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%

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.

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

More on the War on Older City Retirees and the Tsunami of Health Insurance Costs for NYC

In the middle of the City's war on Medicare city retirees and their inexpensive and high quality health insurance, the City is being hit by a tidal wave of rising health insurance for its employees and younger retirees.

In FY-2014 the City spent $5.0B on health insurance. In FY-2018 it spent $6.9B. In FY-2022 it spent $8.7B. In three years, that amount could easily be $12.0B surpassing pension costs.

On a more personal level, the annual cost for family coverage for the basic health insurance plan for employees and younger retirees has exploded over the last 25 years as outlined in the table below:

Annual Costs for Family Health Insurance Coverage 1997-2022

Date	Annual GHI-CBP Cost	Annual HIP-HMO cost
July 1, 1997	$4,601.53	$4,356.00
Jan 1, 2006	$8,986.12	$8,687.76
July 1, 2011	$13,791.41	$15,391.06
July 1, 2013	$14,330.82	$17,607.41
July 1, 2014	$15,838.00	$17,826.94
July 1, 2015	$16,933.29	$18,358.94
July 1, 2016	$17,997.88	$19,241.18
July 1, 2017	$19,603.88	$20,749.53
July 1, 2018	$19,603.88	$22,236.35
July 1, 2019	$21,485.88	$23,106.35
July 1, 2021	$26,904.59	$25,306.12
July 1, 2022	$26,904.59	$27,250.12
Oct 1, 2022	$29,577.53	$27,057.06

In contrast, over the 25 year period from 1997 to 2022 the City's annual cost per Medicare retiree's supplemental insurance has risen from $1,063.76 to $2,388.82.

Loss of Coverage

On top of these increases, the level of coverage has decreased. In addition to the introduction of copays for both HIP-HMO and GHI-CBP, many doctors have been deciding to stop accepting payment from GHI because of the plan's deficient payment for services. GHI is the main plan for employees and younger retirees. Based on documents from OLR 73% of employees/retirees use GHI while 19% use HIP. Both plans are run by Emblemhealth. Another drawback is that employees who work or live outside the NYC metro area very often have to sign up for plans with added premiums to get coverage where they live.

Response

Up until now the City has not addressed the macro problem. It has dicked around the edges but has not challenged Emblemhealth to provide better coverage at less cost. Why not?

In FY-2022 the City paid Emblemhealth $8.4B out a total of the $8.7B total of its health insurance costs, not including the payments to Emblemhealth for prescription drugs coverage. Drug coverage is paid by many employees out of their paychecks or by the unions out of their welfare funds.

It is not clear whether the cost explosion is Emblemhealth's fault or the general cost of health care. I suspect that a new insurance vendor will not solve the problem. I suspect that every US employer is facing this problem.

Consolidating with the New York State government health insurance plan may help somewhat but the scale of this problem appears to demand a national solution.

How CMS-Medicare Could Help

CMS is the largest payor of health care costs in the US. It is highly efficient in making these payments. That is why most doctors accept Medicare patients.

Maybe the City could enter into an agreement with CMS to make payments for City employees and non-Medicare retirees, and in turn the City reimburse CMS for the payments plus administrative costs.

Structurally, CMS pays 80% of its scheduled fees for medical services to Medicare enrolled persons. The City could agree to reimburse 100% of scheduled fees to satisfy its Section 12-126 obligation. Or it could get an agreement with all from all parties to a lower percentage and change the benchmark in Section 12-126 to a percentage of the CMS fee schedule instead of the current private sector benchmark.

This would eliminate the insurance company overhead/profit, improve coverage, and expand the number of care providers.

In the long term, hopefully, CMS will be able to constrain the rise in health care costs for everyone. Health care is not a free market.

Note

City managerial employees/retirees pay for their drug coverage. The City should push for employees/retires to also pay for their drug coverage on an income scale basis in place of the City funded union welfare funds.

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

Threat from OLR to Trash Older City Retirees Health Insurance

On October 27, 2022, there were oral arguments in the appellate court for the trial court decision stopping the City from charging retired city workers for their supplemental Medicare insurance. It appeared that the appellate court would defer to the City Council over the wording of Section 12-126 which would leave standing the trial court decision.

