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

Mayor Adams and His War on Older City Retirees - By the Numbers

Every Halloween the Comptroller releases the City's finacial report for the previous July-June budget year.

During the year ending on June 30, 2022 the City spent

• $9.7B on pensions,
• $13.2B on fringe benefits,
• $31.0B on salaries, and
• $52.7B on other than personnel services, the famous OTPS expenses.

Of the $13.2B for fringe benefits

• $8.7B went for health insurance for workers and retirees,
• $2.3B went for Social Security contributions,
• $1.4B went for welfare benefit funds (both city and union),
• $0.13B went for union annuity funds,
• $0.6B went for workers comp insurance and other items.

Of the $8.7B for health insurance,

• $6.5B went for workers health insurance,
• $1.3B went for younger retirees health insurance,
• $0.5B went for older retiress health insurance, and
• $0.5B went for Medicare Part B premium refunds.

Attack on Older Retirees

The Mayor (and the MLC) wants to stop paying for the GHI supplemental health insurance for city retirees and their spouses who are covered by Medicare. The Mayor wants to force all of these retirees into a Medicare Advantage plan. It is an inferior insurance plan as compared to the supplemental plan but, of course, the City does not have to pay for the Medicare Advantage plan.

Last year the City tried to ram this down our throats but it lost its attempt in court. It now wants to cut the law (Section 12-126) that protects retirees health insurance. It also protects workers health benefits.

There are 139,442 city retirees covered by the GHI supplemental plan along with 20,205 retirees who retired from the Health and Hospitals Corp and the Housing Authority.

The monthly cost for each retiree and each spouse in this group is $201. The City's total cost in FY-2022 for the GHI supplemental insurance for city retirees was $425M and $87M for HHC and HA retirees.

Any US citizen eligible for Medicare can signup for a no premium Medicare Advantage plan. The City is offering older retirees something they already have, whether or not they are a city retiree. What the City is really trying to do is to abort its current obligation under law to pay for health insurance coverage for older city retirees and their spouses.

Other Ways for the City to Save Money Without Beating up on Retirees

During FY-2022, the City incurred the following expenses:

1. $269M in administrative expenses for the five pension systems. That cost could be cut in half ($135M) and still improve services. I know, I was the executive director at NYCERS for many years.
2. $1.5B in investment fees at the five pension systems which lost $31.0B during the year. The systems should be required to limit fees to 20 basis points of assets. That would save $1.0B a year.
3. $2.1B to subsidize the teachers deferred compensation plan (403-b plan). No other city employees receive this subsidy. This is in addition to the cost of the teachers regular city pension benefit. This benefit could be radically cut or eliminated with a huge savings to the City. And in a counterintuitive view, members of TRS would probably make more money if they deversified their assets rather than parking them in the guaranteed stable income fund.

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.

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.

Stupidity and the Medicare Advantage Scam

I am assuming that all NYC retirees and workers know that the City is trying to screw with retirees Medicare benefits. Enough with abuse of power and illegal actions, let's look at the City's stupidity.

Cross Over Retirees

Consider a current 66 year old male NYC retiree with traditional Medicare and GHI Senior Care coverage. He has a 62 year old wife. With respect to Part D coverage at age 65, he continued his family drug coverage with GHI which he started when he retired at age 62. He pays the the family GHI-CBCBS drug premium ($149.96), not the Senior Care family drug premium ($300.60).

In FY-2021 the City paid $2,023.61 per month to GHI for CBP/EBCBS family health insurance. This was for workers and retirees with non-Medicare eligible dependents. This means that the City is paying GHI $2,023.61 for this retiree's family health insurance even though he is Medicare eligible. I am almost dead sure that the City is not paying GHI the $194.14 per month individual Senior Care premium for this retiree, since it is already forking over the $2,023 each month.

Now consider that in 2021 this retiree and his wife adopted two newly born children. The retiree now has three dependents on his health insurance coverage and the City now has a 25 year liability for family GHI CBP/EBCBS health insurance costs. As I stated above the monthly cost for the GHI family coverage is $2,023.61. That is $24,283 per year. Even when the retiree's wife turns 65, the City will still have to pay the $2,023 per month

The New MAP Plan for January 1, 2022 - With a Court Stay in Place

On January 1, 2022 the City wants to jam this retiree, along with all other Medicare eligible retirees (not HIP-HMO), into a Medicare Advantage plan with the express purpose of avoiding paying the Senior Care $194.14 per month premium. Of course, the City is not actually paying for this retiree. The City then wants to give the "savings" to the union welfare funds (the MLC).

In fact the City will probably never save any money on this retiree.

Political Blowback

Since the City can not escape paying the $2,023.61 per month for this retiree, would it not be more politically advantageous to leave this retiree in his current "Senior Care". You know this family is going to be radically motivated to rip the heart out of the scum that are screwing up their health insurance. Of course all effected retirees are going to want to get revenge but the City is not even getting any "savings" in this case.

