Court Stay for Retirees Fighting the City's Medicare Advantage Scam

On July 7, 2023, the trial court issued a stay stopping the City from terminating Medicare supplemental insurance, Senior Care, for 139,442 city retirees on Medicare and their estimated 50,000 spouses. As part of the termination the City is jamming these retirees and their spouses into a private Medicare Advantage insurance plan offered by Aetna.

The following is a reported response to the stay from the Mayor:

Mayor Eric Adams’ office said the city is considering appealing the injunction. “We are extremely disappointed by this misguided ruling,” it said in a statement. “The city’s Medicare Advantage plan, which was negotiated in close partnership with the Municipal Labor Committee, improves upon retirees’ current plans, including offering a lower deductible, a cap on out-of-pocket expenses, and new benefits, like transportation, fitness programs, and wellness incentives. Further delay in implementing it will only cause greater uncertainty for our retirees and have a detrimental impact on our city’s budget.”

The statement is at best misleading. The mayor and the Municipal Labor Committee did collude to deprive Medicare eligible retirees of health benefits that have been in place since 1966 since the start of Medicare. The fight over which plan is better is something that the Mayor wants to ignore. The alleged new benefits are not important when compared to access to quality health care, especially when you have serious health issues. The further delay that the mayor is worried about is not a delay but a very real hope that the retirees will keep their health benefits. As I have outlined below the just adopted City budget has sufficient funds allocated to cover the cost of Senior Care for Medicare eligible retirees.

As reported by the actuary in his FY-2022 OPEB report, there are a total of 246,832 city retirees with

• 73,601 (plus 46,510 spouses) who are not eligible for Medicare and
• 173,231(plus 61,646 spouse) who are eligible for Medicare.

When you subtract the 139,442 retirees covered by Senior Care, you are left with 33,789 Medicare eligible city retirees who have elected private health insurance via Medicare Advantage contracts between CMS, the federal Medicare administrator, and private insurance companies. As of January 1, 2022, the City is essentially no longer paying anything for Medicare Advantage contracts (monthly COBRA rate is $7.65). It is not clear why.

The City is currently paying $204.10/month per person for the Senior Care supplemental coverage. (The COBRA premium is $208.18/month).

That adds up to $464M per year - ((139,442 retirees + estimated 50,000 spouses)*$204.10*12).

Note: The Health & Hospitals Corp. and the Housing Authority have 20,205 retirees covered by Medicare supplemental coverage and would have saved money if the termination had gone into effect on Sept. 1, 2023

On June 30, 2023, the City Council adopted the NYC budget for FY-2024. The Mayor had asked for $2.959B for retirees’ health insurance and $5.64B for workers’ health insurance. The final budget cut the retiree health insurance appropriation by $500M down to $2.459B, what appears to be a ballpark number for the Medicare supplemental cost.

As reference, the adopted budget has the following allocations for health insurance:

• Workers $5.644 billion
• Retirees $2.459 billion

Note: The monthly cost for employees and non-Medicare eligible retirees

• without dependents is $923.67, and
• with dependents it is $2,265.67.

Note: The adopted budget also includes

• $896 million for employee welfare fund benefits and
• $449 million for retiree welfare fund benefits.

Just for the reord, that is a total of $9.4 billion for health insurance and welfare benefits for workers and retirees.

Enough Money for Senior Care

The retiree health insurance costs for FY-2024 based on retiree and spouse counts from the actuary’s June-2022 OPEB report breaks down as follows

• Non-Medicare retirees $1.565 billion
• Medicare retirees $0.464 billion
• Part B refunds for Medicare retirees $0.465 billion

The total of these three amounts is $2.494, very close to the $2.459B amount in the adopted budget. It appears that the adopted budget has enough money to pay for the Medicare supplemental coverage for the 139,000 plus Medicare retirees and their spouses, as if the City knew that it was going to have trouble in court.

The Mayor’s initial $500 million request and its final cut seems to have no rationale.

What these numbers show is that the Medicare with Senior Care is the most economical part of the health insurance program for City workers and retirees. In addition, Medicare with Senior Care is the most effective part of that health coverage.

