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Home » Clarion » 2022 » February 2022 » Stop the nightmare of privatization

Stop the nightmare of privatization


Fighting increased health-care costs

Editor’s note: In December, a state judge ruled that the city’s plan to switch municipal retirees to a privatized health-care plan will “be delayed until at least April 1, 2022” and that municipal retirees “will have until June 30, 2022, to opt out of the plan,” according to a joint report by The City and New York Focus. In January, PSC President James Davis and the PSC Retirees Chapter Chair Bill Friedheim wrote a letter to Mayor Eric Adams, who has previously spoken out against the switch to privatized benefits, asking his administration to reexamine and reconsider the deal. Other retirees have made similar appeals to the Adams administration, according to the NY Daily News.

Mayor Eric Adams assumed leadership at the beginning of the year. PSC leaders have written to the new mayor, asking him to reconsider the privatization of health care for municipal retirees. (Photo Credit: Office of the Mayor)

Retirees are the canaries in the coal mine.

The coal mine is a metaphor for New York City union health-care benefits.

Over the past decade, there has been a slow but relentless decline in those benefits, mainly for in-service members – a co-pay here, a deductible there, a shift of health insurance in 2018 for new hires from EmblemHealth to HIP. But then, in July 2021, the “slow” decline metastasized into something much more ominous. The New York City Office of Labor Relations (OLR) and the Municipal Labor Coalition (MLC) announced a massive restructuring of NYC retiree health-care insurance.

While city unions individually bargain directly with the city on wages, the MLC negotiates health-care benefits for more than 100 municipal unions, including the PSC.

The story does not end with retirees. The re-engineering of retiree health care grew out of a June 28, 2018, OLR-MLC agreement. On a recurring basis from fiscal year 2022 forward, that agreement calls for “$600 million per year savings” in municipal employee health benefits. Savings is a euphemism for cutbacks. Given this grim reality, the health-care benefits of every municipal union member, including NYC and PSC union members, are potentially next on the “$600 million per year savings” cutting block.


When OLR and the MLC signed the June 28, 2018, agreement, they targeted eight areas of potential savings, but only seriously considered one, reaching for the low- hanging fruit: retiree health benefits. For all but a few MLC unions (the PSC being one), retirees are denied membership and effectively any voice in union decisions. Cutting retiree benefits was easier and preserved the fiction, over the short term, that in-service benefits remain whole.

Among the menu of eight options, there were two with potential for major cost-savings that OLR-MLC did not pursue: (1) Exploring self-insurance (many states and cities self-insure to reduce costs); and (2) Municipal unions and the NYC government exercising their collective leverage to reduce runaway hospital costs. The PSC has subsequently joined a labor coalition examining how to reduce hospital costs, but this is outside the MLC.

Consider the path chosen by the OLR and MLC: Most NYC retirees and their spouses are Medicare eligible, so traditionally it became their primary health insurance, covering 80% of costs. The city provided premium-free, secondary insurance, paying most of the remaining 20% with few out-of-pocket expenses for municipal retirees. Combined with robust benefits (particularly prescriptions) from the PSC-CUNY Welfare Fund, PSC retirees had excellent, affordable health-care benefits, before the proposed restructuring of retiree health insurance.

The goal of the restructuring, approved by the MLC last summer over the dissent of the PSC and several health-care unions, is to move the bulk of New York City’s 250,000 retirees from traditional Medicare administered by the government to a privatized Medicare Advantage Plus plan (MA+). The MA+ plan is premium-free and ostensibly covers 100% of costs, but it has co-pays and requires pre-authorizations for multiple procedures and treatments (which is not the case with traditional Medicare). Though it claims retirees can access any doctors, medical providers and hospitals that accept Medicare, the reality has proven more complex.


Responding to a lawsuit brought by the NYC Organization of Public Service Providers in October, a state supreme court judge issued an injunction, admonishing the city and the MA+ vendor for not providing an accurate list of providers who would accept the MA+ plan and calling upon both to make “corrections and additions” to a flawed enrollment guide previously distributed to municipal retirees. The judge characterized the original “implementation of this plan” as “irrational and thus arbitrary and capricious.”

