Broken Promise: Mayor’s Plan to Shift 250,000 Retired City Workers to Privatized Health Insurance Heads to City Council

Read also: What’s Wrong with Medicare Advantage? and Why Bernie’s Medicare Expansion Plan Got Snuffed Out

In March, New York State Supreme Court Judge Lyle Frank stopped Mayor Eric Adams’ administration’s attempt to switch the roughly 250,000 retired city workers to a private Medicare Advantage plan, saying it violated city law — so the administration is now trying to change that law. 

Section 12-126 of the City Administrative Code states that the city “will pay the entire cost of health insurance coverage for city employees, city retirees, and their dependents” up to the cost of the standard “benchmark plan.” In collaboration with most of the main city workers’ unions, the administration wants to add an alternative: It and the Municipal Labor Committee (MLC), the group of 102 city employees’ unions that negotiates benefits, could jointly agree on a new benchmark plan for “any class of individuals eligible for coverage.”

That “would enable the city to make Medicare Advantage the only premium-free retiree plan,” says Stuart Eber, president of Council of Municipal Retiree Organizations of New York City. It could also charge retirees who want to keep traditional Medicare roughly $200 a month per person, as in the plan Judge Frank’s ruling rejected.

If the change is enacted, Eber adds, that would “seriously undermine the health-care protections for all city workers. It will allow the city to renegotiate the rate for everyone and place employees into different ‘classes’ with reduced benefits, eliminating the protections and equal treatment regarding health benefits that current and retired employees have now.”

The City argued that the Medicare Advantage plan the court stopped would have provided the same benefits while expanding many other services. 

The retiree groups opposing it, however, say the private plans typically have higher copayments and require referrals and pre-approvals for many procedures, and there is no guarantee that doctors, hospitals and other providers will accept them, particularly out of state. They want to stay with Senior Care, a Medicare Part B supplemental insurance plan that covers the 20% of costs Medicare doesn’t. 

But after the March court decision, Steven Cohen, lawyer for the New York City Organization of Public Service Retirees, the group that filed the lawsuit, told The Indypendent that the city still had a “nuclear option”: Since the ruling said the city couldn’t charge retirees for staying with Senior Care as long as it gave them that option, it could simply stop offering it. 

Changing the law, he told The Indy in late September, “is half the nuclear option. This is the tactical nuclear option.” 

The other half, he says, will come in the next few weeks, when the city puts out its “summary program description” of health benefits.

A hearing on the city’s appeal of the March decision is scheduled for Oct. 27.

City council’s turn

The proposed change must be approved by the city council. No bill to do so had been introduced as of Oct. 1, although Mayor Adams plans to work with the MLC to get one passed.

The mayor “believes the Medicare Advantage Plan is in the best interest of retirees and taxpayers,” a spokesperson told The Indy. “We support this measure by the Municipal Labor Committee to ensure the plan can be implemented in accordance with the law.”

The MLC voted to approve the change Sept. 8. Supporters included District Council 37, the United Federation of Teachers and the Uniformed Sanitationmen’s ­Association. The 10 opponents included the Professional Staff Congress (PSC), which represents City University of New York faculty and staff. 

“Our former unions are selling off our benefits to pay off a bad deal they made.”

The MLC argues that the City’s costs have increased drastically: With hospitals raising prices by 6% to 10% a year, what the city spends on hospital bills went up more than 50% between 2016 and 2021, rising by $1 billion to reach nearly $3 billion. The main reasons for switching retirees to Medicare Advantage, however, are a 2014 deal the MLC and then-mayor Bill de Blasio made to tap into the Healthcare Stabilization Fund, its benefit fund, to give teachers raises and one in 2018 in which the unions agreed to find ways to save $600 million a year in health-care costs. That bill has now come due.

“The proposed Medicare Advantage plan is one of the tools the MLC is using to save money (estimated $600 million annually) that would be used to support health care for city workers, including the city’s Healthcare Stabilization Fund,” UFT spokesperson Dick Riley told The Indy. 

According to a transcript of the Sept. 8 meeting obtained by the Indypendent, MLC attorney Alan Klinger said that if the change is not approved, Martin Scheinman, the arbitrator overseeing the health-savings deal, will probably “order something, because he recognizes the city will be out $600 million to a billion dollars.”

