NYC - Exploding Costs for Employees Health Insurance

In the June 6th, 2025 issue of the Chief, the New York City announced the start of negotiations with EmblemHealth/UnitedHealthcare for a new health insurance plan for employees and non-Medicare retirees.

Warning: United Healthcare is being investigated by the federal government for Medicare/Medicaid fraud ae per a WSJ article May 15, 2025.

The City's current carrier is EmblemHealth/Anthem-Empire Blue Cross. The City will still be using EmblemHealth but has changed from Anthem to UnitedHealthcare for hospital coverage.

Current Cost Problems

It is clear from the chart below (based on NYC-OLR data) that the City has a serious cost inflation problem with the current EmblemHealth insurance coverage. It is, however, not clear whether this is an industry problem or is it a problem made worse by EmblemHealth's operations. In either case the City has an exploding cost problem.

Another scary piece of data is that it appears that Emblemhealth is almost totally dependent on the City for revenues.

EmblemHealth had reported premium revnue of:

• $8.33B in 2022 and
• $7.726B in 2023.

See report on page 6.

The City (plus HHC and Housing) paid EmblemHealth (GHI and HIP) $9,678M in FY-2024 as per OLR's reporting.

The primary problem with the NYC GHI-CBP health insurance plan for employees and non-Medicare retirees is increasing costs.

• In 2014 the City paid $3.416 billion in premiums for GHI-CBP and
  
• in 2024 that amount had increased to $7.927 billion.

That is an 113% increase over 11 years with a 13,000 decrease in employees and an increase of 5,000 in non-Medicare retirees.

Medicare vs EmblemHeath

In contrast to EmblemHealth, in 2015 Medicare spent $10,581 for both Part A plus Part B benefits per beneficiary and in 2023 Medicare spent $14,253 per beneficiary.

That is a 34.7% increase. (2024 Medicare Trustees Report – page 195).

As of the 2015 - 2023 period, the City’s total cost for GHI-CBP was $3.772 billion in 2015 and $6.861 billion in 2023.

That is an 81.9% increase.

In addition to lower cost increases, Medicare is a more effective plan than GHI-CBP and covers a higher risk population.

It would be very interesting if Medicare were able to administer the health claims for the City's employees and non-Medicare retirees and the City reimbursed Medicare.

The Participation Problem

There is also a secondary problem of a shrinking group of participating doctors and hospitals:

• In the NYC metro area
• In the rest of the USA.

I assume these issues are tied into the reimbursement schedules and operating problems between providers and Emblemhealth.

Over the last 11 years the City has obviously not been able to resolve this cost issue between the City and Emblemhealth and it is not clear how the City can resolve it now.

Employers Should Hire Medicare to Manage Health Insurance Benefits

Proposal

Major employers who want to provide health insurance to their employees should seriously consider pushing for a process to enable Medicare to manage paying the medical bills for their employees and then have the employer reimburse Medicare for the charges with a 3% administrative charge. The employer can choose to cover the full cost or have the employees contribute part of the cost.

Medicare is accepted by most doctors and hospitals all over the United States. In my opinion Medicare is arguably the best health insurance in the US even at 80% coverage. The non covered 20% can be purchased at approximately $200 per month. There are no pre-approval obstacles for needed treatments. Medicare has a good reputation for paying promptly. And the reimbursements to Medicare would be significantly lower than the payments for commercial health insurance. The trend line for Medicare annual cost increases is much lower than commercial insurance.

Annual Medical Cost Data for NYC Employees and Retirees

I recently posted a note outlining the increased cost for health insurance for NYC employees and retirees for the FY-2014 to FY-2023 period. I have done further analysis on the cost data from OLR for the period from 2014 to 2024 period.

Using the GHI charge for Senior Care (20% of the amount paid by Medicare) the health insurance cost for the average Medicare retiree & family in FY-2014 was $12,999 based on the $2,599 payment to Senior Care.

The full cost in FY-2024 was $16,404 based on the $3,280 payment to Senior Care. That was a 26% increase over ten years.

