The Chief
December 26, 2003

Boost Employee Health Payout Under City Deal

Higher Co-Pays And $35 Fee Preserve Benefit Levels

By Deidre McFadyen

The municipal unions agreed Dec. 18 to shoulder a greater share of the city’s soaring health costs in a health benefits agreement with Mayor Bloomberg that rescued a popular plan for specialized drugs that was in danger of financial collapse.

The union concessions, which will take effect April 1, include increases to a variety of co-payments for the two-thirds of the municipal work force covered by GHI; new or higher co-payments for psychotropic, injectable, cancer and asthma drugs; and a $35 annual administrative fee for every city worker or retiree enrolled in a city health plan.

Saves City $100M

The agreement will generate $100 million in annual savings for the city, with roughly one third going to maintain the so-called PICA drug program and the remainder bolstering the unions’ beleaguered welfare benefit funds that have had to absorb spiraling prescription drug costs.

Mayor Bloomberg touted the accord, which is the first in the current round of bargaining, as keeping with his goal to pay for all additional worker benefits through productivity.

“This agreement demonstrates that we can protect our municipal employee benefits without spending resources that we simply don’t have,” he said.

United Federation of Teachers President Randi Weingarten, the chair of the Municipal Labor Committee, said the unions beat back the city’s efforts to exact much deeper concessions while averting the threatened bankruptcy of the health stabilization fund that finances the PICA program. Its demise, she said, would have forced many families to pay thousands of dollars out of pocket for those specialized drugs.

‘Preserved Essentials’

“At the end of the day, knowing that we had to keep the funds solvent, we all felt that this was a fair deal,” Ms. Weingarten said. “We preserved the core principals on health benefits that the unions believe in: having health benefits at an affordable cost, giving workers a choice of health plans, and keeping at least one plan at no cost.”

Ms. Weingarten said the Mayor was mistaken if he thought that the deal would serve as a model for wage agreements.

“The city makes a huge mistake in overplaying this,” she said. “The only implication is it should eliminate the excuses for not bargaining and should jump-start wage talks.”

Communications Workers of America Local 1180 President Arthur Cheliotes agreed that the deal boded well for stalled contract talks because it illustrated the art of the possible.

“There is value in the fact that both sides understand that we can accommodate each other and meet each other’s needs he said.

Some union officials, however, grumbled privately that the MLC should have taken a more militant approach and not worked from the premise that the only way to save the PICA program was to agree to givebacks. As a plausible alternative strategy, they cited Transport Workers Union Local 100 President Roger Toussaint’s successful campaign, including large demonstrations, to pressure the Metropolitan Transportation Authority to rescue his union’s health benefits fund from near-bankruptcy last December.

Ms. Weingarten responded that the TWU’s deal was done in the context of wage negotiations and was itself a carefully crafted package of gains and savings.

“If we were doing coalition bargaining, we could have done a very different thing,” she remarked. “But a lot of unions want to be bargaining alone.”

Other union officials, including District Council 37 Mark Rosenthal, complained that the MLC did not extract a commitment from Mr. Bloomberg to fund wage contracts. Virtually every union contract has expired, many a year and a half ago, and the Mayor has insisted that all wage increases must be offset by productivity enhancements.

“I’m not happy that we gave money, and the city did not put any money on the table for contracts,” said Mr. Rosenthal.

Ms. Weingarten responded that many union leaders have grown wary of those sorts of commitments, given the failure of previous administrations to live up to them.

‘Lock Up What’s There’

“We wanted to lock up every single bit of money we could find instead of reserving it out there for future wage talks,” she said.

Mr. Cheliotes noted that internal disagreements with-in the MLC over how the unions should divide the pie in wage contracts made it unfeasible to yoke those negotiations to a health benefits agreement.

Starting April 1, city workers who use psychotropic, injectable, cancer or asthma drugs will have to pay a $5 co-pay for generics, a $15 co-pay for brand-name drugs on the drug company’s preferred list, and $35 for brand-name drugs that are not on the formulary. Until now, the only co-pay was $6 for brand-name psychotropic or injectable drugs. GHI will also take over coverage of chemotherapy and asthma drugs for its participants.

The roughly one-fifth of city workers and retirees enrolled in the basic GHI health maintenance plan will continue to have no premiums or co-payments.

Those in the GHI plan will see co-payments for primary care doctors’ visits increase from $10 to $15, while co-payments for visits to specialists will increase from $10 to $20. Co-payments for diagnostic services will go from $10 to $15 while non-mandated in vitro fertilization services, which used to be covered like any other health treatment, will now require a co-payment of 25 percent. The annual deductible to visit an out-of-network doctor will remain the same for families but rise from $175 to $200 for individuals. The hospitalization co-payments for regular workers will increase from $200 per admission with an annual maximum of $500, to $300 with a maximum of $750. The co-payment for visiting a hospital emergency room will increase from $25 to $50.

Retirees Pay More

Medicare retirees who are enrolled in the GHI/Blue Cross Senior Care plan will see their medical deductible increase by the same amount as those for regular workers and younger retirees.

The city will impose an annual fee of $35 for all workers and retirees as soon as administratively possible.

Those savings will translate into an approximately $31 million city contribution to the health stabilization fund, which pays for the PICA program and was in danger of drying up by March. The rest of the savings will convert into an additional $100-per-member contribution to the union welfare funds, which cover dental benefits, optical services and drugs not covered by other plans.

The health benefits negotiations were fraught from the beginnings with tensions between the civilian unions and the unions representing police officers and firefighters.

Misguided Criticism

The uniformed union leaders believed that their members did not use the PICA benefits as heavily as did members of other unions. When the data showed that police officers and firefighters and their families in fact used psychotropic, asthma and cancer drugs at higher-than-average rates, they dropped their complaints and signed on to last week’s accord, city and union officials said.

But even as that disagreement ebbed, another flared between the New York State Nurses’ Association and the Patrolmen’s Benevolent Association over the presence at the bargaining table of PBA attorney Bob Linn, who also represents Maimonides Hospital in its negotiations with NYSNA.

Nancy Kaleda, the NYSNA’s association director of the economic and general welfare program, complained that the PBA repeatedly refused her request to exclude Mr. Linn from union discussions, forcing her to call for repeated executive sessions, which only union heads can attend.

‘A Management Spy’

“It’s like having a management spy sitting at the table with you,” said Ms. Kaleda. “This is just one more example of the PBA’s dog-eat-dog approach to negotiations and its complete disrespect and disregard for the other city unions.

PBA First Vice President John Puglissi dismissed the NYSNA’s objections to Mr. Linn, noting its right to request executive sessions for sensitive matters.

“The PBA has an obligation to provide the best representation possible to its members and to bring, as other unions have, its lawyers, negotiators and consultants to these meetings,” he said. “We make no apologies for hiring the best available professionals to represent our members interests.”