Health Insurers Just Killed The Medicare Plan City Retirees Railed Against

With the plan tied up in court, insurers Elevance Health and Empire BlueCross BlueShield pulled out of a controversial deal to switch retired city workers to privately run health insurance.

Sam Mellins   ·   July 19, 2022
We have been promised good, reliable healthcare in our retirement, and Medicare Advantage would break that promise, said Marcia Biederman, a retired Brooklyn public school teacher. | THE CITY

This article was published in partnership with THE CITY.

New York City’s years-long effort to shift retired city workers to a cost-cutting health care plan was dealt a major blow Monday when the insurer in charge of running the plan announced that it is withdrawing from the deal.

The plan — which the city and municipal unions hoped would save $600 million a year in health care costs — would have been run by the Retiree Health Alliance, a partnership between health insurance companies Elevance Health, previously known as Anthem and Empire BlueCross BlueShield.

The effort, part of a bigger cost-savings package negotiated with labor unions, involved switching retired city employees from their current coverage, which is traditional federal government-run Medicare plus supplemental insurance paid for by the city and the unions, to a privatized Medicare Advantage program

The plan’s implementation has been on hold since March, when a state Supreme Court ruling barred the city from charging retirees for their current health coverage. Before the ruling, retirees who opted out of the switch would have been required to pay $191 per month to maintain their current coverage. The city had appealed the ruling, and that process was ongoing.

The Alliance had requested that the city provide them with an exact start date for the plan by July 15. Likely because of the ongoing lawsuit, the city was not able to do so.

In a statement, Harry Nespoli, chair of the Municipal Labor Committee, a coalition of city unions that negotiated the cost-savings deal, said that the Alliance had demanded an unconditional guarantee that the program would start on January 1, 2023, no matter what happened in court. When the city and unions declined to make this guarantee, the Alliance withdrew from the plan, Nespoli said.

On Monday, a notice on the Alliance’s website read: “Given the level of uncertainty at this time, we informed the city that Empire BlueCross BlueShield is not able to participate in offering the NYC Medicare Advantage Plus Plan.” 

Asked for comment, Mayor Eric Adams spokesperson Jonah Allon said: “The City and the Municipal Labor Committee continue to believe that a customized Medicare Advantage Plan provides the retirees, the City and its taxpayers with the best opportunity for high quality healthcare. We remain committed to moving forward with the program and are exploring alternative options.” 

The Adams administration is considering whether to continue with its appeal of the court ruling.

Union leaders said Tuesday that they still intend to pursue a switch to a Medicare Advantage plan.

“We still believe in a Medicare Advantage Plus plan and we'll just figure out how to get that done,” Michael Mulgrew, president of the United Federation of Teachers and vice-chair of the Municipal Labor Committee, told New York Focus.

Waiting Room 

The news of the withdrawal was a win for the groups that have been organizing against the change.

“This is yet another victory for the retirees, ensuring that for now, they are guaranteed their health care,” said Steve Cohen, the lawyer representing the New York City Organization of Public Service Retirees, which sued in September to block the switch.

Retirees — who for months have warned that the new plan could cover fewer treatments and lead to higher costs — also celebrated the development.

“I think Anthem is wise to back away from this hot mess, and I think that the city has wasted enough of my money and other taxpayers’ money on legal action,” said Marcia Biederman, a retired Brooklyn public school teacher. “We have been promised good, reliable healthcare in our retirement, and Medicare Advantage would break that promise.”

Mulgrew said that any future Medicare Advantage plan will be premium-free for retirees — as their current insurance is, and as the Alliance’s Medicare Advantage plan would have been.

The next step in the process is likely to be reaching out to other insurers that demonstrated interest in providing a Medicare Advantage plan.

“There were multiple people who bid on it. So I’m assuming what we'll do is contact those folks,” Mulgrew said. 

The two finalists for the original contract were the Alliance and Aetna, according to court documents. Aetna, which unsuccessfully sued the city after it was not awarded the original Medicare Advantage contract, did not respond to questions on whether it is still interested.

The Organization of Public Service Retirees might support a future Medicare Advantage plan, Cohen said, noting that the group was planning to mention the possibility to Mayor Eric Adams at a meeting scheduled for Monday that was canceled. “We were going to suggest that he goes back and put out a new bid for a better and different Medicare Advantage plan that really works,” he said. 

But the organization’s support would depend on whether they feel that the program meets retirees’ needs, the plan being opt-in, rather than opt-out, and with the option of allowing retirees to maintain their current coverage free of charge, he insisted.

“Is it going to be the same pig with lipstick? Or are you going to actually try to come up with something that is as good as, or close to, the Senior Care plan?” Cohen said, referring to retirees’ current health insurance plan.

The United Federation of Teachers is committed to keeping Senior Care open as an option for retirees, Mulgrew said. If the city’s appeal is successful, Mulgrew said the unions might support requiring retirees to start paying a monthly premium for Senior Care, which the lower court’s ruling currently bars them from doing. 

“Since that is one decision we made at that point in time, we would probably make it again,” he said.

The city is also currently seeking a cheaper option for the health plan that it provides to active employees and retirees who are not yet 65 and eligible for Medicare, New York Focus reported last month, but Mulgrew said that wouldn’t affect retirees’ health care. 

“It would not affect Senior Care at all. Senior Care is a separate entity completely,” he said.

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. 
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