This is a big deal. The UAW (my union) and the major car companies are talking about a deal that would shift the responsibility for retiree health care from the auto companies to the union. I think “Egads” and “hmmm” at the same time. Here’s what the Wall Street Journal reports today:

Detroit’s auto makers and the United Auto Workers are examining a potentially revolutionary plan that would shift to the union responsibility for tens of billions of dollars in retiree health-care liabilities, according to people familiar with the matter.

A deal is far from certain, especially with formal national-contract talks months away. A big question is where General Motors Corp. and Ford Motor Co. — both saddled with speculative, or “junk,” credit ratings — would get the cash required to fund a handover of future retiree health-care obligations to a union-managed fund. Another uncertainty is whether the UAW would want the role of bad guy if the time came to cut future benefits.

The preliminary discussions highlight the determination of the UAW and the Detroit auto giants to find a way to restructure the U.S. auto industry without resorting to bankruptcy-court protection, as many unionized steelmakers and airlines did.

UAW leaders and Detroit auto executives agree on this much: Detroit’s status quo is unsustainable. UAW leaders and company executives have tried to argue that without health-care overhaul, thousands more U.S. manufacturing jobs will be at risk. The UAW’s official position is the federal government should step in. Top executives of the Detroit auto makers have been more cautious but have advocated proposals for the government to shoulder the burden of “catastrophic” health costs.

This is where you want to scream: SINGLE-PAYER. I’ve made this point here and other places for sometime–if we had single-payer health care, it would save billions of dollars for companies and make them a whole lot more competitive. GM alone is projected to owe about $55 billion for current and future retiree health care benefits, Ford’s number is about $22 billion. Look at this:

But the burden of paying for UAW health-care benefits still adds roughly $1,500 a car to the cost of U.S.-made Big Three vehicles — a cost penalty the Detroit auto makers can’t offset by raising prices.

There is some precedent to what the folks in Detroit are considering:

The Detroit auto makers and the UAW are looking at an agreement this month between Goodyear Tire & Rubber Co. and its largest union, the United Steelworkers. Under the deal, which settled a strike, Goodyear agreed to transfer its $1.2 billion health-care liability to a fund managed by the steelworkers union. Goodyear, in turn, would put in $1 billion in cash and equity into the fund.

GM Chief Financial Officer Fritz Henderson told auto analysts this month that “it would be fair to say that we have more than a passing interest in the Goodyear agreement.” GM, according to people familiar with the matter, has hired advisers that worked with Goodyear on their contract talks.

These discussions are more a reflection of the deep crisis that we find ourselves in, rather than a good option. The auto makers will try to buy themselves out of the health care liabilities for something like 70 cents on the dollar, which will help their balance sheets in the short-term. The problem is cost projections: if they off-load the liabilities for a discount and health care costs go soaring beyond the projections, it’s the UAW that will have to figure out where the extra money comes from–or impose benefit cuts. Is that where the union wants to be?

Single-payer. Single-payer. Single-payer.