The Chief
September 26, 2003

Friction Within Ranks

Unions’ Prescription Fund Faces Crisis

By Deidre McFadyen

While Mayor Bloomberg and the labor unions remain stuck at square one in wage talks, a similar paralysis in health benefits bargaining is quietly coming to a head and fueling tensions among the unions.

The Health Insurance Stabilization Fund, which has been the sole source of funding for four classes of popular prescription drugs since 2001, has been eroding at a precipitous rate. Without a cash infusion from the city the fund will run dry by March or April, union sources said.

The issue was at the top of the agenda at the Municipal Labor Committee’s annual conference last week in Melville, L.I. though no resolution was achieved.

Unanticipated Demand

Neither the Giuliani administration nor the MLC foresaw how strong the demand would be among the city’s 500,000 active and retired workers for the so-called PICA drugs – those that are injected at home, or treat depression or psychosis, cancer or asthma – when they agreed to tap the fund, which was flush with a $500 million surplus.

PICA coverage was previously spotty, with some drugs picked up by the city’s health insurance plans and others covered by some union welfare funds.

In return for the new PICA benefit, the unions agreed in the multi-part deal to allow the Giuliani administration to transfer $95 million from the jointly managed fund into the city’s general budget and to forego scheduled $35 million payments into the fund for fiscal years 2001 and 2002.

City officials said that the stabilization fund, which was established through bargaining in the mid-1980’s to deal with rising health insurance rates and offset some disparities in coverage between the two major plans, is down to $285 million, $203 million of which is reserved for the original purpose of cushioning health insurance costs.

City Seeking $50M

Jordan Barowitz, a spokesman for Mayor Bloomberg, said the city is owed $100 million from the fund stemming from the 2001 agreement and is looking to collect half of that. He said the Mayor’s Office recently sent a letter to the MLC requesting talks.

“These PICA drugs are extremely expensive and we’re anxious to negotiate with the unions to stabilize the fund,” Mr. Barowitz said. “As of yet, they haven’t shown a tremendous amount of interest.”

Municipal labor leaders counter that it is the city that is guilty of foot-dragging.

United Federation of Teachers President Randi Weingarten, who chairs the MLC, said the city unions came up with $100 million in potential health savings in negotiations over the $600 million in labor savings demanded by the Mayor. “The unions were very responsible in trying to identify ways of solving this back in May and June, she said.

‘Wants Us to Beg’

While loathe to return to the status quo ante on PICA coverage, union officials say that they won’t buckle under pressure either. “He’s trying to force a crisis that will bring us to the table begging,” said Communications Workers of America Local 1180 President Arthur Cheliotes. “I don’t see us caving in to this guy on the whole package.”

The issue has put enormous strain on the coalition, particularly along the fault line dividing the civilian and uniformed unions.

Patrolmen’s Benevolent Association President Patrick J. Lynch, who had sought unsuccessfully to carve his union out of the January 2001 deal, has been privately grumbling that his members are not using the PICA drug benefit at the same rate as civilian unions, according to several union sources.

Underscoring the frictions, District Council 37 Executive Director Lillian Roberts began a Sept. 9 MLC meeting that she was presiding over in Ms. Weingarten’s absence by ordering “consultants” to exit the room. The unprecedented demand was aimed at several Aon Corporation officials whom the PBA had brought along to advise them on health benefits. When PBA Treasurer Joseph Alejandro, the top PBA officer at the meeting, fired back with a motion that all consultants, including DC 37’s chief negotiator, should leave, Ms. Roberts adjourned the meeting.

Mr. Lynch and the heads of the six other police and fire unions recently wrote the Office of Labor Relations asking for the utilization date for their individual bargaining units. They insist that their only motive in requesting the information is to be prepared in case some PICA coverage falls back on the individual union welfare funds.

“Right now, it’s about making informed decisions and nothing more,” said PBA spokesman Al O’Leary. “What’s driving it is an intense desire to make the best decisions for our members. We can only do that if we have the data.”

Uniformed Fire Officers’ Association President Peter L. Gorman said that he had no ulterior motive in requesting the data either. “As the PICA program becomes taxed and might dissolve, I need to see the utilization data for my members in order to make informed decisions about what benefits I can and cannot provide,” he said.

Some civilian union leaders remain skeptical. “The uniformed unions want to sit down and negotiate their own package, and they don’t want the constraints of the MLC,” said one president. “But the fact is the MLC has the bargaining certificate for health benefits.”

‘Don’t Have Facts Yet’

Ms. Weingarten said the uniformed unions had a right to view the data for their own memberships. “Since no one has gotten any utilization data disaggregated yet, we don’t really know at this juncture who really uses PICA in what ways,” she added.

Ms. Weingarten took the internal debate in stride, saying the municipal labor movement was not “monolithic.”

Lieutenants’ Benevolent Association President Tony Garvey said the Bloomberg administration would love to use the PICA issue to drive a wedge between the civilian and uniformed unions. “We’re all part of the MLC. I think that’s the forum to address the issue,” he said. “Randi Weingarten has done a sterling job of keeping us on track.”

Ms. Weingarten claimed that the Bloomberg administration had exacerbated the problem with its sluggishness in awarding a contract that would combine medical and hospital coverage and potentially save the city tens of millions of dollars a year. “The overarching concern we have is that the city, by delaying a conclusion on the request for proposals, created a worse situation than we had,” she said.

‘Conflicts’ Distraction’

In April, just as the city and the MLC were about to choose between Group Health Insurance and the Health Insurance Plan of Greater New York for the jumbo contract, a brouhaha erupted over Roslyn Yasser’s dueling roles in the bidding process, first as the administrator of DC 37’s health and security plan until March 2002 and then as HIP senior vice president for business development. The administration asked the city’s Conflicts of Interest Board to make a determination and has held off awarding the contract pending the ruling.