For the first time in about 15 years, there will be increases in select co-payments for covered active and non-Medicare-eligible retirees in the two largest health insurance plans for municipal employees, Group Health Incorporated (GHI) and Health Insurance Plan of New York (HIP). This action is being taken to preserve GHI and HIP as no-premium plans. The changes are the result of negotiations between the City of New York and the Municipal Labor Committee (MLC), the coalition of citywide unions that negotiates with New York City on matters that affect members of the city’s more than 100 municipal employee unions.
During the 1970s, the MLC negotiated the unions’ responses to the exigencies of the city’s fiscal crisis. In recent years, the MLC has negotiated with the city primarily about health insurance, a benefit that predates unionization and was established under Mayor Fiorello La Guardia.
Controlling Costs
For the past 20 years, mayoral administrations have demanded various changes and reductions in health insurance benefits for city employees, claiming that rising health-care costs are too much for the city to afford and that the New York City employee package is much richer than other public- and private-sector benefit packages. The MLC response has typically been to reject city proposals or to identify strategies for reducing costs that have had little or no direct impact on most of the 365,000 active employees and 160,000 retirees and their families. Such approaches included re-positioning the tax status of health insurance providers and finding ways to control physician and hospital cost increases by expanding prior authorization requirements for certain procedures or facilities.
The vast majority of city employees (and PSC members) and retirees receive health insurance through either GHI or HIP — now both part of Emblem Health, a New York-based not-for-profit company. New York City pays more than $6.5 billion for health insurance for its employees, retirees and their families. GHI and HIP are both cost-effective health plans, in part, because of the large number of people covered — well over a half-million. Nevertheless, costs keep going up, and the city cannot act to control those costs without negotiating with unions.
Finding Savings
When he was elected in 2014, Mayor Bill de Blasio set out to settle the city’s unresolved labor contracts. But part of the problem he faced when he took office was that there was no labor reserve in the city budget with which to pay for increases or back pay. So, as a key element of his labor strategy, he set a goal for slowing the rate of health-care cost increases for city employees. However, he took a different approach from the Bloomberg administration, which had tried for six years to coerce municipal unions into agreeing to allow the city to charge members an annual premium for their health insurance. (This dispute is one of the reasons no city labor contracts were settled — including the PSC’s — after 2008.)
To address this constraint, the city’s settlement with the United Federation of Teachers (UFT) covered nine years, spreading out the payment of retroactive increases and back pay. The settlement was accompanied by an agreement with MLC unions to jointly identify and implement more than $3 billion in health-care savings over four years, as well as to provide the city access to $1 billion in cash in the joint Health Insurance Stabilization Fund to help finance wage increases in city union contracts. (The fund — jointly managed by the city and the MLC — was established in 1982 to set aside funds based on HIP HMO rates exceeding GHI rates and several other factors. In recent years, savings have been accruing at a healthy rate.)
Over the past two years, the city has settled almost all of its labor contracts (but not with the PSC because of the city/state duality of funding CUNY), and the first two years of health care savings have been instituted through joint discussions between New York City’s Office of Labor Relations and the MLC. These savings had no impact on members’ health-care outlays, but were achieved because 1) increases in city health insurance costs were not as high as projected in the city’s five-year financial plan, 2) after an audit of employees’ dependents, ineligible dependents were dropped from coverage and 3) a more extensive hospital stay management program was put in place.
For the third year, starting July 1, 2016, a portion of the additional savings will be achieved by shifting some costs to employees and retirees covered by GHI through higher co-pays for certain medical services. Union representatives insisted that co-payments be structured so that members who use the system optimally will not see big increases in health care costs. In those situations a co-pay increase becomes an “incentive” to seek a less expensive choice. For example, getting routine medical care in hospital emergency rooms (ER) is very expensive (about $1,500 for the insurance company, not including tests), and a consultant reported that city employees use ERs much more frequently than workers covered by other plans. Employees covered by GHI who go to the ER (and are not admitted to the hospital) will now be charged a $150 co-pay (up from $50). Those who use the ER will pay the extra $100 as a cost-shift. Those who elect a different level of care save the insurer a much larger expense. Either one counts toward the savings that are being sought.
Here’s what else is happening: The GHI co-pay for a visit to a specialist will increase from $20 to $30, and there will be co-pay increases to $50 (up $35) for use of “urgent care” centers and for MRI/CTs, and a $5 co-pay increase to $20 for physical therapy and diagnostic labs.
Expanded Coverage
The GHI co-pay for a regular office visit with a primary care provider will not increase, and GHI is expanding the number and hours of its outpatient facilities throughout the city and in Nassau and Suffolk counties. GHI Advantage Care Physician (ACP) centers will offer access to primary care physicians with no co-pay. There are 36 ACP centers citywide, plus Montefiore in the Bronx. (Locations can be found on the ACP website.) GHI is also contracting with a telemedicine provider to provide access to an Internet-based physician.
HIP subscribers will also see changes in their plan. For those with a primary care doctor who is in the new “HIP Preferred” network, there will be no co-pay, as usual. For a visit to a HIP non-preferred physician, there will be a $10 co-pay.
In addition, as mandated by the Affordable Care Act, there is a significant expansion of preventive procedures available at no charge from in-network providers (to be discussed in the second part of this Clarion series).
Members (active and non-Medicare-eligible retirees) currently enrolled in GHI and HIP can expect to receive (or to have recently received) an explanatory mailing from the City of New York and Emblem Health describing the changes. Review it carefully. The letter includes a phone number at the health insurance company to call if you have questions or want more information.