Three Card Monte -- NYC FY-2024 Executive Budget and Health Insurance Costs

On May 31, 2023, retired employees of NYC filed suit against NYC over the termination of their Medicare supplemental health insurance. The City is doing this to save $450.0 million per year. The Health and Hosptials Corp. and the Housing Authority will also save a total $60.0 million per year.

So why is the City so desparate for money that it choose to strip its older city retirees of their health insurance and force them into a second class private insurance plan (Medicare Advatage)? The City could have attacked any number of other programs. Why the retirees?

The City has previously stated that it is giving these savings to the Health Insurance Satbilization Fund (HISF) which in turn allows the City labor unions to funnel the money into their welfare funds. This is already getting comfusing but this may be why the unions sold the retirees down the river.

The City Budget - FY-2022 to FY-2024

In FY-2022, the City adopted a budget of $98.7B. This year, FY-2024, the City is proposing a budget of $106.7B. See chart below.

Health Insurance Costs from FY-2022 to FY-2024

Health insurance and welfare fund costs are embedded in the personal service category.

Again if you refer to the chart below, you can see that the City's health insurance costs have increased significantly from 2022 to 2024: the City spent

1. $5.0B on employee health insurance in 2022
2. $5.2B on employee health insurance in 2023
3. $5.6B on employee health insurance in 2024

Why did employee health insurance increase $400M in 2024? Is this the money that is going to be given to the union welfare funds?

1. $2.1B on retiree health insurance in 2022
2. $2.0B on retiree health insurance in 2023
3. $3.0B on retiree health insurance in 2024

And why did the retiree health insurance costs go up $1.0B in 2024? Isn't the City saving $375M ($450M full year) by terminating insurance for retirees on Medicare.

Welfare Fund Costs from FY-2022 to FY-2024

The welfare funds have dropped since 2022 but not radically. Quite different from health insurance.

1. $1.118B on employee welfare fund benefits in 2022
2. $0.858B on employee welfare fund benefits in 2023
3. $0.876B on employee welfare fund benefits in 2024

1. $0.494B on retiree welfare fund benefit in 2022
2. $0.442B on retiree welfare fund benefit in 2023
3. $0.449B on retiree welfare fund benefit in 2024

Health Insurance and Welfare Fund Costs for NYC

Category	FY-2022 Adopted Budget	FY-2022 Modified Budget	FY-2023 Adopted Budget	FY-2023 Modified Budget	FY-2024 Executive Budget
Total Budget
Personal Service	$53.4B	$54.4B	$52.9B	$52.5B6	$55.6B
Other Than Persanal Service	$45.9B	$53.4B	$47.7B	$52.4B	$48.3B
Debt Service	$1.3B	$6.3B	$2.4B	$4.5B	$4.8
Less: Intra -City Expenditures	-$1.9B	-$2.3B	-$2.0B	-$2.3B	-$2.0B
Net Total	$98.7B	$111.8B	$101.1B	$107.1B	$106.7B
Fringe Costs
Health Ins.-Employees	$5.880B	$5.061B	$5.399B	$5.164B	$5.640B
Health Ins.-Retirees	$2.142B	$2.142B	$2.260B	$1.969B	$2.959B
Welfare Funds-Employees	$1.040B	$1.118B	$0.938B	$0.858B	$0.876B
Welfar Funds-Retirees	$0.491B	$0.494B	$0.442B	$0.442B	$0.449B
Pensions	$9.921B	***	$9.305B	***	$9.525B

Let the Old Folks Die But Let's Take Care of Wall Street

I've recently written about the City's new attack on the health care of city retirees. It is almost certain that some retirees will die because of the City's actions and complicity of the retirees' former labor unions. All this so that the City can save $460M a year. Talk about blood money.

But every year the City and the unions are more than happy to squander money on Wall Street.

Below are copies of the income statements from 2002 and 2022 for the City's five pension funds. That spans a 21 year period in which the penion funds have gone crazy with throwing money at Wall Street.

In 2002 the pension funds spent $102M on investment fees. In 2022 they spent $1.509B. That amount is over 14 times more than what they spent 2002. Just in case you think that is because the assets of the five funds have increased 14 times - no. They increased less than 3 times their value in 2002, $93.5B versus $263.2B.