In contrast, the cost for the average employee and family was $10,949 in FY-2014 and $24,325 in FY-2024 (GHI coverage). That is a 122% increase over ten years

The cost of the average non-Medicare retiree and family was $13,080 in FY-2014 and $28,539 in FY-2024 (GHI coverage). That is a 118% increase over ten years.

Medicare retirees usually have more health benefit claims than employees but have smaller families. So, the levels of claims are probably very comparable but not the costs. EmblemHeath administers GHI coverage for NYC. NYC pays EmblemHeath 96% of its $8.4B annual health insurance costs.

Recap

NYC Average Annual Health Insurance Costs

	FY-2014	FY- 2024	% increase over 10 years
Senior Care Costs (20%)	$2,599	$3,280	26%
100% Medicare Retiree Costs	$12,999	$16,404	26%
Employee Costs	$10,949	$24,325	122%
Non- Medicare Retiree	$13,080	$28,539	118%

History: Health Insurance Costs for NYC Employees and Retirees for FY-2023 and FY-2014

Based on reports from the NYC Office of Labor Relations, NYC spent the following amounts on helath insurance for FY-2023 and FY-2014.

The amounts do not include payment for the Housing Authority (HA) or the Health and Hospitals Corp. (HHC).
It also does not include payments to retirees for refunds of Part B premiums that the retirees pay to Medicare every month (est. $415M from City funds for FY-2023).

Health Insurance Costs

Group	FY-2023		FY-2014
Employees	$5.580B		$3.009B
Non-Medicare Retirees	$1.619B		$0.787B
Medicare Retirees	$0.452B		$0.357B
Total	$7.651B		$4.152B

It is clear that the City's costs for health insurance are rising. But what the City doesn't make clear is that it is the costs for employees and non-Medicare retirees that have gone up significantly. While the costs for Medicare retirees has increased $100M over ten years, the number of Medicare retirees increased by 22,400.

Average annual cost per contract:

• Employees
  • 2014 -- $10,862
  • 2023 -- $21,107
• Non-Medicare Retirees
  • 2014 -- $13,271
  • 2023 -- $25,571
• Medicare Retirees
  • 2014 -- $2,550
  • 2023 -- $2,840

Number of Contracts including HHC and HA

Group	FY-2023		FY-2014
Employees	325,434		335,381
Non-Medicare Retirees	76,376		71,434
Medicare Retirees	191,536		168,657
Total	593,346		575,472

Emblemhealth

In 2005, GHI and HIP merged to form Emblemhealth. In FY-2023, the City paid 96% of its health insurance costs to Embelemhealth ($7,488 out of $7,651).

Average annual cost for GHI anf HIP per contract including HHC and HA:

• Employees
  • GHI
    • 2014 -- $10,949
    • 2023 -- $22,616
  • HIP
    • 2014 -- $10,517
    • 2023 -- $17,913
• Non-Medicare Retirees
  • GHI
    • 2014 -- $13,080
    • 2023 -- $26,546
  • HIP
    • 2014 -- $14,140
    • 2023 -- $20,266
• Medicare Retirees
  • GHI
    • 2014 -- $2,599
    • 2023 -- $3,277
  • HIP
    • 2014 -- $2,318
    • 2023 -- $129

The $129 amount is not a typo. In 2022, Emblemhealth changed the monthly amount per contract for the HIP Mediacre Advantage coverge to $7.50. Why? I suspect that it was because of competitive pressure.

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.

The City’s Failed Attempt to Steal from its Retirees and the Medicare Advantage Scam

NYC Admin Code Section 12-126 requires the City to “pay the entire cost of health insurance coverage for city workers, city retirees, and their dependents, not to exceed one hundred per cent of the full cost of H.I.P.-H.M.O. on a category basis.”. HIP-HMO is a Medicare Advantage plan managed by Emblemhealth. There are also other Medicare Advantage plans offered to NYC retirees. Medicare Advantage plans are not popular with NYC retirees, especially not retired teachers.