On October 28, 2022, the City's OLR director sent the Municipal Labor Committee (MLC) a letter threatening to terminate all existing health insurance contracts for all older city retirees (I am assuming that the City did not mean younger retirees) and leave the older retirees with only a Medicare Advantage plan for which the City doesn't have to pay anything.

"MAP" Plan

In her letter the OLR director refers to the "MAP" plan indicating that she and the MLC have a "MAP" plan ready to go. For the record, since Anthem has withdrawn from its offering to provide a Medicare Advantage plan, OLR has not given public notice about what constitutes the "MAP" plan. There may be a new "MAP" plan but we don't know anything about it.

NYC retirees live all over the United States. That is why traditional Medicare with supplemental insurance works so well for NYC retirees. Medicare is almost universally accepted across the country. Medicare coverage with supplemental insurance provides the best health care for older retirees who statisically have more health problems than younger retirees. Preversely, the younger retirees cost the City more than the older retirees.

I know that contracts between Medicare (CMS) and insurance companies offering Medicare Advantage plans are regionally based. I suspect that to provide the same plan on a national basis is not really possible.

Attack on Section 12-126

The OLR director also stated in the letter that she and the MLC had agreed via collective bargainning to changes to Section 12-126 of the NYC Admin Code which would eliminate the health insurance protections for older city retirees. She was complaining that these changes have not yet been introduced at the City Council. The proposed changes, however, are floating around and are dangerous.

The OLR director claims that the City is losing $50M per month paying for the supplemental Medicare insurance for older city retirees because the changes have not been passed into law. The City paid $425M for supplemental insurance in FY-2022. Divided by 12, that is $35.4M per month. This type of inaccuracy is always indicative of deception.

In fact the City is not losing money. It is continuing to honor the committment that it made in 1965 and memorialized in statute in 1967.

There were 246,832 city retirees in 2022 of which 173,231 were Medicare eligible. Of that number 139,442 were covered by the supplemental insurance. The City wants to terminate their supplemental insurance and only offer a Medicare Advantage plan with an exclusionary drug rider that the retiree would have to pay for.

Talk about Losing Money

On October 31, 2022, the Comptroller released the FY-2022 NYC Financial Statement (CAFR).

The statement documents that in 2022 the City contributed $3.03B to the teachers' pension fund (TRS) and in turn TRS skimmed off $2.14B into the teachers' deferred compensation plan (403-b). Yes, it is mind boggling but legal. The 2021 skim was $1.99B.

The UFT is the dominant player at TRS. The UFT is also the main union pushing the "MAP" scam on the other unions.

The CAFR also documents that the City paid $1.42B to the union welfare funds in 2022. The 2021 amount was $985M. The City paid $126M to the union annuity funds in 2022 and $109M in 2021.

Conclusion

Let's hope the City Council stands by its 1967 committment to provide health insurance to the City's workers and retirees and not dump older retirees into a second rate private insurance plan.

Assault on the Law Protecting City Retirees' Health Insurance - Blowing Up Section12-126

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,

1. in the case of any class of individuals
2. eligible for coverage
3. by a plan jointly agreed upon
4. by the city and the municipal labor committee
5. to be a benchmark plan for such class,

not to exceed the full cost of such benchmark plan as applied to such class.

Harry Nespoli and Bob Linn, Both Knew All Along - The Medicare Advantage Scam

1965

In 1965, the City agreed to pay for both employees and retirees health insurance coverage. Dependents were also included.  As part of this coverage the City also agreed to offer employees and retirees a choice of three plans,

• HIP/Blue Cross,
• GHI/Blue Cross, and
• Blue Cross/Blue Shield.

The cost, however, was capped

• at 75% of the cost of HIP/Blue Cross(21 day plan) on category basis as of 1/1/1966 for employees and 4/1//1966 for retirees and
• at 100% effective on 1/1/1967 for employees and 4/1/1967 for retirees.