I defy anyone to put forward an honest reason for this craziness. Not for nothing - the pension funds lost almost $32B in FY-2022

Lets Get Something Straight About the Health Insurance Stabilization Fund - It's the City That Is Raiding It, Not Senior Care.

I just read a letter written by the president of the local representing NYC correction officers. He was trying to defend his vote to sell out retirees health benefits. He starts out moaning about the Health Insurance Stabilzation Fund (HISF). He states that rising health care costs are diminishing the HISF.

The City and the unions have been crying over the HISF ever since this attack on retirees started. So below is the income statement chart for the fund since 2012. I've only included the main items.

The fund has only paid GHI $378M over the eleven year period.

But over the same period the HISF fund has paid:

1. the City $1.889B ($77M every year plus a $1.0B bonus in 2015).
2. the union welfare funds $996M and
3. other discretionary benefit providers $654M.

Payments to the City, the welfare funds, and the other benefit providers are controlled by the unions and the city subject to collective bargainning. You know collective bargainning, where the unions fight with the City to get what they deserve and not give things back to the City.

Income Statement History for the HISF

Fiscal Year	Opening Balance	1984 HBA City Contib Pay In	City Liability Pay In: GHI less than HIP	Other Benefit Pay Out	Welfare Fund Pay Out	2009 HBA City Refund Pay out	GHI Pay out: GHI greater than HIP	CBA City Refund Pay out	Closing Balance
2012	$587M	$35M	$465M	$48M	$38M	$112M	$0.0M	$0.0M	$894M
2013	$894M	$35M	$0.0M	$39M	$38M	$112M	$0.0M	$0.0M	$744M
2014	$744M	$35M	$1.162B	$40M	$38M	$112M	$50M	$0.0M	$1.706B
2015	$1.706B	$35M	$336M	$45M	$38M	$112M	$100M	$1.0B	$789M
2016	$789M	$35M	$1.202B	$43M	$52M	$112M	$8M	$0.0M	$1.829B
2017	$1.829B	$35M	$54M	$57M	$188M	$112M	$0.0M	$0.0M	$1.586B
2018	$1.586B	$35M	$232M	$57M	$38M	$112M	$2.0M	$0.0M	$1.643B
2019	$1.643B	$35M	$136M	$27M	$81M	$112M	$39.3M	$0.0M	$1.587B
2020	$1.587B	$35M	$0M	$83M	$171M	$112M	$3.9M	$0.0M	$1.369B
2021	$1.369B	$35M	$154M	$74M	$160M	$112M	$175.9M	$42.8M	$1.031B
2022	$1.031B	$35M	$0.0M	$136M	$100M	$112M	$0.0M	$0.0M	$900M

The MLC (DC-37 and UFT) and the City Attack on Senior Care

Along with the garbage about the HISF, this president had the gall to say that the MLC only voted to adopt the Aetna Medicare Advantage plan and not the termination of Senior Care. The City was required by a collective bargainning agreement to get the approval of the MLC before it terminated the GHI Senior Care contract. This union wants to hide the fact that it was part of the crime.

I hope every Correction Officer, who has to retire on disability and collect Social Security benefits, knows that he/she will get hammered with the Medicare Advantage crap. This is not about Aetna, all Medicare Advatage plans are inferior to Medicare with a supplemental plan.

I hope I don't have to tell anyone how to deal with statements from insurance companies. We have a massive legal industry based on this situation.

New Battle in the City's War on the City's Retirees

In 2021, the former City administration, without a legal opinion from Corp Counsel, tried to force Medicare eligible (ME) retirees to pay for their Medicare supplemental insurance, Senior Care.

This attempt flew in the face of 55 years of practice based on local law and collective bargaining agreements. The City wanted to save the $191 a month per retiree and spouse that it was paying for this coverage so that the City could give that money to the City unions’ welfare funds.

The City did not plan on the retirees fighting back in court and then having them win both at trial and on appeal.

The City then tried to gut the law guaranteeing the City’s obligation to pay for health insurance. That was the law that the court based its decision on. Again, the City failed. This time at the City Council.

Revenge

Now, in retaliation for losses in court and at the City Council, the Adams administration is dropping the 57 year old Medicare supplemental coverage (Senior Care) for older (ME) city retirees.

