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Mayor Adams plows ahead with plan to privatize health benefits for 250,000 NYC municipal retirees

New York City Mayor Eric Adams is showing no signs of stopping an already-delayed plan to switch 250,000 retired municipal workers from traditional Medicare to a private Medicare Advantage plan – with or without the cooperation of the City Council or the support of retirees themselves.

The city has proposed allowing retirees to keep their current benefits for a large fee ($191 per month), but the way things are going, that may not end up being an option. This proposed switch was supposed to take effect a year ago in January 2022 — but has faced stiff opposition. Meanwhile, some of those critics are urging the city to establish a panel of stakeholders to come up with alternative ways to achieve the $600 million savings that this Medicare Advantage switch is supposed to deliver.

Medicare Advantage plans, which shift seniors’ benefits to health plans administered by private insurance companies, have become increasingly popular in recent years – but have also faced criticism for having smaller networks of health care providers than traditional Medicare, and for improperly denying patients’ medical claims.

Municipal retirees don’t pay a monthly premium for their current health plan, known as SeniorCare. The new Medicare Advantage plan would also be premium-free – and would come with federal subsidies that will offset the cost to the city. Officials have been working to convince seniors that this particular Medicare Advantage plan would not have those problems, and would even represent an improvement over their current benefits.

judge ruled last year that the city could not charge the $191 monthly premium for people to keep their SeniorCare. Adams responded by urging the City Council to change the city’s administrative code so the fee would be allowed. Believing that was the only way to grant seniors a modicum of choice in their health benefits, Councilmember Carmen de la Rosa introduced the bill the mayor requested.

But after an epic 10-hour City Council hearing on the proposal earlier this month, during which retirees clashed with union leaders and city officials, de la Rosa said her effort to fast-track the bill was put on hold.

After the hearing, it was clear that there were way more questions and concerns from councilmembers.Carmen de la Rosa, New York City Councilmember

“After the hearing, it was clear that there were way more questions and concerns from councilmembers,” de la Rosa told Gothamist last Wednesday. “It doesn’t seem like there’s an appetite to move this bill at this moment and the bill was laid aside.”

Asked last week whether the administration is still moving forward with its efforts to switch retirees to a Medicare Advantage plan, City Hall spokesperson Jonah Allon didn’t deny it and said that at the hearing, “we presented a clear case that the city’s Medicare Advantage plan would offer myriad improvements over the current SeniorCare plan, while still encouraging the Council to preserve retiree choice by amending the administrative code.”

The change in benefits, intended to save the city $600 million on health coverage annually, was first set in motion by former Mayor Bill de Blasio and is being implemented in cooperation with the Municipal Labor Committee, a group of unions representing city workers. Implementation has been delayed for years, in part, by litigation brought by retirees who oppose the shift.

Some retirees who spoke at the Jan. 9 hearing urged the City Council not to be complicit in the switch and asked the lawmakers to explore other ways to save money on health benefits for city workers. Others, accepting the fact that the Medicare Advantage shift was moving forward, said the City Council should take action to preserve seniors’ options.

In the latter camp was Ellen Gentilviso, a retired public school teacher who said she was recently diagnosed with breast cancer and wanted the option to retain her current plan. Like others, she expressed concerns that her doctors would not accept the new insurance plan.

“Having a cancer diagnosis is devastating, but the threat of losing access to the trusted doctors treating you due to the elimination of choice of insurance coverage is even more stressful,” Gentilviso said.

A page from the 2019 U.S. Medicare Handbook in Washington.
A page from the 2019 U.S. Medicare Handbook in Washington.Pablo Martinez Monsivais/AP/Shutterstock

The Adams administration and the Municipal Labor Committee are currently designing a new Medicare Advantage plan with Aetna, after the insurance companies previously selected to administer the plan backed out. About 85% of the doctors who currently accept SeniorCare would also be in Aetna’s network, and another 10% have indicated they would accept an Aetna Medicare Advantage plan even if they are not in-network, according to testimony from the Mayor’s Office of Labor Relations deputy commissioner Claire Levitt.

