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.
- 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.
