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Arbitrator’s decision on healthcare could impact PSC members, retirees

Dec 23, 2022

December 22, 2022

Dear PSC member,

Last week arbitrator Martin Scheinman issued a decision on NYC retiree healthcare that could have major implications for PSC members, both retired and active. I am writing with an update, and ask that you stay in touch with your City Council representative on this issue. If you live outside NYC, stay in touch with the Council representative for the district in which you work.

The effort to expand Medicare Advantage (MA) programs nationally has shifted millions of retirees and their dependents to privately administered plans with a different incentive structure than federally administered Medicare. That structure has not helped control costs, as was the original intention. The PSC has resisted the City’s effort to move all municipal retirees into a MA plan. MA plans generally require pre-authorization more often than traditional Medicare, and not all providers who accept Medicare accept MA. The PSC is concerned about access to and quality of care, and we opposed the deal the City reached with the Municipal Labor Committee (MLC), of which the PSC is a member union, to seek $600 million in annual savings through a MA plan. There is a real problem that this measure was meant to solve: health care costs have skyrocketed, and the MLC Stabilization Fund has become insolvent. That fund pays for prescription drug and Welfare Fund benefits for some unions, so there is an urgency to the City’s demand for savings. But we believe other ways can be found to achieve health care savings, and that it can be done without compromising the current premium-free plan (Medicare plus the Medigap program Senior Care) in which most City retirees are enrolled.

The arbitrator charged with resolving the conflict over NYC retiree health care decided on December 15 that the City and the MLC, which negotiates health benefits for City workers and retirees (including PSC-represented employees), must complete a deal with a Medicare Advantage provider by January 9, 2023. The plan would take effect July 1, 2023. He said that failing this action, he would be compelled to identify other sources of health care savings for the City, possibly including charging monthly premiums for all active employee health coverage. Finally, he said that if the City Council does not immediately change the NYC administrative code governing the provision of health benefits, MA would be the only program made available to retirees and their dependents. If the City Council changes the administrative code, the arbitrator added, Senior Care will be preserved, but retirees who opt to stay in traditional Medicare plus Senior Care will be charged a new rate of roughly $2400/year for an individual.

The arbitrator’s decision raises the stakes considerably in this struggle to preserve access and quality in our health care benefits. The simple solution would be for the City to take responsibility for rising health care costs and, using the immense purchasing power of its more than 1 million covered lives, drive these costs down at their sources: hospital prices, prescription drug prices, and inefficiencies in the current comprehensive benefits plan. These government actions would take the burden off the MLC to generate savings for the City, relieving its member unions of the terrible false choice to either risk the quality of care for retirees or invite premiums for active employees. It is a classic anti-labor maneuver to pit in-service members against retirees, and the Adams administration has been aided by the arbitrator’s latest decision.

The PSC has proposed a concrete alternative for the near-term. Explained here, our proposal involves the allocation of $500 million annually from City reserves to the MLC Stabilization Fund for the next three fiscal years. This would give the parties the time to make the necessary structural changes to achieve long-term health care savings. PSC elected leaders and members have made progress in persuading some members of the City Council and the MLC of the viability of our proposal, but it faces stern opposition from the City and the majority of MLC unions. We remain convinced that our proposal is preferable to the false choice now threatened: risk the quality of retiree health benefits by imposing a MA plan without any advance review, or impose premiums on active employees. But we are open to other means of achieving savings, as long as they are not done on the backs of municipal workers or retirees. For example, Councilmember Gale Brewer is, like other progressive members of the Council, seeking alternatives.

Please urge your City Council member to bring the Adams administration, the Council Speaker, and the MLC to the table to find another way. The arbitrator’s decision notwithstanding, the Council has authority and leadership to exert in this matter. The PSC remains committed to protecting health benefits that are rare among public employees, benefits that our members – whether retired or active – have earned, and that have been a signal feature of the compensation package PSC members earn for their public service.

In solidarity,

James Davis, President

Published: December 23, 2022 | Last Modified: January 4, 2023

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