The city and its unions declare war on their workers with Medicare Advantage

Since the mid-1960s, when Medicare became available, the city has given its retired workers a cost-free supplement to fill the 20% gap left in Medicare’s coverage.

Two years ago, with the support of the leaders of its employee unions, it declared its intention to move these retirees from public Medicare to a private Medicare Advantage plan, unless they opted out and agreed to pay nearly $200 per month for the Medicare supplement, known as SeniorCare.

Now, following multiple lawsuits and two years of political debate, marches, and protests, the city and union leaders are about to agree on a plan that will be much harsher and far more expensive for their retired workers,

When the city and the leaders of the major city unions issued their initial plan, they claimed, falsely, that the federal government would make up for what the city was not spending. They asserted — and continue to assert — that the private Medicare Advantage plan will be as good as what retirees now have. That claim was false then, and it is even less true today. The city was paying 20% of the cost. Those funds are missing from Medicare Advantage plans, with the federal government providing them with a supplement that barely reaches 2% today.

In 2021, then-candidate Eric Adams decried the city’s plan, declaring it was a “bait and switch,” luring workers with the promise of good benefits in return for middling wages, and then withdrawing those benefits when they were most needed.

Today, as mayor, Adams is implementing that “switch” on steroids. The plan the unions are about to vote on would not only require that city retirees, if they want to remain on Medicare, buy their own supplemental plan; it would require them to waive all other city health benefits. No longer would the city reimburse them for their Medicare Part B (physician care) premiums, nor would they be eligible for city drug benefits.

The cost to every retiree would be $5,000 or more each year. No wonder retirees refer to this as the “nuclear option.” Most retired workers would be unable to afford this and would be forced into Aetna’s Medicare Advantage plan. The poorest among them, often Black and Brown, would be hurt the most.

Retirees on Medicare have coverage run by a federal agency whose mission is to provide access to health care for seniors. Medicare Advantage, by contrast, is private insurance. While the federal government pays for it, the mission of any private insurer is to make money for its shareholders. Every dollar spent on health care is a dollar not going to the shareholders.

Retirees currently receive first-class care under Medicare. Under the city’s new plan, retired city workers will be relegated to second-class, cut-rate care. Without the city’s supplemental payment, and with the additional cost of executive salaries and corporate profits, a Medicare Advantage plan has 25% less to spend on health care.

Medicare Advantage plans save money by imposing a variety of measures that limit their spending. They require ubiquitous copays which not only shift cost to members, but discourage them from seeking care. They limit the choice of physicians and hospitals. And, unlike Medicare, they require prior authorizations by the insurer for any treatment or procedure likely to be expensive. The resulting delays and denials can be deadly to patients.

New York City, which claims to be a world leader in commerce and social policy, is unwilling to learn from countries around the world which have found they cannot turn over their health care system to private insurance companies and expect to achieve high quality, affordable care. Authoritative comparisons of systems globally show ours to be the most expensive, least effective among all leading countries, yet this city and its unions want to move from the effective public Medicare to the costly, inefficient private insurance model.

There are solutions that will not cost the city any money in the short run and would save large sums long-term. The union representing CUNY faculty and senior staff has proposed using excess reserve funds to pay for the current retiree benefit while organizing a special commission to find ways to contain future health care costs. Meanwhile, the City Council should direct the mayor’s administration to continue the current benefit with public Medicare and the city-funded supplement. That is the fairest way to honor the commitment the city has made to its dedicated workforce. The city’s workers deserve the very best.

Rodberg is professor emeritus of urban studies at Queens College/CUNY. He taught health policy and other topics until his retirement in 2017.