In 2021, the City introduced a new Medicare Advantage plan, the MAP plan, for retirees. The joint vendors for the contract for the new plan were Anthem and Emblemhealth. The only cost to the City for the new plan was a $7.50 monthly charge per participant for the first year of the five-year contract. This new plan was to be mandatory with a federally required opt out process. Part of the opt out, however, was that those retirees (GHI Senior Care) would have to pay $191.57 per month to stay in the GHI Senior Care plan. Prior to 1/1/2022 there was no charge for Senior Care.

On September 29, 2021, the retirees sued the City.

As of March 3, 2022, a state judge ordered the City to not charge the retirees the $191.57 monthly premium.

On the day before, March 2, 2022, the City for the first time notifies the court that Emblemhealth has dropped its monthly charge for HIP-VIP from $184.95 to $7.50 effective Jan. 1, 2022. Prior to 3/2/2022 the City had not notified the court of this reduction.

In its 3/21/2022 appeal papers the City claims that Emblemhealth did this “to retain market competitiveness”.

This is not credible because Emblemhealth was already offering the new MAP plan on a no cost basis and the HIP-HMO plan was a closed plan to new retirees. The more credible reason is that this would change the “100% full cost of HIP-HMO” cap and give the City a plausible excuse to start charging the retirees the $191.57 per month for the cost that was above the new HIP-VIP rate.

Why wait until the night before the court’s decision to reveal the $7.50 charge? I suspect that the City knew that if it had included the $7.50 change in its court filings, that the retirees would have attacked the City for circumventing the intent of the Section 12-126 and it would have exposed the City to credible charges of collusion with Emblemhealth.

Needles to say the City is trying to expedite its appeal to overturn the judge’s order and circumvent Section 12-126.

Anthem - US Department of Justice - Medicare Advantage Scam

I just stumbled on the following notice from DOJ. Within the press release you can find 112 page complaint. You can read the opening paragraph below:

Department of Justice
U.S. Attorney’s Office
Southern District of New York
FOR IMMEDIATE RELEASE
Friday, March 27, 2020

Manhattan U.S. Attorney Files Civil Fraud Suit Against Anthem, Inc., For Falsely Certifying The Accuracy Of Its Diagnosis Data

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that the United States filed a civil fraud lawsuit today against ANTHEM, INC. (“ANTHEM”), alleging that ANTHEM falsely certified the accuracy of the diagnosis data it submitted to the Centers for Medicare and Medicaid Services (“CMS”) for risk-adjustment purposes under Medicare Part C and knowingly failed to delete inaccurate diagnosis codes. As a result of these acts, ANTHEM caused CMS to calculate the risk-adjustment payments to ANTHEM based on inaccurate, and inflated, diagnosis information, which enabled ANTHEM to obtain millions of dollars in Medicare funds to which it was not entitled.

Why is the notice significant? Well, Anthem is the company NYC has contracted with to ramrod NYC retirees into a Medicarae Part C plan (aka Medicare Advantage). You can read the opening of the proposed NYC/Anthem contract below. This raises serious questions about the integrity of this whole process.

Medicare Advantage Group Agreement

This NYC Medicare Advantage Plus Plan Group Agreement (hereinafter "MA Agreement") is entered into as of January 1, 2022 (hereinafter “Effective Date”) by and between

the City of New York (“City”) acting through Mayor’s Office of Labor Relations – Employee Benefits Program on behalf of the Labor Management Health Insurance Policy Committee for the New York City Health Benefits Program with an office at 22 Cortlandt Street, 12th Floor, New York, NY 10007 (hereinafter "Group") and

Anthem Insurance Companies, Inc. doing business as Empire BlueCross BlueShield Retiree Solutions, on behalf of itself and the Alliance, defined below (hereinafter “Empire” or the “Alliance”) sponsor of the NYC Medicare Advantage Plus Plan (hereinafter "MA Plan"). Empire and The Group each are sometimes referred to herein as a “Party” and collectively as the “Parties.”