I created this exaggerated case to highlight the complications of the Medicare Advantage scam. There about 158,000 Medicare eligible city retirees covered by Senior Care. I guarantee you that 25% of those retirees fall into this cross over scenario to some extent. Just think of a 66 year old retiree marrying a 55 year old. Happens all the time. All of a sudden the cost goes from zero to $24,283 per year.

Catch-22

The City has created a Catch-22 for the Medicare eligible retirees. The City will not be saving anything on these cross over retirees and yet the City is punishing them by reducing their benefits.

The retirees are either forced into the new inferior "free MAP" plan or pay the Senior Care $191 a month premium each for themselves and everyone of their Medicare eligible dependents plus $125 month each, for Part D coverage, for themselves and everyone of their Medicare eligible dependents.

Of course the new free MAP plan is not totally free since the drug coverage will cost $125 per month each for the retiree and any of his/her Medicare eligible dependents. In addition, the retiree can not choose to buy the Part D drug coverage on the open market since CMS gives Medicare Advantage plans a monopoly on Part D coverage. Interestingly, the retiree in Senior Care plan can shop for a better Part D drug plan.

How About a Little Intelligence

The City has pressure on it health insurance costs. Instead of picking on a party that the City thinks it can walk over, how about bringing all parties together. That means the insurance companies, the workers, and the retirees. Get the insurance companies to offer better coverage at lower cost and require all the workers and the retirees to make a monthly payment. That would also mean that the City would have to be totally transparent. That is a big problem. Don't feel sorry for the City. The federal government gave the City $1.02B in FY-2022 to pay for workers health insurance.

City Incompetence and the Medicare Advantage Scam

I have previously written about the Medicare Advantage takeover. OLR is calling it the MAP plan.

By law the City is required to pay for health insurance for its employees and retirees as per Section 12-126.b of the Administrative Code of New York City

(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.

For more updated info on the MAP plan check this Facebook page. It also appears that the PBA union is not on board with the MAP plan.

OLR sent out an undated letter around August 15, 2021, stating as part of the MAP implementation that retirees would receive an enrollment guide, an FAQ sheet, and a plan comparison chart. It also promised to include in the package an opt-out form for retirees who do not wish to be enrolled in the Medicare Advantage plan. The letter did not say when the package would be sent. OLR’s website, as of August 18, 2021, stated that the enrollment package would be sent in late August.

It is now September 16, 2021 and I have yet to receive the package. Update - on 9/17/2021 I received a package from Blue Cross/Blue Shield.

The most current opt-out period is 9/15/2021 to 10/31/2021. It originally was 9/1/2021 to 10/15/2021 as per the August 18, 2021 website FAQ sheet.

OLR also gave a call center number in the August letter. The call number is answered by employees of Blue Cross who are unable to answer issues involving OLR’s control of the process. OLR is legally required to administer the health insurance program for city retirees (S.126.d of the NYC Admin Code), not Blue Cross.

OLR is hiding behind its website and has given no OLR phone number where retirees can call.

The website is constantly changing so it is not an adequate legal notice of the specifics of the MAP plan. As of today, there is still no summary plan description of the MAP plan even on the website. I suspect OLR is having serious trouble drafting a document that will pass legal muster.

CSM, the federal Medicare administrator, states that Medicare Advantage plans are voluntary. It is not clear how OLR is unilaterally placing all Medicare eligible city retiree in the MAP plan.

I suspect there will be litigation on the MAP conversion and aside from legal issues, OLR will probably have to deal with gross incompetence issues. I know the new mayor is going to love this headache.

OPEB issues in the NYC 2020 CAFR

The Comptroller issues the city’s annual financial report every October 31. The following comments are based on data from the FY-2020 report. The NYCERS Actuary also published OPEB Report on 9/10/2021.

As of June 30, 2020, there were 243,978 city retirees and beneficiaries. My estimate based on CAFRs from the five city pension funds is that 75% of city retirees are enrolled in Medicare.

The two main health insurance plans covering the Medicare portion of this group are GHI and HIP. GHI, a supplemental plan, covers about 80% of the group and HIP, an HMO plan, covers about 15%. The are 12 other plans, some of which are Medicare Advantage plans, but together they only cover about 5% of the total Medicare group.

For FY-2021 (new info from NYCERS Actuary) the city was paying the follow monthly premium for each member of the group:

GHI-EBCBS

• Non-Medicare Single : $775.66
• Non-Medicare Family : $2,035.61
• Medicare : $194.14

HIP-HMO

• Non-Medicare Single : $776.66
• Non-Medicare Family : $1,901.23
• Medicare : $181.58

Other

• Non-Medicare Single : $1,160.34
• Non-Medicare Family : $2,701.42
• Medicare Single : $291.83
• Medicare Family : $576.92

It is clear that the premiums for Medicare covered retirees are the least expensive premiums and represent the lowest cost to the City. As of 1/1/2022 GHI Medicare retirees will be forced into the MAP plan unless they choose to opt out and stay in the GHI plan which will now cost $191 a month.

