Tuesday, February 17, 2009

The Day When Nothing Changes

Today is the day during which we will learn nothing new about our future. As we all know, GM and Chrysler are required to submit viability plans regarding the future of their respective businesses as a condition of the federal loans they received at the end of 2008. In the days and weeks leading up to milestones like today, there is a greatly increased amount of media reporting, stories, and speculation regarding the future of the U.S. auto manufacturers. Over the weekend we were told that the UAW walked out of talks with GM and Chrysler and that bondholders are playing hardball, with both groups citing, curiously, that other stakeholders are not being required to make equivalent concessions. That is curious to me because these are the two primary groups from which concessions are required. After today, these companies are supposed to submit more detailed versions of today's plans by the end of March 31st, at which point the government will make some new sort of time line for making decisions. If I had to hazard a hypothesis, this guess would be that we will learn nothing significantly new during the day and that our future will continue to hang in automotive purgatory.

It's hard when there is so much focus on a subject but that issue never seems to progress forward. It's like spending the entire off-season talking about how to improve the Lions but nothing really ever seems to happen. A few points I'd like to make regarding the car companies today that I'm sure will be a focus later today.

Almost assuredly, someone will report "Car Companies Want More $$$". This person will be right, but this has not changed from the last time the companies were before Congress. If I tell you I need $20 and you give me $10, I will still likely need that $10 to bridge the gap. Am I coming back and asking for more money? I would say no - I asked for the money the first time and you were able to provide me with 50% of my request. This is almost exactly the case with GM and Chrysler. Second, if anyone out of state happens to be reading this post - many of us here in Michigan are genuinely appreciative that your tax dollars are keeping us afloat. Michigan is, of course, at the epicenter of these difficult events, and we're one government decision from being mid-80s Serbia. Many of us do not believe that the U.S. "owes" us the money or that we are necessary to the U.S.'s defense or some other explanation, but the 10M people in Michigan are grateful to be able to afford our macaroni and cheese. Finally, can someone explain to me (seriously, I'm very confused), the difference between retiree health care provided by a giant corporation and Medicare? My brother tried on Sunday, but I was not getting it. If I can participate in government-sponsored health care at no cost to the corporation from which I am retired, what is the major barrier to entry to that government-sponsored health care? Is it primarily complexity of enrollment, navigating the forms, or some additional cost? As this area is GM's largest liability, I'm hoping someone out there in internet-land could help me to understand this subject a little bit better.

Today is a big day and the news will be all over us, but the whole process starts again tomorrow.


Lynn Dig said...

Hey Ken,

Here are some good articles on Detroit I just read. I'm sure you've seen them, but I thought I'd pass them along.

What will and won't Save Detroit

How to bring back the Big 3 - Fortune Magazine

Steven said...

Regarding Medicare: There are a couple key points to take into consideration. The first is this: while Medicare does provide basic health insurance, the coverage provided isn't necessarily equal to the types of insurance that can be provided by a typical employer or the level of coverage the UAW has negotiated. Everyone of the retirees who is eligible for Medicare will be a part of Medicare, but that can still result in significant short-comings to coverage. In effect, many elderly people currently opt to purchase health insurance on top of what they have under Medicare. While Medicare Parts A and B cover hospital and medical insurance, neither cover all the costs. Additionally, some treatment might not be covered under Medicare, but covered under other health plans. As a result, the retiree health trust must coordinate with the health insurance carriers to achieve the negotiated coverage. The next big thing is dealing with prescription drugs. Medicare covers prescription drugs in Part D, but to receive the benefit, the individual must be enrolled in a Prescription Drug Plan or Medicare Advantage, independent from Medicare. On top of that, back to my first point, some drugs are specifically not covered by Medicare. Now, bundle the initial Medicare enrollment, further health insurance carrier contracts, and Pharmacy benefits into one package to ensure a maintained standard of health care for retirees at a minimum cost to the private sector through the use of Medicare; and the result is an administrative burden rife with eligibility issues, negotiations with the health insurance companies, multiple I.D. cards, and debates over coverage. Meanwhile, the reitrees are just trying to get the care. The point of the retiree trust is to coordinate all these different elements so that the retiree can show up at the doctor, present his or her health insurance card, and recieve treatment with minimal confusion.

BobA said...

Medicare doesn't cover everything. In fact it doesn't cover a lot. So people need additional insurance to cover the expenses Medicare doesn't cover. Some have to buy it themselves. Others get retiree health care from their former employees.