May 12, 2014

Despite Strong Vote, Health-Care Accord Stirs Union Anger


Although the Municipal Labor Committee voted overwhelmingly to find $3.4 billion in health-care savings to help fund raises in the unions’ long-expired contracts, there remained rumblings of discontent last week within city unions, including some that approved the deal.

The agreement, worked out as part of the city’s negotiations over the United Federation of Teachers pact, would require the municipal unions to help produce $400 million in savings in fiscal year 2015 and $700 million in fiscal year 2016, followed by $1 billion and $1.3 billion in each of the next two years.

Cassidy: ‘Reject Pattern’

“Today the UFA again voted no on the MLC’s health-care agreement with the city,” Uniformed Firefighters Association President Stephen J. Cassidy said in a statement. “New York City Firefighters risk their lives every day and we reject the terms of the health-care agreement and the proposed wage pattern it has established.”

Mr. Cassidy’s is among a handful of uniformed unions that voted no or declined to participate. The Patrolmen’s Benevolent Association is said to have abstained in part because it entered arbitration recently over its contract, and Correction Officers Benevolent Association President Norman Seabrook told this newspaper days earlier that he felt “hoodwinked” into a deal that he implied chiefly benefited the UFT.

Some who are familiar with the workings of municipal health-care systems said they believed the savings are very achievable. The city and the unions will work collaboratively to reduce costs, and though the strategies for doing so will be decided in meetings over the next several weeks, a few options have reportedly been discussed.

Weeding Out ‘Ineligibles’

Audits to remove from the health-care rolls those who are no longer eligible, including ex-spouses and dependent children who are too old to be covered, could save between $200 and $400 million a year. The unions may look to save money on expensive drugs by centralizing purchasing, and to coordinate care better between a patient’s physicians. Moving away from a straight fee-for-service model has been shown to lower costs.

The unions will have help in meeting the savings targets—the parties agreed to use $1 billion from the Health Stabilization Fund, a pot of money used since the mid-1980s to help stabilize rates between the city’s health-care plans. Some of those funds will also go toward shoring up the unions’ welfare funds, which typically cover dental and optical benefits and especially costly drugs like chemotherapy medications and other injectables.

If the targets aren’t met, the prospect of members paying for portions of their own premiums is still possible, though both the city and the unions have said that option would be a last resort. If the unions save more than required, they could share up to $365 million of that windfall.

But the Teachers’ deal struck some municipal union officials as setting a potentially damaging pattern for their members, especially in wages.

Uniformed Fire Officers Association President Al Hagan was among those who voted for the deal but object to the manner in which it moved out of MLC discussions to become a central feature of the UFT talks.

“There was widespread confusion about the process that was used to come to this health-care agreement, and going forward the MLC needs to fine-tune the process,” he said.