(new info) Current HIP medicare retirees who are enrolled before 12/31/2021 can stay in the HIP plan but that plan will close to new enrollees after 12/31/2021. It is not clear why there is a different approach for the HIP retirees.

Without access to the new MAP contract with Emblemhealth/Blue Cross, I have to assume that the City will no longer be paying the Medicare premiums for GHI retirees and beneficiaries covered by Medicare. As of 1/1/2022, CSM will pay Emblemhealth/Blue Cross directly to cover 100% of authorized Medicare charges. Previously CSM paid the doctors 80% of the charges and GHI or HIP paid the remaining 20% using the premiums paid by the City.

It is not clear what the city will be paying for retirees covered by Medicare but who have spouses and children not eligible for Medicare.

Where is the saved money going? Into the union welfare funds and increased insurance costs for active employees. Just check the fringe benefit numbers in the City's FY-2022 Adopted Budget on page 1406 (page 1412 of PDF document). Actually the city scatters a lot of these costs throughout the budget, especially for DOE and CUNY.

Bottom line, the City is walking away from its statutory obligation to pay the entire cost for city employees, city retirees, and their dependents health insurance limited only by the cost of the HIP-HMO coverage. This is not a collectively bargained obligation. It is a law.

The new MAP plan is not equal to the previous supplemental insurance plans. The City has previously offered Medicare Advantage plans to retirees and the retirees have chosen the supplemental plans overwhelmingly. (new info, 9/20/2021) The City has just been sued by Aetna over claims of violations of standard City procurement rules.

If the retiree wishes to keep his/her previous free GHI coverage as of 1/1/2022, he/she will now have to pay $191.57 per month and if there is coverage for a Medicare spouse the premium doubles to $383.14. In addition, the GHI benefit is less generous than it currently is. Existing retirees covered by HIP can stay in the HIP plan premium free. Medicare Retirees covered by the others plan can choose to stay in them but will now also have to pay the City's premium as well as their own.

NYSUT and School Districts in New York State

With the passage of Chapter 504 of the laws of 2009, the NYSUT, which includes the city UFT Local, negotiated a permanent protection (Chapter 729 of the Laws of 1994) for their retirees from NYS school districts from unequal treatment with respect to health insurance benefits versus active workers. Any reduction to retiree health insurance benefits must be equal to reductions to active worker health insurance benefits. See Section 14 from Part B of Chapter 504 below.

This statute is something called a chapter law. It is not part of the consolidated laws of NYS which are published separately like the RSSL or the Education Law. You are not going to be able to easily find it unless you know about it ahead of time. Actually Chapter 729 was renewed for one year earlier in the 2009 legislative session. You can check Chapter 30 of 2009 to see the annual renewal along with a very clear justification of the law. Later in the session, Chapter 504 made it permanent. This means that BERS and TRS retirees can not be sucked up into the MAP plan. They can not have their benefits diminished nor can the city reduce its contributions to health insurance benefits below active workers.

So why did the UFT abandon their city retirees?

I think the UFT was just incompetent with respect to the legal rights to retirees of school districts. Of course, I may be wrong. The UFT may just be dishonest and wanted to get the increased money for their welfare fund and screw the retirees.

Chapter 504 of the Laws of 2009 - Part B - Section 14

§ 14. Section 1 of chapter 729 of the laws of 1994 relating to affecting the health insurance benefits and contributions of retired employees of school districts and certain boards, as amended by chapter 30 of the laws of 2009, is amended to read as follows:

Section 1. From on and after June 30, 1994 [until May 15, 2010,] a school district, board of cooperative educational services, vocational education and extension board or a school district as enumerated in section 1 of chapter 566 of the laws of 1967, as amended, shall be prohibited from diminishing the health insurance benefits provided to retirees and their dependents or the contributions such board or district makes for such health insurance coverage below the level of such benefits or contributions made on behalf of such retirees and their dependents by such district or board unless a corresponding diminution of benefits or contributions is effected from the present level during this period by such district or board from the corresponding group of active employees for such retirees.

JUSTIFICATION: (Chapter 30 of the Laws of 2009 - a one year extension - C.504/L.2009 made it permanent)

Health insurance coverage for school district retirees has been protected from unilateral reduction since 1994 under provisions of a law which is subject to annual renewal. 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 law does not, however, prevent school districts from taking cost-cutting measures, so long as these apply equally to active employees and retirees. There has been no evidence of harm befalling school districts over the past decade as the result of this requirement for fair treatment of their retirees.