Health Care Costs for Retired City Workers Could Dramatically Increase Under City Plan

The documents show annual out of pocket costs could reach upwards of $7,000 for an individual — approaching the maximum allowed by Medicare under law.

“Basic city workers in the $30,000 to $50,000 [salary] range, their Social Security payments are smaller, their pension is smaller; they’re going to get hit badly by this,” Rodberg said.

“Our commitment to our retirees is unwavering, and any new plan will increase both quality and benefits for retirees. It will also remain free for them while lowering costs for the City,” said Laura Feyer, deputy press secretary for Mayor Bill de Blasio, in a statement provided to New York Focus after this article was published.

Some budget watchdogs have highlighted retiree health care savings as necessary to bring $2.2 billion in annual city benefits spending under control.

“Health care savings are important. They’re essential to getting the city on solid fiscal footing, due to the rate at which these costs grow,” said Ana Champeny, director of city studies at the fiscally conservative Citizens Budget Commission. “It’s important to come to a consensus about how to control the costs, and how to possibly reduce the retiree health costs too.”

But retiree advocates say the deal in the works is too high a price for members to pay.

“Somehow you’re going to save $600 million, and the 200,000 Medicare retiree recipients are going to somehow get no worse and maybe even better service?” said Stuart Eber, president of the Council of Municipal Retiree Organizations.

‘People Don’t Know’

The city Office of Labor Relations received eight proposals for Medicare Advantage plans, now winnowed down to two finalists: Aetna and Empire BlueCross BlueShield, multiple retirees said they’ve been informed by their unions.

Cost-cutting employers have been gravitating toward Medicare Advantage, created in 1997 under then-President Bill Clinton. As of 2018, 39% of New York State’s Medicare beneficiaries were enrolled in Medicare Advantage plans.

“Employers have been gravitating towards Medicare Advantage plans to save money on their retiree health obligations,” said Tricia Neuman, executive director of the Kaiser Family Foundation’s Program on Medicare Policy. “New York is not alone.”

Neuman notes that Medicare Advantage plans rely on a list of in-network doctors. “They’re likely to be more limited in their provider network than traditional Medicare coupled with a Medigap policy,” Neuman said.

Some union officials have attempted to obtain information on their future access to services such as lab tests and rehab facilities, to little success.

“We haven’t gotten specific answers to those questions, and because we’re not privy to the negotiations, we don’t know that they’re not an issue,” said Neal Frumkin, a retiree leader with DC 37, the city’s largest public employee union.

‘Fewer Services’

Achieving the $600 million savings could involve requiring pre-approval from insurers for certain procedures. “That would mean fewer services that would be covered by the plan, potentially,” Neuman said.

More than half of Medicare Advantage participants are enrolled in plans that require prior authorization for ambulance rides, mental health services, inpatient hospital stays and other services, according to a Kaiser analysis.

CUNY retirees are mobilizing against the Medicare Advantage shift, at least until more details are known. At the end of the union’s April 5 retirees’ meeting, over 93% of attendees voted to request a moratorium on the shift, saying that retirees “have not been provided adequate and timely information” about the details of the proposal.

None of the unions represented among the Municipal Labor Committee’s officers responded to requests for comment, nor did the city Office of Labor Relations. They include the United Federation of Teachers, the Uniformed Sanitationmen’s Association, DC 37, the City Employees Union and the Council of School Supervisors and Administrators.

Frumkin said that DC37 president and Municipal Labor Committee co-chair Henry Garrido voiced his support for the proposed change at the union’s March executive board meeting.

“Garrido’s position is that it’s a must do because that savings is necessary to stabilize the health benefits for the entire city of New York; the city has to be able to afford to do what they’re doing,” Frumkin said.

“The argument that Garrido makes is that the city fiscally is in a dangerous place, therefore we are trying to come up with savings to enable them to get over this financial problem that they have.”