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
- City’s PICA program (which covers injectable and chemotherapy drugs),
- additional contributions to union welfare funds, and
- 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.
