NYC Medicare Disadvantage: Court delivers victory for 250K city retirees, but will it turn out to be a bandaid?

Issue 270

The City’s plan to move 250,000 retired municipal workers from Medicare to an inferior, privately run plan has been thwarted for now.

Steven Wishnia Apr 6, 2022

New York City’s plan to switch its 250,000 retired employees from traditional Medicare to a private Medicare Advantage plan has been stalled by a court order.

The plan had been scheduled to go into effect April 1, but Manhattan Supreme Court Justice Lyle Frank ruled March 3 that the city could not charge retirees who wanted to opt out $192 a month to keep their current health coverage, in which Medicare pays 80% of costs and a private “Medigap” supplemental plan called Senior Care pays the other 20%. He said the city administrative code requires it to “pay the entire cost of health insurance coverage for city employees, city retirees and their dependents.” At least 45,000 people had opted out as of mid-February.

The ruling came after months of protest by retirees, who objected that the bureaucracy and profit motive of a private plan would impair their health care.

“We are ecstatic,” retired United Federation of ­Teachers (UFT) member Gloria Brandman told reporters outside City Hall on March 3. “Good-quality health care is a human right not just for us, but for everyone.”

PROMISE MADE: OFF MY Retirees with District Council 37, the largest municipal union in the city, marching last July in defense of their right to continue being covered by Medicare. Photo: Steven Wishnia.

Neal Frumkin, associate vice president of inter-union relations for District Council 37 retirees, called it “a victory for low-income retirees.” Having to pay almost $2,300 a year to keep their current health care, he explained, would have particularly hurt those whose pensions are less than $20,000, such as former school-cafeteria workers.

The city corporation counsel filed a notice March 4 that it plans to appeal the decision, but Mayor Eric Adams’ administration said it would not put the plan into effect April 1. Adams, who criticized the move as a candidate, endorsed it in early February. The mayor’s press office did not return inquiries from The Indypendent.

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The “Medicare Advantage Plus” plan, paid for and regulated by Medicare but run by private companies, was touted as better than the current one. “The plan will not only cover all the traditional Medicare benefits as well as the benefits covered by the Senior Care supplemental plan, but will also add some important new benefits,” Mayor Bill de Blasio’s office announced July 14.

Typically, Medicare Advantage plans offer some benefits not covered by traditional Medicare, such as vision or dental care, but because fewer providers accept them, patients risk massive bills for going “out of network.”

Many retirees were skeptical. The Cross Union Retirees Organizing Committee argued that Medicare Advantage plans typically have higher copayments, require referrals and pre-approvals for many procedures, and there is no guarantee that doctors, hospitals, and other providers will accept them, particularly out of state.

At a December rally in Brooklyn urging Adams to cancel the plan, protesters displayed lists of more than 80 procedures, tests and supplies that wouldn’t be covered without prior authorization from the insurance company, including knee and hip replacements, physical therapy, repairs to power wheelchairs and MRI scans. 

“These Medicare Advantage programs are for profit,” Edward S. Hysyk, president of DC37’s Retirees Association, said March 3. “Whatever they don’t spend on health care for you or for me is profit.”

The plan was the result of a 2018 deal between the city and the Municipal Labor Committee, an umbrella group of municipal unions, to reduce health-care costs by $600 million a year. 

Brandman, who is running in the UFT’s April elections on a slate opposed to President Michael Mulgrew’s ­caucus, says the deal was made “without our knowledge.” Retirees have little representation in DC37 and the UFT, the two largest unions in the committee, she notes. In DC37, they can’t vote in elections for union leadership, and in the UFT, they’re limited to 22,000 votes. 

Municipal Labor Committee chair Harry Nespoli told City Councilmembers in January that more than 90% of the doctors “currently utilized by our retirees” were already in the plan’s network,” and that it had also “ensured the participation of major hospital systems” in Florida and the Carolinas, where many retired city workers move.

The UFT withdrew its support from the plan after the court ruling. “The judge’s recent decision will effectively eliminate the savings the plan would have produced and that would have been reinvested in health benefits for our members,” Mulgrew said in a statement. 

The court decision likely voided the deal between the city and the insurance companies, says Steve Cohen, lawyer for the NYC Organization of Public Service Retirees, which filed the lawsuit. The contract, he told The Indy, was contingent on the city delivering 200,000 customers.

•   •   •

Medicare Advantage plans were introduced in 1997 as an alternative to the combination of Medicare and Medigap plans. According to Kaiser Family Foundation figures, they had 26 million people enrolled as of June 2021, 42% of the 62.7 million people enrolled in Medicare. That number has more than doubled since 2011 and more than quadrupled since 2006. Typically, they offer some benefits not covered by traditional Medicare, such as vision or dental care, but because fewer providers accept them, patients risk massive bills for going “out of network.”

The House version of President Joe Biden’s “Build Back Better” bill passed last year would have expanded Medicare to cover dental, vision and hearing care, but in the Senate, opposition by all 50 Republicans and Democrats Joseph Manchin (W.Va.) and Kyrsten Sinema (Ariz.) sank it. Sinema, who also opposed letting Medicare negotiate drug prices with pharmaceutical companies, has collected hundreds of thousands of dollars from the drug and financial-services sectors over the past five years. Manchin, who raised $1.5 million in the last three months of 2021, got contributions from CVS Health and the Anthem and Cigna health-insurance companies.

The city has six months to file its appeal, says Cohen, so the Medicare Advantage Plus plan will be on hold at least that long. The “nuclear option” the administration could use, he worries, is that since the ruling said the city couldn’t charge retirees for staying with Senior Care as long as it gave them that option, it could simply stop offering it. 

“That’s a serious contingency that we have to consider,” he says.

“This is not over. We still have to fight,” Gloria Brandman told The Indy. “We want to make sure current workers know, because we expect their health care will be affected in the next contract.”

The city has six months to file its appeal, says Cohen, so the Medicare Advantage Plus plan will be on hold at least that long.

At the December rally, retired City College administrator Naomi Nemtzow of Brooklyn called it “one battle out of many” against a nationwide effort to privatize Medicare. For-profit health care is why Americans “have terrible health care compared to most wealthy countries, and pay much more,” she said. “I believe we need the New York Health Act and a national single-payer system.” 

The New York Health Act would create a single-payer system in New York State. But last year, after it was passed by the Assembly Health Committee and a majority of state Senators had signed on as cosponsors, key local union leaders joined with health-insurance companies in urging Assembly Speaker Carl Heastie and Senate Majority Leader Andrea Stewart-Cousins to kill it. They said the bill would force New Yorkers into a “government-run health-care system” in which “union members would lose the benefits they have earned.” The signers included DC37, the New York State Building and Construction Trades Council, several police unions, the Sanitationmen and the UFT.

“We don’t want our insurance to be further privatized. We want it to go in the other direction,” says Brandman. “And then we can work for Medicare for All.”

“We may be retired, but we’re not dead, and we will fight back,” says Neal Frumkin.

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