In December, the judge issued an order delaying implementation from January 1, 2022 to April 1, 2022, with an option to move in either direction between the premium-free MA+ and NYC Senior Care (for which retirees must now pay a premium) by June 30, 2022. He also ordered the city and the vendors to correct errors in the enrollment guide and to provide him with periodic reports of their efforts to recruit providers and educate members about the terms of the new plan.


What particularly irked large numbers of retirees was that implementation of the plan made MA+ the default. That meant that the city would automatically enroll retirees in the MA+ plan, removing them from traditional Medicare. On its face, this looked legally dubious, but there was precedent for it in other municipalities and states that had taken similar measures.

To stay in traditional Medicare, members must jump through hoops, notifying the Medicare vendor that they are opting out. In many instances, those who opt out have not received a confirmation from the vendor (although one is promised), creating uncertainty about their coverage.

In addition, keeping traditional Medicare coverage comes at considerable cost. To remain on NYC Senior Care, the secondary insurance for Medicare for most municipal retirees, members must pay a minimum of $191.57 a month for a plan that, until the restructuring, was premium-free. Compounding the financial pain, EmblemHealth, which provides NYC Senior Care (and is one of the partners administering the MA+ plan along with Empire BlueCross BlueShield Retiree Solutions) has instituted new co-pays as of January 1.

EmblemHealth’s management, unlike its municipal retiree clients, is feeling little economic constraint. President and CEO Karen Ignagni saw her compensation at EmblemHealth – salary, bonuses, stock awards, option awards and other payments – rise to $5,342,500 in 2020, up 66.58% over 2019. (Source: Becker’s Hospital Review.)


New York City is now the largest government entity – larger than any other municipality or state – to have moved the health insurance of its retired public workforce to a Medicare Advantage plan. It accelerates a disturbing trend toward the privatization of Medicare. In 2021, a Kaiser Family Foundation report found that 42% of those Medicare eligible were in Medicare Advantage plans, up from 13% in 2004. Most of those plans are run by corporations that get a direct subsidy from the Centers for Medicare and Medicaid Services (CMS). The financial subsidies from the federal government is what the city and the MLC are counting on to pay for the $600 million in savings called for by their 2018 agreement.

Medicare Advantage programs provide insurance to seniors at higher cost to CMS (and hence the US taxpayer) than traditional Medicare. CMS pays Medicare Advantage providers a lump sum based on a complicated formula of aggregate risk scores of a company’s customers. Private Medicare Advantage companies know how to game the system. An important new study by a former federal health policy analyst and University of California at San Diego professor Richard Kronick documents how CMS has overpaid Medicare Advantage plans by more than $100 billion over the last decade.

The retreat from Medicare to privatized insurance complicates labor’s role in health-care reform, particularly any agency it has in the movement toward single payer. NYC public sector unions are now in the uncomfortable position of partnering with management (OLR) to oversee health-care austerity in what is arguably the richest city in world.


PSC President James Davis delivered testimony at a tumultuous hearing conducted by OLR in November, pointing out that the contract between New York City and the Medicare Advantage vendor lacks many of the protections that are standard in agreements between a public employer and a health-care vendor, highlighting the vendor’s limited accountability and its ability to make changes without consultation or approval by OLR and the MLC.

Meanwhile, rising numbers of PSC retirees have pushed back, part of a larger movement of municipal retirees demonstrating, petitioning, testifying, contributing thousands of dollars to a lawsuit and joining mass educational events about the health-care changes. PSC Retiree Chapter meetings, which in the past typically ranged from 50 to 100 participants, now sometimes engage over 600 members. (For more details on the chapter’s role in the retiree healthcare crisis, go to

But the forces aligned against us are powerful and well-financed. We need to grow the retiree pushback. We need to grow the forces for affordable health care inside our own union and within the New York City labor movement beyond retirees.

We need to be part of the movement for both short-term health reform and longer-term universal, single-payer insurance. Join us.

Bill Friedheim is the chair of the PSC Retirees Chapter.

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