As of September 1, 2023, the City will force all Medicare eligible retirees and spouses (238,000) into a inferior Medicare Advantage plan (private insurance) which will cost the City nothing. Retirees, however, will be locked into paying whatever the new plan charges for Part D drug coverage. The only retirees to be left alone are the ones in the HIP Medicare Advantage plan (22,300).

This is a more drastic attack on the retirees than the illegal 2021 attempt to force retirees to pay for Senior Care. The City is now arbitrarily and capriciously dropping all health coverage for older retirees other than for the proposed Aetna Medicare Advantage plan. This means about 170,000 Senior Care retirees and spouses will be wrenched out of Medicare and jammed into a private health insurance plan.

It is a absolute fact that traditional Medicare with supplemental insurance is better than any Medicare Advantage plan. Anyone who tells you otherwise, including the mayor or any union rpresentative, is either lying or uninformed. This action is about reducing benefits to save money, period.

In addition, Medicare Advatage insurers have been exploiting Medicare for over a decade as noted by NY Times (4/1/2023):

"Nearly every large insurer in the program has settled a fraud lawsuit for such conduct. Evidence of the overpayment has been documented by academic studies, government watchdog reports and plan audits."

You can just imagine the turmoil that this will cause for very old retirees who will no longer be covered by Medicare and Senior Care. They won’t even know about it until they go to their doctor and are told that they don’t have Medicare anymore.

Also included will be 780 line of duty widows who will have their health insurance turned upside down.

Costs

This attack will potentially save the City $454M per year ($2,400 per retiree & spouse) . Health & Hospital Corp will save $45.8M per year and the Housing Authority will save $16.1M per year. These are rough amounts based on the NYCERS & TRS actuary’s 2022 annual OPEB report. There are some complications which include:

1. 13,000 ME retirees who have non-ME eligible dependents that will still cost the City $27,000 per year per retiree.
2. Non-ME retirees who have waived health coverage but will now re-enroll in GHI-CBP at $10,200 or $27,000 per year

The City claims $600M annual savings but never documents their figures.

Senior Care is the least expensive component of the City’s legal obligation to pay for the costs for health insurance for its workers and retirees. It is also the most effective component of that coverage.

Betrayal

For the City to be able to drop Senior Care, it had to get a majority of the city unions to agree. On March 9, 2023, the UFT and DC-37 agreed to sell out these older retirees, many who were their members when they worked for the City. For what? We can only suspect.

The UFT, however, will have legal (Chapter 504/Laws 2009 Part B - Section 14) problems with these cuts. Any dollar reductions imposed on retiree benefits will have to be matched by dollar reductions imposed on current workers. The UFT has not been honest with their members about this state statutory requirement.

Opting Out

By federal law the City must allow any retiree to opt out of the mandatory Medicare Advantage plan. The City is trying to equate this federal opt out choice to a retiree’s waiver of health insurance benefits. This will be challenged in court. They City does not have the right to penalize retirees for exercising their rights under the Medicare law.

The City is pushing this waiver concept for retirees opting out because they want to be able to:

1. stop refunding Part B premiums to these retirees
2. terminate any welfare drug subsidies they receive (possibly all welfare benefits) and
3. drop health insurance coverage for dependents of these retirees.

This plan is punitive on it face and reflects the City’s anger at having been beaten in the courts and at the City Council. It also reflects the betrayal by the unions of the retirees.

Retirees with sufficient financial resources will have a choice to avoid the garbage MA plan but most retirees will not have the money to opt out.

Choice

In 1965, choice was the driving concept behind the City – Union agreement to offer health insurance to workers and retirees.

The City's 1965 letter to the Board of Estimate

The City of New York Department of Personnel- City Civil Service Commission,
220 Church Street,
New York, N. Y. 10013,

December 14, 1965.

To the Board of Estimate: Subject: Proposed Resolution Extending Choice of Health Insurance Plans to Active and Retired City Employees. Gentlemen—

On October 24, 1946, the Board of Estimate adopted a resolution ( Cal. No. 11), approving a proposed agreement between The City of New York and the Health Insurance Plan of Greater New York for the furnishing of medical benefits to the employees of The City of New York or of any agency or department thereof, who are paid out of the City treasury, and their families, who voluntarily elect medical coverage.

