tune of billions of dollars.
It seems like pork took priority over the main idea behind the Affordable Care Act, judging from the effectiveness of the rollout. And should people who can afford to retiree at the age of 55 be getting taxpayer subsidies for their healthcare? The cronyism of the Obama team is clear as most of those that receive the $5 billion in handouts are union retirees.
An underlying problem for GM and the UAW may also be exposed by the further funneling of taxpayer money into the VEBA fund. The UAW’s retiree health care costs are more likely to rise at a rate higher than what the fund will generate. Only a year or so ago, the fund was underfunded by $20 billion. The strong stock market performance of the past year has helped the VEBA fund to stop the bleeding, but a close eye should be kept on funding levels.
The high cost of UAW obligations will inevitably have to be dealt with once again at GM. Either the UAW will put the VEBA funding back on the table at future contract negotiations, or the Obama Administration will try to sneak more taxpayer money into the UAW’s pockets to fund future shortfalls. The result will be painful for either GM shareholders or American taxpayers. For the sake of the taxpayers, let’s hope that others are paying attention to the seemingly endless ways that GM and the UAW receive government handouts.
Mark Modica is an NLPC Associate Fellow.