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posted: 9/8/2012 5:00 AM

Health care VEBAs are a solid alternative

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Mr. Alesky's letter of Aug. 16 furthers the misconception being spread by some news outlets about the stock given to the GM union. GM followed the lead of Ford and other large older corporations with huge legacy costs. They gave a one-time lump sum in stock to form a health care VEBA (Voluntary Employee Beneficiary Association), run by a third party, for retiree health care obligations. This one-time payment washes hundred of millions of future retiree health costs off the books. It played a huge part of Ford's successful reorganization.

GM was obligated by contract to these costs. The VEBA is an agreement that the company is not responsible for any future retiree health care costs. The other alternative was not to honor the contract and dump the obligation onto Medicare and Medicaid.

As more retirees lose their benefits, I think this is a nice viable alternative. This malarky of President Obama giving the stock to the unions for their votes is an urban myth started by some respected news outlets.

Rick Smith


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