The City was prompted in entering into this agreement with the Health Insurance Plan of Greater New York and in authorizing the payment of up to 50 per cent of the premiums of the medical, surgical and hospital insurance coverage by the great need for The City of New York to provide for and protect the general health and welfare of its employees and their families. The City took into consideration the fact that sickness and physical disability of employees or members of their families are responsible for the loss of many man-days in each year's work, are reflected in lower morale among employees and affect their work and productivity.

Your honorable Board, on February 11, 1965, adopted a resolution ( Cal. No. 155), which allowed The City of New York to contract with the Associated Hospital Service of Greater New York ( Blue Cross), Group Health Insurance, Inc. ( G.H.I.), United Medical Service, Inc. ( Blue Shield), and the Metropolitan Life Insurance Company, to provide a choice of health insurance plans for certain employees in the uniformed forces of The City of New York.

As a result of collective bargaining negotiations entered into with the representatives of certain classes of employees in the uniformed forces and other occupational groups; personnel orders were issued by his Honor, the Mayor, and determinations made by the Comptroller in the case of employees subject to Section 220 of the State Labor Law, providing for the assumption by The City of New York of

- 75 per cent of the total payment for choice of health and hospital insurance during the first year of such choice, not to exceed 75 per cent of the full cost of H.I.P.-Blue Cross (21-day plan) on a category basis, and, thereafter, of

- 100 per cent of the full payment for choice of health and hospital insurance, not to exceed 100 per cent of the full cost of H.I.P.-Blue Cross ( 21-day plan) on a category basis.

It appears desirable that the City institute a uniform policy for all City employees with respect to choice of health and hospital plans. Therefore, in line with the resolutions previously adopted by the Board of Estimate and with the various personnel orders issued by his Honor, the Mayor, on the choice of health and hospital insurance plans, with the assumption by the City of a greater share of premium costs, there is herewith presented for your consideration and determination a proposal, in which the Director of the Budget and I concur,

providing
- to all City employees who are eligible for H.I.P.: Blue Cross coverage and
- to retired employees,
health and hospital insurance benefits, which are the same as, or equivalent to, those offered to members of the uniformed forces and other categories of City employees.

Respectfully submitted, THEODORE H. LANG, City Personnel Director.

Retiree Data

Medicare Eligible Retirees with Senior Care out of all Medicare Eligible Retirees

Agency	Senior Care Retirees	Spouses	All Medicare Retirees	Spouses
City -	139,442	49,320	173,231	61,646
HHC	15,156	3,940	20,110	5,266
HA	5,046	1,660	6,741	2,217
WFA	2	0	5	1

Appellate Win - Now the Political War at the City Council over Section 12-126

On November 22, 2022, a NY appeals court decided in favor of the Medicare eligible city retirees in their fight with the City to keep their Medicare supplemental insurance coverage. The City had attempted force the retirees into a Mediacer Advatage plan that the City did not have to pay for.

The Stabilization Fund and Age Discrimination

In a previous post about the Medicare Advantage Scam I highlighted a document from OLR to the former Mayor. It went into great detail about the Health Insurance Stabilization Fund, the HISF.

In 1983 the City and its labor unions agreed to set up the HISF to equalize HIP and GHI insurance rates.

In 2005 HIP and GHI merged into Emblemhealth. The City fought this merger in court but lost the fight.

The HISF Agreement

The following is part of a section from the UFA's 2008-2010 labor contarct with the City that recites the HISF agreement:

Section 3.

A. Effective July 1, 1983 and thereafter, the City's cost for each employee and each retiree under ager 65 shall be qualized at at the community rated basic HIP/HMO plan payment rate as approved by the State department of Insurance on a category basis of individual or family e.g.the Blue Cros/GHI-CBP payment for family coverage shall be equal to the HIP/HMO payment for the family coverage.

B. If a replacement plan is offereed to employees and retirees under age 65 which exceeds the cost of the HIP/HMO equalization provided in Section 3a, the City shall not bear the additional costs.