WHEREAS,

the City and Municipal Labor Committee (“MLC”), an umbrella organization for municipal unions, negotiate on a variety of matters, including collective bargaining regarding health benefits pursuant to their obligations under the New York Collective Bargaining Law;

WHEREAS,

to aid in the administration of the negotiated health benefits agreements, the City and the MLC established the Labor Management Health Insurance Policy Committee (“Committee”) for the MLC and City representatives to meet on a regular basis to discuss City health insurance benefits; and

WHEREAS,

the Employee Benefits Program (“EBP”) is a division of the Mayor’s Office of Labor Relations (“OLR”), and OLR is acting under the authority of the New York City Administrative Code Section 12.126(d) as the administrator of the New York City Health Benefits Program (“HBP”); and

WHEREAS,

on October 30, 2020 OLR’s request for authorization to enter into a Negotiated Acquisition to solicit a Medicare Advantage plan under Medicare Part C for the Medicare eligible retirees and dependents of the City of New York who are eligible for the City’s Health Benefits Program was approved by the City Chief Procurement Officer; and

WHEREAS,

OLR issued a public notice for a negotiated acquisition (EPIN:0021N002) in conformance with the New York City Procurement Policy Board Rules (“PPB”) and had otherwise advertised in order to solicit vendors through the Notice of Intent to provide health benefits services in the form of a Medicare Advantage plan under Medicare Part C for the Medicare eligible retirees and dependents of the City of New York who are eligible for the City’s Health Benefits Program; and

WHEREAS,

the Retiree Health Alliance (“the Alliance”), a strategic alliance between Empire and EmblemHealth Plan, Inc. (“EmblemHealth”) and their affiliates, submitted a response for such services, as provided for in the public notice for a negotiated acquisition, in the form of an expression of interest to OLR; responses were evaluated by an evaluation committee pursuant to PPB Section 3-04; and

WHEREAS,

OLR determined the Alliance’s proposal to be most advantageous to the City, taking into consideration technical expertise, price, contract terms, M/WBE Utilization Plan and other factors set forth in the negotiated acquisition solicitation; and

WHEREAS,

the City desires to appoint the Alliance to provide a Medicare Advantage Plan Under Medicare Part C for City of New York Retirees, and their Dependents, and

NOW, THEREFORE,

in consideration of the terms and conditions contained herein, the parties hereby agree as follows:

  ARTICLE 1 - PURPOSE
The Alliance will provide health insurance coverage to the Group’s eligible retirees and other eligible individuals as described in this MA Agreement. Empire is accountable for the operations, compliance, and performance of the MA Plan. EmblemHealth is an entity contracting with Empire to administer portions of this co-branded product to help ensure the City’s retirees receive continuity of care and membership support.

Specifically, EmblemHealth will co-manage the account, provide a professional network in the downstate New York area, deliver care through Neighborhood Health Centers, and support Empire in multiple areas of plan performance. ...

Emblemhealth – the Big Winner in the Medicare Advantage Scam.

Please refer to previous postings on the City’s attack on its retirees’ Medicare benefits and the bogus Medicare Advantage Plus (MAP) plan.

History

Since the mid 1940’s GHI and HIP have been the main health insurance providers for NYC workers and retirees. In 2005 these two firms announced their merger to form Emblemhealth. Interestingly, the City fought the merger in federal court on antitrust grounds claiming it would increase its health insurance costs. The City lost the case.

Cash Flow

In FY-2021, the City paid approximately $4.821B for city workers health insurance and $2.773B for city retirees’ health insurance. This is approximately 5% of the City’s total budget. Almost all of the $7.5B was paid to Emblemhealth via GHI and HIP. The City is Emblemhealth’s primary client. Because of the amounts of money involved and the time length of the relationship, there is a serious potential for corruption between the City and Emblemhealth. And city unions!

This is a huge business for Emblemhealth. Can you just imagine if Aetna started to tap into this gold mine?

Oversight

The NYC Office of Labor Relations (OLR) is the statutory administrator of health insurance benefits (Section 12-126.d of NYC Admin Code). From my long experience in administering NYC pension benefits, it is my opinion that OLR is quite effective in negotiating labor contracts but incapable of managing large scale data intensive employee benefit operations. OLR contracts out all this type of work with minimal "oversight".

The following is a recent notice from AM Best, a firm that monitors the credit worthiness of insurance companies.

