Missed in all the trivial bullshit of the past few days is this really big story:
The broad cutbacks included a 20 percent reduction in payroll for salaried workers, elimination of health care for older white-collar retirees, and suspension of G.M.’s annual stock dividend of $1 a share.
The retirees will receive an additionally $300.00 a month, but as we both know, that will not make up for the loss of their health-care plan. If it did, GM wouldn’t be cutting it in the first place. The $300 is just a cushion. Additionally, how easy is it going to be for 70 year-old retirees to find a new plan other than Medicare? By 65-70, pretty much everyone has a pre-existing condition.
This is a sign of things to come:
General Motors Corp.’s (GM) plan to cut health benefits for certain salaried retirees may make only a small dent in profits at Medco Health Solutions Inc. ( MHS), GM’s pharmacy benefits manager, but it could signal broader, more significant changes to come for the health-benefits industry.
“GM’s decision to cut retiree benefits is likely to have only small impact on (Medco’s) 2009 earnings. Even so, we see the move as a watershed event for the retiree benefits marketplace that is likely to lead other employers to do the same, which will, in turn, cause the issue to grow as an overhang for the stock, ” Morgan Stanley analyst David Veal said.
Probably a good thing the Bush Medicare veto was over-ridden yesterday.