1966

As of 7/1/1966 Medicare became effective and radically reduced the cost for the City in providing health insurance coverage to eligible retirees, roughly by three quarters.

The three health plans were significantly changed to reflect the fact that Medicare was now the primary health insurance coverage for retirees over the age of 65.

As opposed to the three City plans Medicare is an individual coverage plan. It does not administer family plans.

In order to control the costs of the three new modified contracts, the City adopted the new GHI plan premium as the new 100% cost cap for the three reduced coverage plans for this group of retirees.

As support for this claim, I am going to quote a statement from a 1997 letter from the OLR Director Jim Hanley to Deputy Mayor Randy Levine:

“The rate paid by the City for Medicare eligible retirees is based on the GHI/Blue Cross Senior Care rate, traditionally the rate is paid retroactively when the Senior Care rate is approved by the City. The rate approved for senior care is $88.65 per month and the HIP rate is $91,31, resulting in a payroll deduction of $2.96 per person.”

1967

In December 1967, the City Council passed Local Law 120 (Section 12-126, NYC Admin Code) which codified the 100% guarantee for all employees, retirees and dependents. The law only referenced the HIP/ Blue Cross cost cap that was being used for employees and retirees under age 65.

It also authorized the refund of the then current Medicare Part B premiums to Medicare enrolled retirees. The City had required retirees to enroll in Medicare if eligible in order to recive City health insurance coverage. This was actually the primary purpose of the statute.

2014 Collective Bargainning

In 2014, as part of collective bargaining negotiations the City put forward a list of fourteen proposals to create health insurance savings. Two of the those items are listed below:

• 10. Eliminate GHI Senior Care premiums for Medicare plans. Replace with a set rate which can be indexed each year based on Medical CPI or a Medicare Advantage plan.
• 11. Eliminate HIP HMO as the benchmark. Replace with a set rate which can be indexed each year on Medical CIPI

Note: as of 2014, the City was offering Medicare Advantage plans to retirees but with deceasing participation from retirees.

On May 14, 2014, Harry Nespoli and Bob Linn signed a letter of agreement that included  the following clause:

“6. The following initiatives are among those that the MLC and the City could consider in their joint efforts to meet the aforementioned annual and four-year cumulative savings figures: minimum premium, self-insurance, dependent eligibility verification audits, the capping of the HIP HMO rate, the capping of the Senior Care rate, the equalization formula, marketing plans, Medicare Advantage, and the more effective delivery of health care.”

It is clear from these documents that Nespoli and LInn knew that the City was obligated to cover the cost of GHI Senior Crae for Medicare retirees. It is also clear that the Law Department knew about the GHI in spite of its court filings to the opposite.

2021 and the Fight over the Scam

So instead of directly attempting to modify Section 12-126 to provide the City with some financial relief from rising health insurance costs, Nespoli and Linn came up with the "MAP" scam.

Mediacare (CMS) allows an employer to auto-enroll its retirees into a Medicare Advantage plan but requires the empoyer to allow the retirees to stay in their existing plan if they choose to do so. So Nesploi and Linn decide to force GHI Senior Care retirees into a Medicare Advantage plan. But then in clear violation of Section 12-126 they demanded that the retirees pay the full cost of GHI Senior Care if they opted out of the the Meidicare Advantage plan.

In more direct language, Nespoli and Linn cut retirees health coverage and then tried to extorted the full cost of the old coverage from the retirees opting out. They would have gotten away with this, if the retirees had not fought back and a judge saw the theft for what it was. His words are below:

Of course, none of this is to say that the respondent must give retirees an option of plans, nor that if the plan goes above the threshold discussed in NYC Admin. Code § 12-126 (b)(1) that the respondent could not pass along the cost above the threshold to the retiree; only that if there is to be an option of more than one plan, that the respondent may not pass any cost of the prior plan to the retirees, as it is the Court’s understanding that the threshold is not crossed by the cost of the retirees’ current health insurance plan. This is buoyed by the fact that the current plan has been paid for by the respondent in full to this point.

