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Home » Clarion » 2023 » January 2023 » City moves to privatize health plan

City moves to privatize health plan

PSC and retirees fight back By Ari Paul

An arbitrator has recommended that the Municipal Labor Committee (MLC) and New York City must reach a deal with Aetna in order to move a quarter of a million retirees into a privately administered Medicare Advantage plan.

Many retirees, as well as the PSC leadership, have opposed and fought City Hall’s privatization push since 2021. But as this paper went to press, the City was hurrying to push through legislation that would amend the city code and to reach a deal with Aetna to lock Medicare Advantage into place. The impending deal with Aetna would still require a ratification vote by the MLC’s member unions. Mayor Eric Adams endorsed the original privatization plan, which was stopped by a judge, a decision later upheld by an appeals court.

The City Council has scheduled hearings and a vote in January on changes to the city code sought by the Mayor that would remove the floor under the City’s contribution to health care for employees, retirees and their families. This change would allow the City, subject to negotiation with the MLC, to charge retirees who seek to keep traditional Medicare and their existing supplemental care and also potentially charge premiums to active employees.  Before January, lobbying by the PSC and other activists had dissuaded city lawmakers from agreeing to this change.


The Labor Stabilization Fund negotiated by the City and the MLC, which among other things helps pay for prescription drug benefits, faces a genuine financial crisis. The City and the MLC have argued that, because private insurance companies receive money from the federal government to take over administration of Medicare benefits from the federal government, they would not need to charge a premium for Medicare Advantage, and the resulting savings to the City are needed to help address the shortfall faced by the Stabilization Fund.

The City is taking the position that it cannot negotiate economic packages with major unions whose members are working under expired contracts, including DC 37 and the United Federation of Teachers until it is guaranteed the savings anticipated from the transition to Medicare Advantage. A March court decision barred the City from charging retirees a $191 monthly premium to stay on the city-run Senior Care supplement to traditional Medicare if they didn’t want to go into the privately administered Medicare Advantage program, on the basis that city code requires the City to pay that premium. An appeals court upheld this decision in November. However, the recent arbitrator’s recommendation demanded that the City Council change the city code within 45 days in order to allow the City not only to charge the premium to retirees who want to keep Senior Care, but to charge a premium to in-service and retired employees and their dependents for any health-care plan that exceeds the cost of a baseline plan.


The PSC has proposed that, instead of forcing retirees into Medicare Advantage, the City provide bridge funding from reserves that would replenish the Stabilization Fund for the next three years as the City and MLC work to implement alternative cost-saving measures, and create a stakeholders’ commission to address the underlying issues, especially the need to control spiraling hospital costs. The PSC’s proposal is picking up support from other organizations and council members.

The union remains opposed to any deal that would weaken retiree health care or increase costs for retirees.

Published: January 10, 2023 | Last Modified: January 17, 2023

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