C. The City (and other related Employers) shall continue to contribute on a City employee benefits program-wide basis the additional annual amount of $30 million to maitain the health insurance stabilization reserve fund which shall be used to continue equaliztion and protect the integrity of health insurance benefits.

The health insurance stabilization reserve fund shall be used: to provide a sufficient reserve; to maintain to the extent possible the current level of health insurance benefits provide under the Blue Cross/GHI-CBP plan; and if sufficient funds are available , to fund new benefits.

The health insurance stabilization reserve fund shall be credited with the dividends or reduced by the losses attributable to the Blue Cross/GHI-CBP plan.

Pursuant to paragraph 7 of MLC Healt benefits Agreement, notwithstanding the above in each of the fiscal years 2001 and 2002, the City shall not make the annual $35 million contributions to the health insurance stabilization fund.

It appears that this agreement violates the federal age discrimination law (ADEA - 1967) by giving a benefit to a subset of a group based only on their age. Why didn't the agreement provide equaliztion for retirees age 65 and older?

How Come?

Actually, there was no need to provide an equalization mechanism for retirees age 65 or older. The cost of their health insurance, both for GHI Senior Care and HIP-Medicare, has always been significantly less than the HIP/HMO benchmark.

In fact, the City has always used the GHI Senior Care cost as the internal benchmark cost for Medicare eligible city retirees. This was done administratively without reference to Section 12-126 which had set up the HIP/HMO benchmark. With the start of Medicare in July 1966, the HIP/HMO health care service model conflicted with the original Medicare indemnity model, whereas the GHI/CBP indemnity model was a better match.

Starinting 1965, the City contracted with GHI to provide an alternative health insurance plan. other than HIP, to employyes and retirees. GHI was built to handle claims coming in from out of network doctors and hospitals.

In 1966, Medicare began paying 80% of doctors and hospital costs for enrolled retirees over age 65. Very quickly most doctores and hospitals began particpating in Medicare. HIP was not equiped to pay claims from independent doctors and non-HIP hospitals. The City adapted the GHI/Blue Cross plan Over the years, GHI Senior Care has become the dominant choice of city retirees enrolling in Medicare with a 84% share while the HIP Medicare plan has a 12% share

The Phantom $600M and the Medicare Advantage Scam - Update

Phantom $600M

As the details about the Medicare Advantage scam have become clearer, one number keeps popping up, the $600M that the City is claiming it is going to save by ramming all the old retirees into a “Joe Namath” Medicare plan. The City, however, is not going to save anything. It is giving the money to the Health Insurance Stabilization Fund which is committed to city workers and pre-Medicare retirees. This is clearly a discriminatory benefits structure excluding Medicare retirees. The Fund is controlled by the city unions and the City. The NYC taxpayers have no control.

In addition, it appears that the $600M is an inflated number. As of June 30, 2021, there were 243,978 retirees that are eligible for city funded health insurance.

The Actuary's FY-2021 Retirees Benefit Report

As reported by the NYCERS Actuary in her 2021 Other Post Employment Benefits (OPEB) report, this number breaks down into two main parts, 72,962 non-Medicare eligible participants (plus 46,483 spouses) and 171,016 Medicare eligible participants (plus 60,602 spouses).

The City saves nothing with respect to the 72,962 participants. They are not yet part of the scam. Their turn will come later.

The 171,016 Medicare retirees breaks down into four coverage groups:

1. GHI Senior Care 137,755
2. HIP VIP Medicare Advantage 18,127
3. Other (mostly Medicare Advantage) 6,905
4. Waived Coverage 8,229

Note: Emblemhealth controls both GHI Senior Care and HIP VIP as well as their companion products for workers and pre-Medicare retirees. The "Other" catergory is made up of an Aetna Medicare Advantage plan plus other minor carrires both Medicare Advanatge and Medicare Supplement plans.

Obviously, the City has never paid anything for the waived class. So, there are no new savings there.

HIP-VIP and the $7.50 Premium

The HIP and Aetna plans are strange situations. Out of the blue as of January 1, 2022 the City is only paying $7.50 per month per retiree for these two plans. Participants can stay in these plans with no change in their zero monthly premiums, but the City has been able to cut its cost from $184.95 and $204.53 per month to $7.50 with these two vendors. This is a real magic trick, the same coverage for almost no charge. Why didn’t the City do this years ago? Assuming all the "Other" class is covered by Aetna, this change produces a $54.96M annual savings.

