There is talk of a multi-billion dollar bailout of American Automakers. A New York Times Editorial urges the U.S. to give Automakers $25B to help pay health care costs until 2010 when they reorganize retirees' health care, and the UAW contract reduces retiree benefits and worker wages.
Instead of giving the automakers any cash, we should take healthcare responsibilities off their hands, and give Medicare coverage to all employees and retirees who receive health insurance from the Big 3, regardless of age.
This would save a crucial industry without actually bailing it out or rewarding bad business behavior. Plus, it would serve as a pilot program for universal health coverage. We could learn how well it works, how much it costs, what is gained, what is lost and what changes should be made. Like the best government programs, it would help the country on multiple fronts.
American automakers are in huge trouble. Costs are high sales are mediocre. The Big 3 have resisted change and been hostile to innovation, and have put out inferior products. Some would say let the Big 3 Automakers die, they brought it on themselves.
But the Auto industry employs hundreds of thousands of Americans, and manufactures and exports goods at a time when America most needs a strong manufacturing sector. The financial sector is in ruins, the service industry can't exist by itself, and there are real questions about what the American economy actually does, other than move money around. Manufacturing can provide a strong backbone for an economic recovery, provide jobs, help prop up hundreds of related companies, and support the economy in every American community. The country and the world will buy cars, even in a poor economy; America needs to be in on that market.
If the Automakers go bankrupt, it would devastate the fragile American economy. As the New York Times says, they are too big to fail. But just as importantly, they could help rescue us from a deep recession. If the automakers experience even a small revival, which seems possible with their promising new lineup of energy-efficient models, they will be a strong source of jobs and broad-based wealth throughout the ongoing recession.
Soaring healthcare costs are the biggest item on American automakers' expense sheets. Foreign competitors don't pay for healthcare, their governments do. If healthcare costs could be removed, or even halved, the Big 3 would be solvent overnight. The tension and threats of action between automakers and the Unions would be largely resolved, and any strikes or lock-outs would be averted for many years.
Therefore the government should rescue the industry, by taking on those healthcare responsibilities. Any autoworker whose health insurance is provided by an American automaker, should be covered by Medicare, regardless of age. The automakers would pay for a supplemental insurance that brings the coverage up to the levels workers already have and cover prescription drugs.
This would be a pilot program, to demonstrate how well an expanded medicare would work as a model for universal healthcare. It would show what we could gain, what changes are needed, and how much it would cost the government and save the employers.
And it would rescue an important industry whose loss would be much more expensive than anything we pay.
There would have to be conditions, at least over 5 years or so. Compensation and bonuses would have to be reasonable, stock dividends forbidden, accounting must be straightforward and transparent (at least to an oversight commission). The automakers would have their lobbying restricted, so resources are spent on their product, not on influencing government standards and creating absurd tax incentives. Automakers would have to respond to the market rather than dictate to it. Perhaps the UAW would make certain promises as well.
We would be saving a corner-stone industry without rewarding bad behavior or sending a message that any large company will be bailed out. We would avoid nationalizing a private business or intrude into business decisions, or saddle them with a large government loan. We would just take GM, Ford and Chrysler out of the healthcare business, which they are terrible at anyway.