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Court Blocks Controversial Medicare Switch for Retired NYC Workers

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Mayor Bill de Blasio and union DC37 announced contract agreement in 2014 that included annual health care savings commitments, leading to recent Medicare program changes.

Office of Mayor Bill de Blasio/ Ed Reed

This story was published in partnership with New York Focus, an independent, investigative news site covering New York state and city politics. Sign up for their newsletter here.

A state Supreme Court judge Thursday indefinitely halted a proposed cost-cutting change in city government retirees’ health care after former municipal workers filed suit seeking to stop the move.

In a four-page order, Judge Lyle Frank called the rollout of the switch “irrational, and thus arbitrary and capricious” — and ordered the city to maintain the retirees’ current health care plans.

The suit was filed by the NYC Organization of Public Service Retirees, a group formed in opposition to the move to a privately administered Medicare Advantage plan. Steve Cohen, the lawyer representing the retiree organization, celebrated the injunction. 

“This is terrific for retirees,” he told New York Focus and THE CITY. “Thank goodness they’re not being rushed and being forced into an irrational decision.”

Frank tentatively prohibited the city and the new insurer — a partnership between EmblemHealth and Empire Blue Cross Blue Shield known as the Retiree Health Alliance — from enforcing a planned Oct. 31 deadline for retirees to opt out of the plan. 

The judge’s order does not, however, scrap the plan: Frank wrote that he “does not intend to disturb” the city’s choice to team with the Alliance.

The planned switch is the result of a 2014 agreement between de Blasio and the Municipal Labor Committee, a group of unions that represent city employees and retirees. The unions committed to $1.3 billion in annual health care savings in exchange for pay raises for members.

The switch to the Alliance will move retirees from their current arrangement of traditional government-administered Medicare plus a supplemental insurance program into a privately run system known as Medicare Advantage.

City officials contend moving retirees’ health care to Medicare Advantage plans managed by private insurers will save over $600 million annually, while preserving equally good care.

But many retirees are skeptical of that promise of equally good care, noting that for the first time, for example, retired city workers will have to obtain prior authorization from their insurer for a host of procedures and equipment, instead of getting coverage automatically.

‘I Could Be Bankrupt’

Some retirees worry that could leave them on the hook for huge sums, if the Alliance decides that their treatments aren’t covered. 

“I could be bankrupt from the other plan if they don’t take everything,” retired NYCHA employee Lainie Kitt told New York Focus and THE CITY earlier this week. 

Retirees who elect to keep the existing supplemental care program must pay $191 per adult covered.

A separate suit filed by insurance giant Aetna, claiming that the process of awarding the contract to the Alliance violated city procurement law and that the Alliance misrepresented its qualifications during the bidding process was rejected.

In response to the Organization of Public Service Retirees’ suit, the city had argued that it had done sufficient work to publicize the plan, and that the Halloween deadline should remain in place.

A spokesperson for the New York City Law Department expressed disappointment with Frank’s injunction. 

“While we are gratified that the court upheld the contract award which is an essential step towards implementing the program, we are disappointed that the court stayed its implementation. We are reviewing the decision and the city’s options for moving forward.  We are confident that the program will ultimately be implemented in the best interest of City retirees,” the spokesperson said. 

Doctor Confusion

The injunction doesn’t scrap the plan entirely, Frank emphasized, but rather delays it until more public information is available surrounding the plan. The judge noted that which doctors will accept the plan is still unknown. 

In an online survey conducted by the NYC Organization of Public Service Retirees, 317 out of 880 respondents said that at least some of their health care providers were not aware of the Alliance’s plan and couldn’t say whether they would accept it.

Writing that “There is little clarity as to which health care providers will be accepting this new Medicare Advantage Plan,” Frank found that retirees are at risk of suffering irreparable harm if forced to decide whether to remain in the plan on the basis of incomplete information.

Some retirees hope that the injunction will give them time to continue mobilizing against the switch. “It’s an opportunity to inform people and build the opposition,” said Len Rodberg, a retired CUNY professor who opposes the change. 

Frank ordered the city to submit a plan for “curing the deficiencies” his ruling highlighted.

The Department of Law spokesperson said that discussions on when and how the city will submit such a plan are ongoing. A spokesperson for the Alliance did not immediately respond to a request for comment.

In the meantime, Cohen said that his group will “continue looking and monitoring what’s going on, and be ready to respond if anybody appeals.”

Several major municipal unions, including DC37, UFT, Local 237, and the PBA, did not immediately respond to requests for comment on Frank’s ruling.

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