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.

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