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.

History of NYCERS Admin Expenses - FY-2000 - 2022

The following is a chart of NYCERS administrative expenses from 2000. The information comes from NYCERS Comprehensive Annual Financial Report. As a point of reference NYCERS had an annual budget of $8.8M in FY-1996, the last year NYCERS was part of the city budget.

NYCERS Admin Expenses

Fiscal Year	Personnel Expenses	Contracts & Consultants	Phone, Mail, & Printing	Rentals	Software, Hardware, Support, Supplies, & Maintenance	Depreciation & Credits	Total
FY-2022	$52,303,943	$27,418,528	$1,029,424	$9,329,701	$14,906,397	$0	$104,987,993
FY-2021	$48,693,043	$14,058,975	$1,290,546	$6,617,040	$16,753,334	$0	$87,412,938
FY-2020	$45,736,806	$11,337,750	$1,173,896	$6,870,614	$12.548,240	$0	$77,667,306
FY-2019	$43,717,712	$15,884,418	$1,114,263	$6,637,959	$14,719,873	$0	$82,073,325
FY-2018	$40,444,145	$4,310,427	$1,072,077	$6,348,888	$7,513,233	$0	$59,688,770
FY-2017	$39,505,894	$3,829,758	$1,561,282	$5,909,352	$8,864,342	$0	$59,670,628
FY-2016	$37,950,289	$4,687,929	$1,360,397	$5,453,383	$7,230,989	$0	$56,682,988
FY-2015	$37,368,409	$3,652,154	$1,336,002	$5,037,893	$7,239,560	$0	$54,635,018
FY-2014	$33,571,938	$3,773,082	$1,269,387	$4,863,720	$6,952,691	$0	$50,430,818
FY-2013	$33,064,087	$3,102,385	$1,078,411	$4,674,442	$6,797,095	$0	$48,666,420
FY-2012	$32,623,085	$3,088,256	$1,096,186	$4,796,584	$9,780,637	$0	$51,384,748
FY-2011	$31,748,443	$4,108,186	$995,415	$4,741,621	$4,780,811	$0	$46,374,476
FY-2010	$31,527,659	$5,434,495	$1,041,471	$4,278,903	$6,678,071	$715,000	$49,675,599
FY-2009	$30,187,604	$4,043,775	$914,311	$4,047,949	$8,198,354	$1,430,000	$48,821,993
FY-2008	$28,344,427	$6,401,744	$997,316	$4,138,211	$6,687,716	$1,430,000	$46,999,000
FY-2007	$27,123,219	$2,677,793	$1,055,233	$5,203,902	$4,205,095	$1,430,000	$41,695,242
FY-2006	$24,992,543	$3,124,688	$1,497,895	$4,797,895	$4,472,246	$1,406,132	$40,291,469
FY-2005	$24,474,710	$3,039,970	$827,277	$4,454,258	$3,118,356	$1,392,296	$37,306,867
FY-2004	$22,631,504	$3,124,800	$845,391	$4,192,543	$3,375,187	$1,430,000	$35,559,081
FY-2000	$15,990,745	$1,587,290	$718,686	$1,531,536	$2,691,719	$725,000	$23,244,976

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.

FY-2023 NYCERS Budget Update

In June of 2017, I wrote post about NYCERS's budget history and a recent explosion of spending. Since then the growth of budget has lost all touch with reality. I have added new data both current and historical. Currently I do not have access to the records from 1997 to 2004.

I will let the numbers in the table below speak for themselves.

Prior to FY-1997, the NYCERS admin budget was part of the overall NYC budget adopted by the City Council.

In 1996 the state legislature authorized the NYCERS Borad of Trustees to adopted the annual admin budget for NYCERS and to pay all expenses from the assests of the pension fund. From 1997 to 2005 the NYCERS admin budget increased by 294.25%. Most of that increase was in place by 2001, the year the dot-com bubble hit Wall Street. That, in turn, created pressure to keep the growth in the budget below the inflation rate.

It is reasonable to question the need for such a significant increase in the NYCERS admin budget over this nine year period, if you were not aware of what disparate shape NYCERS was in 1996.

It is, however, absolutely clear that NYCERS was radicallly well equipped to do its work in 2005, probably far better than any other city agency. As an example, in the aftermath of 9/11 attack, a major division of OMB worked out of the NYCERS's office for over 6 months. They thought they had died and went to heaven.

The FY-2006 budget was the last budget I prepared before I left NYCERS. It had a 1.4% increase. You will notice in the following year, FY-2007,a significant increase in staff.

On May 14, 2020 in the midst of the pandemic, the NYCERS's trustees adopted FY-2021 admin budget of $89.7M. Then, on Decemeber 10, 2020, the trustees increased that bduget to $98.3M, an $8.6M increase.

