Health Benefits Agreement

I would like to recap the health and welfare agreement reached in this round of bargaining and set forth a comparison of the city’s original positions versus the final settlement.

Given its dire financial condition, from the outset of this round of bargaining the city pushed the unions for $600 million in health benefit give-backs. If implemented, the changes sought by the city would have gutted our health benefits and destroyed one of the principal motivations for taking this job — exceptional health benefits. The PICA Program — a benefit that provides Psychotropic, Injectibles, Chemotherapy and Asthma medications for all city workers, many of whom suffer from serious and debilitating ailments — also would have been jeopardized. When bargaining began, several other municipal unions were advocating that we should agree to the city’s proposal to establish co-premiums on our basic health benefits — a give-back that standing alone may have cost members upwards of $700 out-of-pocket.

To better represent our members, we put together a coalition of police and fire unions to give us the leverage to influence health bargaining — a process that, in the past, was typically driven by one or two large civilian unions, often to the detriment of our members. We also commissioned our own health expert to advise the police and fire unions on health benefits in this round. And, as you know, this resulted in highly publicized disagreements between the police and fire unions, on the one hand, and most other unions, on the other.

In the end, the work of our group benefited our membership and was well worth the investment of time and resources.

We believe that, partly as a result of our efforts and our very public fight, we have been able to keep health benefit changes to a minimum in this round. Of the $600 million sought by the city in give-backs, zero was attained. In fact, the New York Post reported that, while the City will save $100 million under the agreement, it “will pay $30 million to keep the workers’ prescription-drug program going and another $70 million to shore up the unions’ welfare fund, meaning the taxpayers come out even.”

In the end, while there are some increases in co-pays and deductibles, any savings realized will be used to fund other member benefits — this at a time and in a fiscal environment that has been characterized as one of the worst in the last 30 years. Similarly, an administrative fee described below will be more than offset by the $100 increase in welfare benefits. More importantly, there will continue to be a zero payroll deduction for the HIP and GHI Comprehensive Benefits Package (CBP) health plans as well as a continuing but better managed PICA Program to provide for our sickest members.

Provisions of the agreement, effective April 1, 2004, include:

$100-per-member increase to the Active & Retiree Health & Welfare Funds;
Continuation of LOD welfare fund contribution;
Continuation of HIP mental health and alcohol rider;
Continuation of Trust & Agency subsidies for optional riders;
GHI office visits and diagnostic services co-pay will increase by $5; co-pays for specialists will go to $20;
Annual deductibles for the use of non-participating providers will increase from the current $175 to $200;
Current hospital in-patient co-pays of $200 will rise to $300;
Emergency room co-pays will rise from $25 to $50;
Co-pays for psychotropic, injectible and other specialized drugs will rise from the current $0-6 to $5, $15 and $35;
All members will contribute an annual health plan administration fee of $35, similar to other public sector plans in New York State. (We are pressing that this be offset by the welfare fund increase.)
Under the CBP program, modest changes will be made to co-pays, and deductibles that generate savings will accrue to the Stabilization Fund for the members’ benefit. This will help fund various health benefits programs, including PICA and the GHI/Blue Cross CBP Plan.
In the Senior Care Program, there will be a modest increase in medical deductibles and the in-patient hospital co-pay.

Below is a line-by-line summary of the city's original proposal of $600 million in give-backs and the final outcome for each give-back request. The bottom line is $600 million sought — zero give-backs to the city. As I said, the PBA and other municipal unions achieved $100 million in savings that will accrue each year to the Stabilization Fund and that will be used solely to provide health benefits for all our active and retired members.

City/MLC Health Benefits Agreement
December 18, 2003
Original City of New York Proposal to Municipal Labor Committee

Final Outcome

	THE CITY WANTED	THE PBA OBTAINED
1.	Ten-percent across-the-board co-premiums toward the HIP-HMO rate, as well as other health plans, for all city employees and non-Medicare retirees (upwards of $700 out-of-pocket).	HIP continues as a zero cost health plan option.
2.	Elimination of the welfare fund contributions on behalf of line-of-duty survivors.	Line-of-duty survivors will continue to receive city funding and benefits.
3.	Elimination of PICA Program.	PICA program continues.
4.	Elimination of Medicare Part B Reimbursement.	Continue to receive 100 percent of Medicare Part B Premium reimbursement.
5.	Elimination of HIP-HMO Mental Health/ Substance Abuse Rider.	Rider continues at no cost to members.
6.	The remaining $3-million GHI-CBP fee schedule increase referenced in the 2001 Health Benefits plan will not be implemented and paid to the city.	$3 million ewill remain in Stabilization Fund for members' benefit.
7.	Ten-percent across-the-board co-premiums toward the city's share for all Medicare retirees.	HIP continues as a zero-cost health plan option.
8.	A cap on the city's increases in health insurance contributions to the medical CPI.	HIP/HMO continues to be the medical-rate benchmark.
9.	The city's annual contribution to the Stabilization Fund shall be offset by the CBP Basic Program's dividends — reducing the present annual city obligation of $35 million.	City will continue to fund Stabilization Fund at $35 million per year.
10.	Elimination of all premium subsidies for the GHI and Blue Cross optional riders (passing increased costs on to members with optional riders).	The Trust and Agency account will continue to fund optional rider increases, eliminating increases to members.
11.	Administrative assessment for all health insurance programs for all city employees and retirees. Assessment to be used for City Office of Labor Relations operations.	CA $35 per-member per-year administrative fee will go to unions' Stabilization Fund and used to return $100 per year to each union Health and Welfare Fund.
12.	Elimination of retiree health insurance for vested pensioners	Retiree health insurance benefits for vested pensioners will continue.
13.	Reduction of the Active Welfare Fund contributions by $200 per member.	All unions will receive an increase in their welfare funds of $100 per member per year from the Stabilization Fund.
14.	Reduction of Retiree Welfare Fund contributions by 50 percent.	All unions will increase their welfare funds by $100 per member per year
Overall city savings sought — $600 million Overall city savings achieved — $0 Overall union savings achieved that accrue to the Stabilization Fund for future active and retiree benefits — $100 million
Note: A change to the HIP/HMO rate, which is the health benefit level guaranteed to each active and retired worker by law, would have negatively impacted all health benefit plans for workers.