April 28, 2021 09:32 AM Eastern Daylight Time OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has removed from under review with negative implications and affirmed the Financial Strength Rating of C+ (Marginal) and the Long-Term Issuer Credit Ratings of “b-” of Health Insurance Plan of Greater New York (HIP), EmblemHealth Insurance Company, EmblemHealth Plan, Inc. (EHPI) and ConnectiCare, Inc. (ConnectiCare) (Farmington, CT). All companies are subsidiaries of EmblemHealth, Inc. and domiciled in New York, NY, unless otherwise specified. The outlook assigned to these Credit Ratings (ratings) is negative.

The removal of the ratings from under review follows the completion of AM Best’s assessment of the consolidated financials of the group through year-end 2020 and assessment of the capital restoration plan.

The ratings reflect EmblemHealth Group’s balance sheet strength, which AM Best assesses as very weak, as well as its marginal operating performance, neutral business profile and marginal enterprise risk management….

Wasn’t this the exact time that the City/Municipal Labor Council (MLC) were negotiating with Emblemhealth for the MAP contract?

New Deductibles and Copay for GHI Senior Care

The week before Christmas I received a letter as a NYC retiree from Emblemhealth. It was dated December 17, 2021 and signed by a George Babitsch, a senior vice president.

The letter was a notice of changes to my GHI Senior Care Medigap insurance plan. The changes were to be effective January 1, 2022. These changes have an immediate impact of retirees over age 65 and future impact on all current city retirees and workers.

Babitsch claims the changes were based on negotiations between the NYC Office of Labor Relations (OLR) and city unions via the Municipal Labor Committee (MLC). City unions have no collective bargaining authority over current retirees, only current workers. If the unions want to negotiate reductions in the health insurance benefits of current workers, they are free to negotiate those benefits.

There is, however, a statutory guarantee that the City pay the entire cost of health insurance coverage for workers, retirees and there beneficiaries limited only by the cost of the HIP-HMO benefit.

There is also an added statutory protection for retirees who retired from the NYC Department of Education or the old Board of Ed. See the quote below from the legislative history of this law.

The law provides that school districts may reduce neither the level of health insurance coverage nor their contribution toward its cost for retirees, unless the reduction applies equally to active employees. This protects retirees by in effect making them part of the collective bargaining process.

The changes are

• 1) an imposition of an added $50 annual deductible on top of the regular Medicare Part B deductible of $233 for 2022, and
• 2) $15 copay for every medical service.

There are 157,381 NYC retirees covered by Senior Care (see below). If these changes go into effect, they will cost retirees $31.4M per year which in turn will increase Emblemhealth's annual profit. How does the City escape paying for these changes?

Litigation and the MAP Plan

Partly because of these changes, the City is in a legal fight with the retirees over the attacks on their benefits. I’m quite sure that the City did not expect the retirees to fight back.

Along with the Senior Care changes, the City and Emblemhealth are also trying to force these 157,381 retirees into the Medicare Advantage Plus (MAP) plan.

If that effort is successful, the City will no longer have to pay for the retirees’ Senior Care coverage ($194/month) and Emblemhealth stands to increase its regular annual profit of $36.6M for Senior Care plan into an annual profit of $207.7M for the MAP plan.

The retirees will lose their traditional Medicare benefit. Also MAP, as Medicare Advantage plan, will force retirees to buy their Part D drug coverage from the MAP plan.

Speaking of Part D, in New York State, you can get an excellent Part D plan from Aetna for $77.20 per month as opposed to the $125 that Emblemhealth is charging in the MAP plan and the Senior Care plan(2022). It was $150.30 in 2021. You may be starting to see a pattern in the relationship between the City and Emblemhealth.

Opting Out of the MAP Plan

If the retirees opt out of the MAP plan, the retirees will have to pay $191 per month for Senior Care plan and double that if their spouses are covered. This is in addition to the $125 per month charge for the retiree and the spouse each for Part D coverage. If the retiree chooses to buy Part D on the open market, they will lose any subsidy that they receive from their welfare funds.