On April 8, 2021 the trustees adopted the FY-2022 admin budget of $135.7M, a $36.4M increase.

As of January 1, 2022 most of the publically elelcted trustees on the NYCERS Board of Trustees will be gone. The Mayor, the Comptroller and four of the five Borough Presidents will all be new people. One current Borough President and the Public Advocate wiil probably be on the ballot in November. Most likely,four years from now all of the public trustees who voted for this qusetionable $135.7M budget will be gone.

On May 12, 2022 the Tustees adopted the FY-2023 Admin Budget with a $10.5M increase (7.78%, previous year it was a 37.94% increase).

History of NYCERS Admin Budget 1980-2023

Fiscal Year	F/T Count	P/T Count	College Aides / Hourly	PS Budget	OTPS Budget	Fringe	Total	% Increase
2023	485	30	16	$43,016,089	$90,436,500	$12,942,144	$146,394,733	7.92%
2022	474	27	16	$38,397,943	$85,531,063	$11,719,465	$135,648,471	37.94%
2021	438	27	16	$36,842,549	$50,210,145	$11,283,945	$98,336,639	7.10%
2020	438	27	16	$35,262,139	$45,862,557	$10,689,350	$91,814,046	4.97%
2019	428	35	0	$33,592,612	$43,532,302	$10,344,565	$87,469,479	39.44%
2018	411	35	0	$31,704,410	$21,832,718	$9,194,015	$62,731,143	3.55%
2017	401	35	0	$31,056,080	$20,916,796	$8,605,288	$60,578,164	4.81%
2016	392	35	0	$30,233,989	$19,407,619	$8,155,517	$57,797,125	4.70%
2015	392	5	30	$29,131,972	$18,154,572	$7,915,476	$55,202,020	3.68%
2014	383	5	30	$26,813,635	$18,761,240	$7,669,819	$53,244,694	2.18%
2013	380	5	20	$26,623,635	$17,951,822	$7,532,499	$52,107,956	1.93%
2012	372	12	0	$25,756,827	$18,781,428	$6,603,649	$51,122,139	1.14%
2011	372	12	0	$26,046,827	$18,492,228	$6,006,573	$50,545,628	2.76%
2010	372	12	0	$26,046,827	$17,777,228	$5,362,640	$49,186,695	1.88%
2009	371	13	0	$25,189,842	$18,208,861	$4,879,903	$48,278,606	6.22%
2008	371	13	0	$23,597,857	$17,259,313	$4,799,066	$45,656,236	10.80%
2007	364	13	0	$22,616,783	$14,258,471	4,375,788	$41,251,042	5.73%
2006	342	13	30	$20,255,911	$14,683,855	$ 4,076,823	$39,016,589	1.01%
2005	342	13	30	$19,737,687	$14,851,355	$3,887,624	$38,476,666	295.25%
****
1980	219	0	0	$3,558,977	$1,079,851	na	$4,638,828	na
1981	222	0	0	$3,507,806	$1,020,374	na	$4,528,180	-2.39%
1982	220	0	0	$3,970,212	$1,177, 748	na	$5,147,960	13.69%
1983	224	0	0	$4,429,362	$1,230,672	na	$5,660,034	9.95%
1984	231	0	0	$5,026,847	$1,194,237	na	$6,221,084	9.91%
1985	239	0	0	$5,446,600	$1,241,976	na	$6,688,576	7.5%
1986	247	0	30	$5,916,793	$1,423,743	na	$7,340,536	9.76%
1987	245	0	30	$6,621,803	$1,881,300	na	$8,167,220	11.26%
1988	265	0	30	$6,621,803	$1,881,300	na	$8,503,103	4.11%
1989	285	0	30	$7,849,731	$1,932,351	na	$9,782,082	15.4%
1990	280	0	30	$8,284,883	$2,578,693	na	$10,863,576	11.06%
1991	229	0	30	$6,826,473	$2,475,205	na	$9,301,678	-14.38%
1992	225	0	30	$6,646,549	$2,216,262	na	$8,862,811	-4.72
1993	223	0	30	$6,858,991	$2,198,882	na	$9,057,873	2.20%
1994	194	0	30	$6,778,541	$2,183,101	na	$8,961,642	-1.06%
1995	167	0	30	$6,202,062	$2,080,504	na	$8,282,566	-7.58%
1996	154	0	30	$6,199,709	$2,573,715	na	$8,773,424	5.93%
1997	200	0	30
1998	230	0	30
1999	270	0	30
2000	290	0	30
2001	320	13	30
2002	320	13	30
2003	334	13	30
2004	334	13	30

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.