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Mayor Eric Adams announced on Friday that his administration will not move forward with a long-in-the-works switch of health care for the city’s quarter-million retirees to Medicare Advantage, after the state’s highest court issued a unanimous ruling clearing the way for the plan.
His decision comes after years of fierce opposition and organizing from retirees opposed to Medicare Advantage because of expectations that the privately administered plan would increase their out-of-pocket costs and deliver inferior care.
The switch was initially hatched in the waning days of Mayor Bill de Blasio’s administration with the support of the city’s municipal unions as a $600 million annual cost-saving measure, with savings directed to a so-called health care stabilization fund that covers some premiums for active city workers and some retirees.
In a statement on Friday, Adams did not identify how his administration planned to secure the $600 million in annual savings the unions and City Hall had committed to as part of collective bargaining.
“Thankfully, we have found other ways to address health care costs while providing quality health care coverage for our city’s workers, and we have decided not to move forward with the Medicare Advantage plan at this time,” said Adams.
Marianne Pizzitola, the president of the NYC Organization of Public Service Retirees, which is fiercely opposed to the Medicare Advantage switch and filed the suit to stop the deal, said in a phone call on Friday that she was “emotional.”
“I am also extremely appreciative of all the labor people who stood by us in the darkest days of us fighting this, and to the elected officials who endorsed our movement.”
Added Pizzitola, of the mayor: “I’m grateful that he’s kept his original promise that he was going to protect our health care benefits.”
As a candidate in 2021 Adams was critical of the planned switchover, calling it a “bait and switch.” But in March 2023, he finalized the deal with the Municipal Labor Committee, the consortium of the city’s 102 public-sector unions, to move the city’s 250,0000 retirees to Medicare Advantage by that September.
Those plans were put on ice that summer when a Manhattan Supreme Court judge sided with retirees who sued to stop the switch, barring any changes to retirees’ health care.
That ruling held until Wednesday, when the state Court of Appeals issued a unanimous decision finding no merits to retirees’ claims that the change to Medicare Advantage violated longstanding assurances that every active and retired city worker is entitled to city-funded health care through a combination of Medicare and other supplemental insurance.
The mayor was silent on the matter until Friday, stating that he was “grateful to the Court of Appeals for recognizing, earlier this week, that the city has a legal right to offer alternative health care coverage plans to retirees and for acknowledging that we must have flexibility to adapt our policies based on changing times.”
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Added Adams: “This is an important precedent that will allow the city to modify plans in response to evolving conditions.”
Adams is running for reelection as the backlash has become a significant campaign issue, with many candidates, including Andrew Cuomo, pledging they would drop Medicare Advantage if elected. The mayor has said he will run as an independent candidate in November’s general election.
Pizzitola said she intended to continue litigation and pursue legislation that would bar the city from ever changing retirees’ traditional Medicare coverage. A pending City Council bill would prevent future administrations from making any changes to retirees’ healthcare
“This needs to be codified. I need some assurance that there’s not going to be a diminished benefit,” said Pizzitola. “I’m grateful for at least at this point in time that he’s making this statement, and I’m going to accept him at his word for that.”
It was a sentiment echoed by Lower Manhattan Council member Christopher Marte, who sponsored the bill, Intro 1096. The unions oppose the bill because they say it infringes on their collective bargaining rights.
“We remain committed to protecting retiree health care — not just today, but for generations to
come,” Marte said in a statement.
A fiscal watchdog expressed dismay at the decision.
“Abandoning the City’s smart, well-balanced approach is extremely unfortunate,” said Andrew Rein, president of the Citizens Budget Commission. “The city faces huge budget gaps, looming federal cuts, and has a $100 billion liability for post retirement benefits and no plan to fund it,”
Not all unions were on board with the switch: Michael Mulgrew of the United Federation of Teachers, the second-largest union in the city, came out against the deal last summer. On Friday, he said he was “very happy” the mayor had decided to hold off on the plans.
With Medicare Advantage off the table, questions loom around funding for city workers’ health care. The stabilization fund that pays for coverage ran dry as litigation dragged on, and the MLC and the Adams administration have been locked in a long-simmering conflict over who is responsible for securing those savings.
A statement from Henry Garrido, executive director of District Council 37 — the largest union in the MLC — about Adams’ 180-degree turn on Medicare Advantage suggested that the fight may not be over.
“Since the mayor has decided not to proceed with the Medicare Advantage plan, this fulfills the unions’ obligation to generate Medicare-eligible retiree health care savings,” he said in a statement on Friday. “The savings from the abandoned plan must not come at the expense of our members.”
The Adams administration is already pursuing some cost-saving measures. Earlier this month, it announced it had selected, with the blessing of the Municipal Labor Committee, a joint proposal from EmblemHealth and United Healthcare on new, premium-free coverage for active city employees. The negotiations are ongoing.
Additional reporting by Greg David.
Claudia is a senior reporter covering labor and work for THE CITY. More by Claudia Irizarry Aponte
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