She also addressed fears about whether a Medicare Advantage plan would have a more burdensome process of assessing whether a procedure should be covered — sometimes referred to as prior authorization.

“We understand the concerns about prior authorization and want to assure retirees that this is not an issue they need to be concerned about,” she said, eliciting laughter from skeptical audience members. She said there would be a way to appeal coverage denials and that the city would maintain oversight over the plan.

The issue of prior authorization has emerged as a sticking point in negotiations over the new health plan, Crain’s New York Business reported this month.

United Federation of Teachers President Michael Mulgrew has been a supporter of the city’s proposed Medicare Advantage switch, but recently started expressing doubts about the particulars being developed with Aetna.

“New York City can create a unique Medicare Advantage plan, provided we find the right partner,” Mulgrew said in a statement to Gothamist. “At the moment, for a variety of reasons, it is an open question whether Aetna could be that partner.”

According to UFT spokesperson Alison Gendar, the union wants an independent entity to be able to review any potential denials of coverage for patient care by the insurer.

Asked about these concerns, Rick Frommeyer, senior vice president of Aetna Group Retiree Solutions, said, “Our prior authorization process is aligned with federal regulations that govern our Medicare business.”

He added that the company is continuously working to streamline the process and make it more efficient to avoid unnecessarily delaying patient care.

Is the Medicare Advantage shift really necessary?

Part of the controversy around the Medicare Advantage switch comes from the fact that the annual savings generated would largely go toward benefiting active city workers, rather than retirees.

The $600 million would be funneled into the Health Insurance Premium Stabilization Fund. The city’s Independent Budget Office, which has criticized the plan, has explained that the fund was initially established in the 1980s to balance the costs of the health plans available to current city workers. It has since helped pay for a growing list of supplemental benefits including prescription drugs and telehealth services.

Thanks, in part, to rising health care costs, the Stabilization Fund has been depleted, union leaders said at the City Council hearing. Henry Garrido, executive director of DC 37, said union members have sacrificed raises to preserve their benefits and said unions have sought out many other ways to keep health care costs down. Now, he said, it was necessary to cut the cost of retiree health benefits.

What kind of choice are we preserving if retirees and their dependents are charged $200 a month to keep SeniorCare?James Davis, PSC-CUNY president

“We have to take responsible actions,” Garrido told city councilmembers. “They may not be popular but they are responsible actions.”

Meanwhile, some critics of the plan have presented alternatives. CUNY’s union, the Professional Staff Congress, has suggested temporarily bolstering the Stabilization Fund by taking money from a different source, the Retiree Health Benefits Trust. This trust serves as a reserve that can help pay for retiree benefits when city coffers are low, and currently has a surplus. The union also advocated for convening a panel of stakeholders to come up with more long-term savings.

“What kind of choice are we preserving if retirees and their dependents are charged $200 a month to keep SeniorCare?” James Davis, president of the PSC-CUNY, asked councilmembers at the hearing.

De la Rosa said councilmembers will have a chance to put their own solutions forth during the city’s budget negotiation process. But it’s unclear how much time they will have to push alternatives to Medicare Advantage.

Last month, an arbitrator overseeing the negotiations gave the city until Jan. 9 to finalize a plan with Aetna, and directed the Municipal Labor Committee to vote on it immediately after.

Now that that deadline has passed, City Hall has declined to say exactly when a plan can be expected.

Caroline Lewis

Caroline Lewis is on the health care beat for WNYC and Gothamist — and also covers cannabis, both with an eye towards equity and accountability. She was previously a health care reporter for Crain’s New York Business. Lewis has a degree from the CUNY Graduate School of Journalism and is a native New Yorker, although she has left occasionally. She did a Fulbright in Chile in 2011 and is fluent in Spanish. She now resides in Brooklyn.Read more

Caroline Lewis