New York City is getting closer to putting more than 250,000 retired city workers on a new health care plan. The planned switch from retirees’ current Medicare plans to a wholly privatized plan called Medicare Advantage has received steady pushback from some retirees since it was proposed in an agreement between the city’s labor unions and former Mayor Bill de Blasio’s administration to find health care savings. In the latest turn in the saga, the City Council is set to consider legislation that would allow retirees to opt out of Medicare Advantage and keep their current insurance – but at a cost of nearly $200 a month.
Here’s what you need to know about the drawn out conflict.
Why is the city proposing this switch?
New York City employees and their dependents have received long health insurance after retirement. When retirees become eligible, they enroll in traditional Medicare, but the city also fully subsidizes a popular supplemental coverage plan provided by EmblemHealth and known as Senior Care.
But New York City and its unions needed to find savings due to rising health care costs. The fund that covers premium costs and other benefits is jointly controlled by the city and unions and is becoming depleted. It’s called the Joint Health Insurance Premium Stabilization Fund. The city and the Municipal Labor Committee, an umbrella organization of the city’s labor unions reached an agreement in 2018 to find substantial savings in the city’s spending on health care, including $600 million in recurring savings. One option in that agreement, which the city and unions have decided to pursue, was switching retirees to Medicare Advantage. Medicare Advantage is an alternative to traditional Medicare that is provided by private companies that the federal government contracts with. The plans tend to offer lower premiums but can also come with narrower networks and higher out-of-pocket costs. The city estimated that switching retirees to Medicare Advantage would save $600 million a year thanks to federal subsidies that Medicare Advantage plans receive, with those savings replenishing the city’s depleting fund for premiums and benefits.
Why are some retirees fighting the switch to Medicare Advantage?
Although the switch to Medicare Advantage was agreed upon by the city and the unions, many city retirees have pushed back against the change. Although Medicare Advantage will still be free, the New York City Organization of Public Service Retirees has raised concerns that retirees will be stuck with a smaller network of providers and larger out-of-pocket costs.
It’s clear how closely the new Medicare Advantage plan will match retirees’ current coverage. The specifics of the plan are still being negotiated with Aetna, which won the contract to provide Medicare Advantage. An arbitrator named in the initial agreement between the city and the unions said that the plan has to be negotiated by Jan. 9, for implementation this July.
Are all city retirees going on Medicare Advantage?
Not necessarily. The city has given retirees the option to opt out of Medicare Advantage and keep their current coverage, but said that the retirees would now be on the hook for paying fees of $191 per month to maintain that coverage.
The Organization of Public Service Retirees sued before the switch was set to go into effect last January to stop the city from making retirees pay to keep their current coverage. In March, a judge ruled in favor of retirees, citing a section of the city’s Administrative Code that requires the city to pay the entire cost of health insurance for employees, retirees and dependents. The ruling, which was upheld on appeal, said that the city could still proceed with the switch to Medicare Advantage but that it couldn’t force retirees to pay to maintain their current coverage if they wanted to opt out. Had they proceeded, it would leave the city and the Municipal Labor Committee in a bind to realize the promised health savings if they had to continue to cover premium costs for the large number of retirees who opt out.
The Adams administration has asked the City Council to amend the city Administrative Code so that the original plan – switching to Medicare Advantage but allowing retirees to opt out for a cost – could proceed. At the request of the mayor, Council Member Carmen De La Rosa, who chairs the Committee on Civil Service, introduced a bill to do so, which will be discussed at a public hearing in the council on Monday. De La Rosa and Speaker Adrienne Adams released a statement suggesting that the city is moving forward with the switch regardless, and this proposed legislation would keep all retirees from being automatically enrolled in Medicare Advantage. “The Council is formally considering legislation to preserve retirees’ choice of health insurance rather than have them automatically enrolled in Medicare Advantage as the sole plan on January 29,” the statement read.
A City Hall spokesperson called the $600 million in savings “especially critical as we continue to face skyrocketing healthcare crisis and other fiscal challenges.”.
Marianne Pizzitola, president of the NYC Organization of Public Service Retirees, urged the council to vote down the proposed legislation and called for an alternative to the choice of Medicare Advantage or paying to maintain current coverage. “We are happy to meet with the Adams administration as well as Speaker Adams to outline over $300 million in potential savings without placing an undue burden on millions of thousands of the retirees who kept New York City running for decades.”