The city’s public employee unions are challenging a bid by the Adams administration to recoup expected savings from a halted effort to shift municipal retirees to privately administered health insurance.
The move to that plan, known as Medicare Advantage, was fiercely opposed by workers and has been tied up in court since 2023. The Municipal Labor Committee, an association of the city’s 102 public sector unions, filed a lawsuit Monday in State Supreme Court in Manhattan to stop an effort by the city Law Department to arbitrate responsibility for contractually agreed-upon savings that never materialized after the transition to Medicare Advantage was blocked by successive judges.
The lawsuit follows years of struggle over the city’s push, with support from the Municipal Labor Committee, to move 250,000 retirees to Medicare Advantage, part of a national shift to the cost-saving model, which officials expected would save the city $600 million. The proposal was struck down multiple times and is awaiting appeal after concerted opposition from retirees who feared they would lose access to doctors and pay more out-of-pocket.
The case comes amid rising health insurance costs and dwindling reserves leading up to the Medicare Advantage bid. The filings show some of the fallout of that beset gambit and the fight over who will take responsibility for supporting legally required health benefits for retired employees.
The union argues that the city’s pursuit of monetary damages – revealed in court documents and first reported by the local news outlet The City – is either a “thinly veiled request” for higher co-pays and premiums for city employees or an “unexplained” demand that the unions pay from their own funds.
The group asserts that the dispute stems from who is responsible for achieving savings to offset a once-multibillion-dollar pot jointly administered by the city and the Municipal Labor Committee to supplement worker health care, known as the Stabilization Fund, which has run low in recent years.
Then-Mayor Bill de Blasio and later Mayor Eric Adams sought to move city retirees to Medicare Advantage to rein in costs, part of an agreement to reach savings needed to counterbalance the diminishing Stabilization Fund.
Since savings from Medicare Advantage were never realized, the city has pushed the Municipal Labor Committee to fulfill the target another way, seeking arbitration in January, the complaint states. While the group acknowledged the dire situation of the low Stabilization Fund, it argued that arbitration would go against collective bargaining and previously established agreements with the city.
The Law Department disputed the claims that it would violate past agreements in a statement to Crain’s.
“The City has filed for arbitration under the 2014 and 2018 health savings agreements. We believe the matter is properly before the arbitrator and the MLC’s effort to stay the arbitration is without merit,” said spokesman Nicholas Paolucci.
