Retired City Workers Brace for Shift to Privatized Health Care

City leaders have awarded a contract to provide city retirees private Medicare-like insurance to a corporate coalition termed “The Alliance.” Former public workers worry their coverage may change.

Sam Mellins and Rachel M. Cohen   ·   August 19, 2021
Mayor Bill de Blasio shakes hands with District Council 37 Executive Director Henry Garrido, whose union will be affected by the change | Ed Reed/Mayoral Photography Office

Starting in January 2022, over 250,000 former New York City government workers and their dependents are set to be shifted off Medicare and on to privatized health insurance. Mayor Bill de Blasio and the Municipal Labor Committee, which represents retired New York City employees, announced the move in mid-July, following several months of scrambled protest from bewildered retirees after New York Focus first broke the news of the planned shift in April.

The plan has been cast as a necessary measure to rein in mounting health care costsand reduce strain on the city’s budget. While public sector retirees in New York City are currently insured by Medicare, the federal government’s program for people over 65, the city reimburses them for outpatient care, as well as for a “Medigap” plan that offers additional services.

City officials and union leaders have negotiated a deal that they claim will save upward of $600 million by switching to Medicare Advantage, the federally funded privatized health insurance program that launched in 1997, ostensibly to give consumers more choice and reduce Medicare costs.

For months, union leaders have emphasized that despite distressing stories members may have heard about Medicare Advantage, the new plan will yield affordable care at the same level, if not better, for enrolled retirees and their dependents. But retirees who spoke with The Intercept and New York Focus expressed concerns that their health care will become less accessible over time. Health care experts say their fears are not unwarranted.

Retirees who do not want to switch to privatized insurance will have the option to remain in traditional Medicare, but they will need to pay a monthly premium, currently covered by the city, to access the same level of coverage they receive now. That rate is likely to be around $200 a month, estimates Stu Eber, president of the Council of Municipal Retiree Organizations, a group that advocates for retired city workers.

Eber predicts that this option will be infeasible for many older adults. “There are tens of thousands of people … whose pensions are less than $20,000 a year,” he said. “They can’t afford it; they have no choice. They’re going to be in this Medicare Advantage plan.” The new plan has been awarded to a coalition of EmblemHealth and Blue Cross known as “The Alliance.”

Now that the plan has been approved, the city and labor committee are doubling down on their efforts to persuade the public that the switch is good policy and the coverage is nothing to be concerned about.

The city points to rising costs associated with traditional Medicare, which have increased nearly 50 percent over the past six years. To make up for the higher costs, co-pays for those who opt to stay in traditional Medicare will begin in January. A side-by-side comparison of the traditional Medicare option and the Medicare Advantage plan, released by the city, shows competitive rates and benefits between the two in the coming year. Some elements of the Medicare Advantage plan, such as annual maximum out-of-pocket costs and primary care physician visits, actually appear friendlier to beneficiaries.

Benefit comparison from a City University of New York Professional Staff Congress presentation given on July 27. | PSC CUNY
Sam Mellins is senior reporter at New York Focus, which he has been a part of since launch day. His reporting has also appeared in The San Francisco Chronicle, The Intercept, THE CITY, and The Nation. 
Rachel M. Cohen is a freelance journalist based in Washington DC and a contributing writer to The Intercept.
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