Below is a graph of the City's FY-2022 expenses of $7.6B for health insurance for employees and retirees, both younger and Medicare eligible.
As laid out in the two charts above the health insurance cost for retirees covered by Medicare is only 12% of the City's costs but represent 31% of the people covered. Yet these are the people that the City and the city unions chose to attack in 2021 because they did not have anyone to stand up for their rights during collective bargainning.
Just to be clear the City and the unions are not partial to younger retirees. It is just that they can not attack the health benefits of younger retirees without damaging the benefits of active employees. Employees and not retirees vote in union elections. The heads of the UFT and DC-37 are paid more than the Mayor. You don't want to lose a union election.
But the Medicare retirees did not take this attack laying down. They fought back in court and won. So now in 2022 the City and the city unions are attacking the law that protected the health insurance benefits of Medicare retirees, Section 12-126 of the NYC Administrative Code.
Section 12-126
Most city retirees with Medicare have a supplemental insurance from GHI called Senior Care. This is a different insurance coverage from the GHI coverage (GHI-CBP) that city employees and younger retirees have from the City.
- GHI-Senior Care costs the City $199.06 per month per indivdual
- while GHI-CBP costs $925.85 per month per indiviual.
- The City's cost for families of employees and younger retirees is $2,270.45 per month
- while the City's cost for dependents of retirees with Medicare is $199.06 per month for each dependent.
Section 12-126 mandates that the City pay for health insurance coverage for city employees, city retirees and their dependents up 100% of the HIP-HMO rate. It was passed into law in 1967 along with authorization for the City to refund $3 a month to retirees for their Medicare Part B premium.
It has been modified over the years to increase the Part B refund as the Part B premium increased, until in 2001 the refund was made equal to whatever the Part B premium was. Also in 2001 there was another modification which changed the service rquirement for city retirees. It was raised to 10 years from 5 years. This change, however, only applied to to new employeees hired on or after December 27, 2001. All current employees and retirees were grandfathered into the 5 year service requirement.
Proposed Changes
Now the City and the city unions (MLC) want to put in place multiple cost caps to go along with the the 100% HIP cost cap. Thses alternative caps would be tied into specific groups made up of employees, retirees, and dependents. The changes would apply to all current employees and retirees. See the wording of the proposed legislative change below.
Remember that the City's and the MLC's main objective is to pay nothing for the supplmental health insurance for city retirees covered by Medicare. They then want to funnel the money saved into the MLC's welfare funds. They want to rip all these Medicare retirees out of Medicare and force them into a Medicare Advantage plan. You know what Medicare Advantage plans are, the garbage plans that Joe Namath and Jimmy Walker are selling on TV. Everyone knows this is a scam but there doesn't seem to be any concern for the truth when money is involved.
Back Room Change
The bizarre aspect of this change is the City and the MLC are proposing a very convoluted wording to get what they want. Instead of saying straight out that from now on retirees covered by Medicare will have to pay for their supplemental coverage and be done with it, they are pushing a back room process where the City and the MLC can craft any arbitary group of employees, retirees, and dependents, then pick an associated coverage plan (health insurance???) for the group, and adopt the plan's cost as the cost cap for the arbitrary group's health insurance coverage.
Increased Liability
There is a huge risk with this change. Forget that the City and the MLC want to hammer older retirees. This wording could create an unlimited cost liability for the City. Once a plan has been chosen for a given group, the City has to pay the cost of that plan no matter what it is. Costs always go up not down.
Two Caps and No Decision
In addition to the upside risk, this proposed change puts in place two caps for these new plans, the HIP-HMO cap and the actual cost of the plan but provides no decision process for giving control to either of the cost caps. This is an open invitation for abuse on the City's part. I am suspicous of why the City did not make this issue clear. You would think that City would want to avoid litigation on this issue but with this vagueness, the City could do whatever it wants unless challanged in court.
"any class of individuals eligible for coverage by a plan jointly agreed upon by the city and the municipal labor committee to be a benchmark plan for such class"
Again, this is language with legislative problems. What are the possible classes? Who are the individuals eligible for coverage?
What coverage? The assumption is health insurance but why was it not specifically stated? Is this an attempt to add new benefits to the guarantee? In fact, the term "health insurance coverage" is a defined term in the statute and is what the statute guarantees not a undefined term, "coverage".
The definition is "A program of hospital-surgical-medical benefits to be provided by health and hospitalization insurance contracts entered into between the city and companies providing such health and hospitaliaztion insurance."
Who is the municipal labor committee? Who controls the MLC? Is the MLC accountable to the voters of NYC? The MLC may represrnt city employees but it does not represent current city retirees. City retirees are private citizens, many of them living outside of New York City. They are not involved in collective bargainning.
How does the City and the MLC jointly agree upon a plan to be a benchmark for a class of individuals? The last time the City and the unions agreed upon a benchmark was in 1965 and it included all city employees, city retirees, and their dependents in the class. It included the choice to three plans, GHI, HIP, and Blue Cross/Blue Shield. All three were capped at the HIP costs. This was also the first time retirees were given health insurance benfits by the City. Since there was an initial associated monthly cost for retirees, they were given the choice of participating in the coverage. This was done as part of a collective bargainning process.
in 1967, Section 12-126 gave statutory protection for health insurance coverage to city retirees.
Will the new proposed selection process be open to the public or will it be a back room deal made without accountablity?
Most city retirees now have their health benefits with GHI (85%) and HIP (12%). This is roughly true for both younger retirees and those covered by Medicare. Employees also use mostly GHI(70%) and HIP(24%). Both these plan are provided by EmblemHealth. They were originally separate but merged in 2005. The City paid approximately 90% of the $7.6B to Emblemhealth in FY-2022.
Politics
As I previously stated, the City could have proposed a direct change the law to stop paying for older city retirees but the City didn't. There may be age discrimination issues with hammering older retirees.
Of course this may all be about politics. To make any change to Section 12-126 the City Council has to adopt the change. That means the City needs to have the unions' backing for the change to get the necessary votes from the City Council members. It is reasonable to conclude that the strange wording is the result of political deals between the City and the MLC. At no point were the city retirees allowed to defend their interests and good luck to the taxpayers.
Wording of the Proposed Change for Section 12-126 NYC Administrative Code
The City and the MLC are proposing the following legislative changes:
Section 12-126(b)
(1) The city will pay the entire cost of health insurance coverage for city employees, city retirees, and their dependents, not to exceed one hundred percent of the full cost of H.I.P.-H.M.O. on a category basis
, or in the alternative, in the case of any class of individuals eligible for coverage by a plan jointly agreed upon by the city and the municipal labor committee to be a benchmark plan for such class, not to exceed the full cost of such benchmark plan as applied to such class.
Where such health insurance coverage is predicated on the insured's enrollment in the hospital and medical program for the aged and disabled under the Social Security Act, the city will pay the amount set forth in such act under 1839(a) as added by title XVIII of the 1965 amendment to the Social Security Act;…
Specifically
Not to exceed one hundred percent of the full cost of H.I.P.-H.M.O. on a category basis ,or in the alternative,not to exceed the full cost of such benchmark plan as applied to such class.
- in the case of any class of individuals
- eligible for coverage
- by a plan jointly agreed upon
- by the city and the municipal labor committee
- to be a benchmark plan for such class,
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