250,000 NYC municipal retirees face controversial switch to privatized health insurance

An arbitrator is directing New York City to quickly move ahead with a plan to transfer some 250,000 municipal retirees from their current Medicare coverage to a Medicare Advantage plan operated by a private insurer — despite ongoing and persistent efforts by some retirees to block the move.

The switch was developed as part of a plan laid out by former Mayor Bill de Blasio in 2018 to save the city money on health benefits. It would generate about $600 million in savings annually, thanks to federal subsidies available to Medicare Advantage plans, according to city estimates. The change was initially set to take place this past January but did not go ahead as planned because of legal challenges from retirees and other setbacks.

Some retirees have long protested the move, lamenting that there had not been enough communication about the change. They have raised concerns to City Hall and the press that privatization will lead to a narrower network of health care providers and increase members’ costs.

Martin Scheinman, the arbitrator overseeing the agreement between the city and its municipal unions to change Medicare plans, gave the Adams administration until Jan. 9 to develop a new health plan for retirees in collaboration with Aetna.

EmblemHealth and Empire Blue Cross Blue Shield, the companies that were previously awarded the contract, backed out amid legal challenges in July. A year earlier, the Municipal Labor Committee, an umbrella group for unions representing city workers, voted in favor of moving forward with a custom Medicare Advantage plan developed by Empire and Emblem. The committee will once again have to vote on the Aetna plan once it’s drafted, Scheinman wrote.

Medicare Advantage plans tend to be accepted by fewer doctors than traditional Medicare. And some plans have been improperly denying coverage for needed services, according to an April report from the U.S. Department of Health and Human Services’ Office of the Inspector General.

But when the NYC Medicare Advantage Plus Plan was first approved, the de Blasio administration and leaders of the Municipal Labor Committee argued that it would be unlike other Medicare Advantage plans and coverage would not be diminished. Under their current Senior Care plan, municipal retirees receive traditional Medicare benefits as well as supplemental coverage from the city, without paying a monthly premium.

Retirees opposed to the change filed a lawsuit against the city and won a victory in the courts in March that would have given them options – although it now appears short-lived. New York City had been planning to allow retirees to opt out of the Medicare Advantage plan and retain their existing coverage by paying $191 per month. But the judge in the lawsuit ruled that it was against the city’s administrative code to require retirees to pay the monthly fee.

In response, Mayor Eric Adams has been pressuring the City Council to change the administrative code — so far unsuccessfully.

Leaving this issue unresolved could mean that the Medicare Advantage shift will move forward without any option for retirees to opt out. In his Dec. 15 decision, Scheinman gave the City Council 45 days to decide whether to amend the city’s code to allow retirees to maintain their current Senior Care plans for a fee.

Some labor leaders are maintaining optimism about the new plan’s potential.

“A new Medicare Advantage plan will be negotiated to keep that premium-free status, and we will make sure that it meets our retirees’ needs, even while saving hundreds of millions of dollars that will be dedicated to other health care services,” Michael Mulgrew, vice chair of the Municipal Labor Committee and president of the United Federation of Teachers, said in a statement.

But the New York City Organization of Public Service Retirees, a nonprofit formed to represent those who oppose the change, is not planning to back down. The organization has a Facebook group with more than 18,000 members.

“We will litigate this as long as I’m breathing,” said Marianne Pizzitola, the group’s president and a retired FDNY employee, in an interview on the arbitration decision. “And I’m sure if something happens to me, someone else will be litigating it right behind me.”

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