A Manhattan Supreme Court judge issued a ruling Friday “permanently” prohibiting New York City from switching its 250,000 retired employees and their elderly or disabled dependents to a privatized Medicare Advantage plan managed by Aetna.
Manhattan Supreme Court Justice Lyle Frank sided with city retirees, finding merit to their argument that the planned switchover violated longstanding guarantees by the city that every active and retired city worker is entitled to city-funded healthcare through a combination of Medicare and other supplemental insurance.
In his decision, Frank ordered the city “permanently enjoined from requiring any City retirees, and their dependents from being removed from their current health insurance plan(s), and from being required to either enroll in an Aetna Medicare Advantage Plan or seek their own health coverage.”
Frank granted the retirees’ petition to stop the switch for the reasons he outlined in a July 6 ruling granting a preliminary injunction. In that decision, Frank wrote that the retirees “have shown that numerous promises were made by the City to then-New York City employees and future retirees that they would receive a Medicare supplemental plan when they retired, and that their first level of coverage once [they] retired would [be] Medicare.”
The administration of Mayor Eric Adams moved to switch retirees as of September 1, adhering to pacts with unions made under former Mayor Bill de Blasio that aimed to save the city $600 million annually.
The Adams administration inked the Aetna deal with the support of the Municipal Labor Committee, a consortium of 102 public sector unions. The MLC voted to approve the Aetna contract in March.
“We are extremely disappointed in this ruling and intend to appeal” Frank’s decision, said mayoral spokesperson Jonah Allon.
“This Medicare Advantage plan, which was negotiated closely with and supported by the Municipal Labor Committee, would improve upon retirees’ current plans, including offering a lower deductible, a cap on out-of-pocket expenses, and new benefits, like transportation, fitness programs, and wellness incentives,” Allon said. “This decision only creates confusion and uncertainty among our retirees.”
The head of the NYC Organization of Public Service Retirees, a lead plaintiff in the case, said she hopes the retirees’ victory will inspire other retirees nationwide to act to prevent their employers and unions “from privatizing the Federal Public Health Benefit of Medicare.”
“This is now the third time in the last two years that courts have had to step in and stop the City from violating retirees’ healthcare rights,” Marianne Pizzitola, the groups’ president, said in a statement Friday afternoon. “We once again call on the City and the Municipal Labor Committee to end their ruthless and unlawful campaign to deprive retired municipal workers of the healthcare benefits they earned.”
It’s not the first time the courts have sided with retired city workers on the issue: Retirees successfully sued last year to block a previous version of the plan. In that case, a judge barred the city’s alternative offer, which would have been allowed retirees to keep their existing Medicare with Medigap health plans — if they paid $191 a month.
The Aetna deal that’s now enjoined was key to locking in an estimated $600 million in annual savings that municipal unions agreed to, in order to help cover the cost of wage boosts and benefits.
Many retirees have argued that the long-planned switch from traditional Medicare to the privately run Medicare Advantage would increase their health care costs and make it more difficult to get approvals for procedures.
As Frank noted in his prior decision, an attorney representing Aetna acknowledged in court that some people might not be able to keep their doctors under the plan.
A prominent labor historian said the retirees’ victory signals the “beginnings of an effort to create a nationwide movement” to enable retirees to retain their traditional Medicare.
“I think the New York example shows that if retirees who know how to organize — and after all these people who had experience in the union movement, people who are used to acting together — if they band together and dig in their heels, they can really tie up the city and other government entities into knots,” said Joshua Freeman, professor emeritus at Queens College and a member of the CUNY Professional Staff Congress retiree council.
“They’re pushing back and they have been remarkable in what they’ve achieved in New York City so far — it’s not over, but it’s pretty incredible what’s happened.”