Next: Union-Managed Health Care

Next: Union-Managed Health Care

For many years, the business community has been looking for a way to rid itself of the role of financing and managing the private health insurance system. The labor movement also has been looking for something that could make unions more relevant again for larger numbers of workers.

So it may be not so surprising that the Big Three automakers and their workers are talking about having the union take over responsibility for managing the industry's health-care plan.

The VEBA, or voluntary employees beneficiary association, would represent a dramatic break with the once-widespread practice of companies providing health insurance to all workers, no matter the cost, and replace it with a fixed payment, no matter how much health care it buys. The switch from "defined-benefit" to "defined-contribution" plans is already well underway with pensions, and given the realities of global competition, it was inevitable that health care would be next.

But the more interesting angle may be the way in which this switch could reshape and reenergize the union movement. It's all well and good to say that workers and consumers should take more responsibility for managing their own health care. But the reality is that until the individual and group health insurance market is reformed -- up to now an elusive goal -- what works best is to have some experienced entity negotiate for health insurance on behalf of large groups. Most often that is the government or a large corporation. But it is also a task ideally suited for a union that also runs a VEBA and can negotiate on behalf of workers in many companies, whether they are covered by a collective bargaining contract or not.

Organizations such as AARP have already shown that there is a big, profitable market in serving as a health insurance broker. What better way for unions to begin building a relationship with millions of workers at nonunion companies than to provide them with affordable health insurance, and see where things go from there?

Recession Watch

Regular readers may remember my confident prediction that the Fed might lower interest rates before or after its meeting on Tuesday, but not at the meeting itself, lest it send the wrong signal about bailing out Wall Street. It would still be a lousy signal, but given the more recent report of a decline in employment in August, it is now probably necessary if the Fed is to get a jump on the coming recession.

Even the whiff of recession has prompted anti-tax crusaders to begin beating the drum for another tax cut. As usual, their line is the cut must be permanent to effectively spur the economy.

If there is a recession every five years, on average, and each time taxes are cut permanently by, say, 10 percent, then by 2057, the top marginal tax rate would be about 12 percent. Not to worry: According to the supply-side fantasy, economic growth would be so robust the government would still have all the revenue it needs.

Who said economics has to be hard?