Opponents cry foul

“Our former unions are selling off our benefits to pay off a bad deal they made,” says Marianne Pizzitola, president of the New York City Organization of Public Service Retirees and the Fire Department EMS Retirees Association. “It’s truly disheartening that they made a really bad deal that they don’t want to fix, but they want someone else to pay for.”

City workers have traditionally accepted lower wages in exchange for job security and better benefits, including retiree health care. But Adams has refused to meet with retirees to discuss the issue, Pizzitola says.

Under the current administrative code, says Steven Cohen, the City will pay up to about $775 a month per person for health insurance, but retiree coverage is significantly cheaper because Medicare pays 80% of costs. 

The city has tried to take away retirees’ free health care several times by eliminating reimbursement for Medicare Part B plans, Pizzitola says. But “even in the fiscal crisis” of the 1970s, it couldn’t do that.

Changing the administrative code also “opens a door to future changes to the quality or cost of active employee health insurance,” PSC President James Davis said in a message to members Sept. 9. It means “the City and the MLC could agree jointly on a different plan as the standard for either retirees and their dependents or active employees and their dependents, and provide only the cost of that plan. The modified language does not specify what if any elements of health insurance coverage a new ‘benchmark’ plan must include.”

“They’re pitting current workers against the retirees, by saying ‘We can’t deal with raises until we settle the Medicare Advantage issue.’” 

A Sept. 8 letter from city Office of Labor Relations Commissioner Renee Campion to MLC chair Harry Nespoli says they agree to designate plans for only two classes under the proposed change: Medicare-eligible retirees and active workers, plus retirees under 65. But that letter is an agreement, not law, Pizzitola says — the proposed law doesn’t specify what a “class” is.

The MLC said the change “is only intended for retirees who are Medicare-eligible — and that’s not true,” she adds. “Coming up real soon is the intent to change the benchmark plan for the actives.” The City is expected to issue a request for proposals (RFP) in October to replace its current plan for active workers.

The City’s aim is “not only to get around the court decision,” says Cohen. “By not pegging the cap to a specific plan, they give themselves the freedom to eviscerate health care for anyone.” 

The switch to Medicare Advantage “is one part of the overall package,” Allan Klinger told the Sept. 8 MLC meeting. “Having an RFP issued for the actives plan” is part of it too. 

“When looking at the administrative code, we want protections,” Geof Sorkin, executive director of the UFT Welfare Fund, said in a Facebook group discussion Sept. 19 whose transcript was obtained by The Indy. “Recently, there was a Medicare Advantage ruling, and the judge — in my opinion — exceeded his authority. So we want to go around that by changing the administrative code. We disagree that the City only has to have one health plan — we believe in ‘choice.’”

Contract talks

The City is now indicating to the unions that it can’t reach new contracts until the Medicare Advantage issue is resolved. 

“The city made one thing clear: in order to get the raise we deserve, we must resolve the issue of health care,” DC 37 President Henry Garrido wrote in a Sept. 29 message to members. Without a long-term solution to control costs, he continued, the City will be forced to begin charging workers for health insurance, and that means “any pay increase we secure will be completely absorbed by your out-of-pocket expenses for health care.”

Controlling costs, he concluded, “means transitioning our retirees to the Medicare Advantage plan, which provides premium-free access with more coverage than the current plan and will result in an estimated $600 million in annual savings.”

The political alignments of unions on Medicare Advantage parallel those on single-payer health care. In June 2021, just as the New York Health Act appeared likely to come up for a vote in the state Legislature, DC 37, the UFT and the Sanitationmen, along with building-trades, police and several smaller public-sector unions, joined insurance companies and business groups in signing a letter denouncing the single-payer legislation as “disastrous.” The PSC, along with health-care unions such as 1199SEIU and the New York State Nurses Association, were strong supporters. The bill never made it to the floor.

“It’s just outrageous what they’re trying,” says Julie Schwartzberg, a former vice president of DC 37 Local 768. “They’re pitting current workers against the retirees, by saying ‘We can’t deal with raises until we settle the Medicare Advantage issue.’” 

Local 768 represents social workers, field health workers and restaurant inspectors — most of whom don’t make a lot of money, Schwartzberg says, so an extra $2,300 a year in health-care premiums would be a big bite out of their pensions.

City leaders “never think of other ways to do things,” she adds. In a city full of tax-evading multimillionaires, “there should be enough money in the city budget for raises for city workers and good health-care benefits for retirees.”

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