Now that retirees are paying for Medigap insurance, shouldn't they be free to pick the plan that thet want? Well not really. If the retiree wants to switch from the GHI Senior Care (Medigap Plan A) and buy a less expensive and more effective Medigap Plan A in NYS(chart), the City is threatening to block the refunds for Part B premiums that retirees pay Medicare each month. The refunds, like like health insurance covergae, are mandated by Section 12-126 of the NYC Admin Code. Why would the City make this threat? Is the City trying to protect Emblemhealth's market share?

I can see if the City was paying for the Medigap insurance that it would want to control who the vendor was. But once the retiree is paying the cost for the insurance, why would the City care who the company was?

Of course the City is doing the same thing with the MAP plan. If the retiree dares to go to another Medicare Advantage plan, he/she will lose their Part B premium refund.

Where the Money Comes From

In a Medicare Advantage plan, CMS, the federal Medicare administrator, will give Emblemhealth roughly $1,100 a month per captured retiree and CMS only requires Emblemhealth to pay out 85% of that amount in health benefits. You can easily do the arithmatic. With a 10% profit margin you generate $207M per year. That does not include whatever it can pull in from its charges for the Part D coverage. I am beginning to become very suspicious of this deal.

As stated before, Emblemhealth is now offering the City a new Medicare Advantage plan that will cost the City nothing. Only for the first year of the five-year contract is there a token monthly premium of $7.5 per retiree. I suspect that the lawyers inserted this trivial amount to ensure that the contract is valid.

HIP-HMO for Medicare Eligible Retirees

As of June 30,2021, there were 22,404 Medicare eligible city retirees covered by HIP-HMO. This is a Medicare Advantage (MA) plan that has been in place for years. It is a voluntary plan as opposed to the MAP plan.

It is not clear what is going on with the future coverage for retirees in the HIP-HMO (MA) plan.

It is also not clear what is going on generally with the charges for Medicare retirees with families who are not Medicare eligible.

Comparing the number of participants in the Senior Care and the HIP-HMO plans, you can easily see that Senior Care is the dominant plan for Medicare eligible retirees and that has been true for decades.

You might wonder what has been going on with HIP-HMO Medicare Advantage plan for all these years? Why was there a cost for the HIP-HMO (MA) plan when the new MAP plan is now free or precisely, why did the HIP-HMO (MA) cost the City $48.8M per year for 22,404 retirees and the MAP plan for 157,381 retirees will cost the City nothing?

Stats from the Actuary’s 2021 OPEB Report

As per the OPEB report for 2021 from the NYCERS’s actuary the following is the major breakdown NYC retirees and health insurance coverage. A small portion of retirees (10,478) chose other plans that have added charges,

• Medicare eligible retiree:
  • a. 157,381 retirees covered by GHI Senior Care (Medigap – Plan A)
    • i. Monthly cost per retiree and spouse: $194.14 each
    • ii. Monthly cost per retiree with younger family: $2,035.61
  • b. 22,404 retirees covered by HIP-HMO (Medicare Advantage)
    • i. Monthly cost per retiree and spouse: $181.58 each
    • ii. Monthly cost per retiree with younger family: $1,901.23
• Non-Medicare eligible retiree:
  • a. 62,779 retirees covered by GHI-CBP/EBCBS
    • i. Monthly cost per single retiree: $775.66
    • ii. Monthly cost per retiree/family: $2,035.61
  • b. 9,169 retirees covered by HIP-HMO
    • i. Monthly cost per single retiree: $776.01
    • ii. Monthly cost per retiree/family: $1.901.23

That adds up to the following annual revenue paid by the City to Emblemhealth for just retirees:

• a) Medicare eligible retirees (assuming no younger families) of
  • a. $48.8M for HIP-HMO
    • ($181.58 * 12 * 22,4040) and
  • b. $366.6M for Senior Care
    • ($194.14 * 12 * 157,381)
• b) Non-Medicare eligible retirees (assuming 50% with families)
  • a. $144.6M for HIP-HMO
    • ($776.01/$1,901.23 * 12 * 9,169)
  • b. $1,040.3M for GHI-CBP/EBCBC
    • ($775.66/$2,035.61 * 12 * 62,779)

All these plans are run by Emblemhealth.