More news on health care cost crisis for car makers...

CEO and Chair of General Motors Rick Wagoner discussed the effects of health care costs on the company's bottom line. AP/Philadelphia Inquirer reports:

[Wagoner] said that the company had made progress with the United Auto Workers in becoming more competitive, but that more needed to be done in forthcoming national contract talks this summer.

GM, he said, needs to "further reduce our still-unsustainable health-care bill, which was a staggering $4.8 billion in 2006."

A couple of the big automakers are discussing creating a trust fund of sorts for workers' health care, which would allow them to put in a set amount and allow the unions to control how the money is spent (called a VEBA, or Voluntary Employee Benefit Association). A May article in Business Week, writes that leaders at GM, Ford , and Chrysler "believe they may have a cure for Detroit's epic health-care woes" in VEBA.

VEBAs would hand "over the companies' long-term liability to an independent fund managed by the UAW, which would be financed by a huge one-time injection of cash and stock. Union workers would probably contribute more toward their own coverage costs but would gain protection from the devastating prospect of bankruptcy."

I'm not sure how I feel about VEBAs yet, but they seem like a pragmatic compromise if done fairly.