1. 18,127 * ($184.95 - $7.50) * 12 = $38.60M
2. 6,905 * ($204.95 - $7.50) * 12 = $16.36M

The City has already started saving this $54.96M as of January 1, 2022. They have not been open about this savings but HIP and Aetna may back off their reductions after evaluating the court decision.

The GHI Senior Care Scam

Finally, let’s look at the big GHI Senior Care class of 137,755 participants. The coverage for this class is a Medicare supplemental insurance plan on top of traditional Medicare. If the participants in this class, however, want to keep their current coverage, the City is shifting $191.57 of its $199.07 per month cost to the retirees and their dependents. Prior to the court decision the City was planning to pay $7.50 per month for the GHI Senior Care plan. This is exactly the same amount that the City will be paying for the “Joe Namath” MAP plan being run by Emblemhealth and Anthem but only for the first year of the five year contract. The following years were going to be free.

This shift in costs would create a $316.68M annual savings (137,755 * ($199.07 - $7.50) * 12 = $316.68M) for the retirees.

Assuming that 67% of the spouses are covered by GHI Senior Care, also charging each of the spouses $191.57 creates a $91.95M annual savings (40,000 * ($199.07 - $7.50) * 12 = $91.95M).

In total, this creates a possible $463.599M annual savings ($54.96M + $316.68 + $91.95M). This is far short of the $600M. How did the City get this number so wrong?

Failed Strategy

In closing, the City has been very secretive about the internal costs figures for the Medicare Advantage scam. I suspect that the City was afraid that this information would expose what the City was doing with Emblemhealth.

Section 12-126 of the NYC Admin Code requires the City to pay the entire cost of health insurance up to 100% of the full cost HIP-HMO on a category basis. Category basis means individual or family. The City has tried to argue that law considers Medicare a category basis also.

After reading a 1995 report on the City's health insurance from the Citizens Budget Committee wriiten with the cooperation of OLR, I discovered that the City has, for many years, been using the GHI Senior Care premium as its cost control for Medicare retirees' health insurance. See the quote below:

The City's contribution for insurance for Medicare-eligible retirees is set at the premium cost for a GHI supplemental benefit policy, or $1,104 annually in fiscal year 1995. The City also pays an equal amount for coverage for a Medicare-eligible spouse of a retiree. If the spouse of a retiree is under age 65, the City pays the HIP rate for individual coverage ($1,780). A retiree and their spouse must choose the same plan if they are both Medicare- eligible or a plan from the same carrier if one is not Medicare-eligible.

I was able to match up the COBRA rates and retirees required premiums for six health insurance vendors for 2018, 2020 and 2021. The City started reporting COBRA rates for HIP-VIP in 2021. So 2021 has sven vendors.

For 2018 the City's cost was $172.42 for all plans, the full amount for GHI Senior Care. In 2020 the City's cost was $189.43. In 2021 the City's cost was $204.53, the full GHI Senior Care cost but the HIP-VIP cost was $184.95. It is clear that the City was using GHI Senior Care as its Section 12-126 cost control plan but was not being very public about it.

In addition to being deceptive about its cost limit for Medicare retirees, the City in order to circumvent the force of Section 12-126 of the NYC Admin Code had to get the HIP-VIP rate as close to zero as possible. It couldn't be zero because zero contracts are not valid. So the $7.50 rate was born. You see it in both of the Emblemhealth plans, the new MAP plan and the HIP-VIP plan.

The City only told the court about the new $7.50 premium on March 2, 2022, the day before the court made its decison. After testifying on March 1, 2022 and reviewing that testimony the following day, the City realized that in trying to hide its deal with Emblemhealth, it had also withheld the knowledge of the new $7.50 charge for HIP-VIP and without that knowledge, the court was going to disallow the $191.57 charge to the retirees.

The City's last minute go for broke strategy failed and the court decided against the City.

Aetna is a different story. I have another suspecion but it is not strong enough to comment on.