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VEBA’s Regulatory Challenge
GM’s creation of a voluntary employee beneficiary association (VEBA) marks a radical transformation of the United Auto Workers from an organization which represented workers to one which represents capital. Whereas the UAW had been a declining labor organization focused on manufacturing, the union is being reborn as a health care management company with a $35 billion endowment. Management of VEBA’s by the UAW, Steelworkers and other unions signals a revitalization of the American labor movement.

The UAW’s new responsibilities and resources give the organization new clout in health care policy, on Wall Street and in politics. The union’s power will further increase if other auto makers also adopt VEBAs. The UAW’s transformation will markedly influence any national health insurance plans enacted in the next administration and will also provide organized labor with enhanced leverage on numerous policy issues.

Unlike many other large health care managers, unions are not subject to Sarbanes-Oxley and many other corporate accounting and disclosure laws. While regulation of trusts is a well established area of the law, federal regulation of VEBAs to ensure their transparency and accountability as health care providers remains embryonic. Developing effective, flexible VEBA-specific regulations will be among the next administration’s most substantive regulatory challenges.

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