Of course the City has the nerve to appeal this decision in spite of the fact that the City knew all along that it was using GHI Senior Care as the cost threshold.

Yes, it is as bad as it sounds.

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.

The Reason for the Medicare Advantage Scam

In a December 27, 2021 memo from the OLR Commissionet to the Mayor (with 4 daya in office), Ms Campion made the following statement reporting on Health Savings in FY-2021:

Memo from OLR to Mayor December 27, 2021

Most recently, the Tripartite Committee was tasked with looking at the status of the Stabilization Fund. An Agreement to set up this Fund was executed in 1983 to help the City and the MLC equalize the costs of the premium-free CBP-PPO and HIP HMO plans offered to active employees and pre-Medicare retirees.

Under the equalization formula, when the HIP rate exceeds that of the CBP, the Stabilization Fund receives a contribution from the City, and when the CBP is higher, the Stabilization Fund has to cover the increased CBP cost over that of HIP.

Over the years, by agreement between the City and the MLC, excess money in the Fund has also been used to cover many of the escalating costs of health care, including the

1. City’s PICA program (which covers injectable and chemotherapy drugs),
2. additional contributions to union welfare funds, and
3. the costs of preventive care mandated by the Affordable Care Act.

In FY 21 and FY 22, the CBP rate was higher than that of the HIP rate so the Fund will have to cover increased costs, accelerating the decline of the Stabilization Fund which we had anticipated would occur in the next few years. This could affect the City’s ability to recover recurring savings from the CBP plan in the future, as they are derived from offsets to the Stabilization Fund assets.

For this reason, the FY 21 withdrawal from the Fund, and therefore the savings, were limited to $600 million so that any further CBP-derived savings will remain in the Fund.

To address the Stabilization Fund, the City and the MLC agreed to implement a new retiree Medicare Advantage program which is expected to save about $600 million a year due to Federal subsidization of Medicare Advantage programs. The Medicare Advantage program will provide NYC retirees with a continuation of premium free coverage while providing important enhancements including free telehealth visits, transportation benefits to and from doctor appointments, fitness benefits, meal delivery after a hospitalization, wellness rewards and coverage while traveling.

The City and the MLC agreed to use the savings from that program to help support the Stabilization Fund. Because this $600 million savings is earmarked for the Stabilization Fund, it does not count as budget savings towards the FY 19 – FY 21 savings target but was not necessary to meet the target.

Right Out in the Open

The City openly admits that the reason that it is forcing Medicare eligible retirees into a Medicare Advantage plan is so that the City can take money that should used to pay for the retirees health insurance and give it to the Stabilization Fund. The benefit of this transfer goes to employees and non-Medicare eligible retirees and none to Medicare eligible retirees

It was not done because the Medicare Advantage plan is a better plan than the current GHI Senior Care plan. The City is doing this only because it can walk away from its stautory requirement to pay the entire cost of older retirees health insurance and dump it on the federal government.

OLR claims that the City is saing $600M because of a federal subsidy. Not exactly. The federal goverment does not subsidize Medicare Advantage plans. Instead of paying 80% of medical costs directly, Medicare gives that same money to private insurance companies to pay 100% of medical costs, admin expenses, and profit. So how do you think an insurance company does that magic trick? Somebody is getting the short end of the stick.

The MLC has no basis to interfere with current retirees health insurance benefits. The MLC only represent current workers, not current retirees. The fact that the unions control the Stabilzation Fund is an actual conflict of interests.

In addition, the City claims it is going to save $600M per year. It will be lucky to save $375M per year. Of course MAP(Anthem/Eblemhealth) will be increasing its profit tremedously but not as much as it thought since 45,000 retirees have already opted out of the junk MAP plan.

Just stop and consider that 45,000 retirees have chosen to walk away from the "free" and "better" MAP plan and are willing to pay the $191.57 per month for their old free plan. Does anyone have any doubt that the MAP plan is junk.

In fact, Medicare Advantage plans are all schemes by insurance companies to extract money from the Medicare Fund. You only have to consider Anthem's problem with the Department of Justice over Medicare Advatage fraud.

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.