$1B health deal for municipal workers draws doubts

About three-quarters of the city’s municipal workforce, pre-Medicare retirees and their dependents will have expanded access to doctors and other clinicians, according to a tentative, cost-saving agreement city and union officials reached with two major insurance firms last week. 

The plan, jointly run by EmblemHealth and UnitedHealthcare, would continue to provide premium-free coverage for 750,000 active and retired city employees, Mayor Eric Adams and city Labor Commissioner Renee Campion said. 

The agreement would for the first time offer a broad national network of providers for the more than 80,000 members who live outside New York, city officials said. It would also bring an expected additional 200,000 members’ current out-of-network doctors into the system.

The arrangement would, also for the first time, move the city to a self-funded insurance model, standard among large employers, a change officials said will stabilize rising costs. The plan would trim the city’s healthcare costs by more than 10 percent, with savings expected at up to $1 billion annually, or just under 1 percent of the city’s budget, “while simultaneously expanding, instead of reducing, benefits and coverage,” city officials said. 

“Our city employees dedicate their lives to making our city a better place and looking out for their fellow New Yorkers. They deserve the absolute best health care and benefits we have to offer, and, with this plan, we are giving them exactly that,” Adams said in a statement. The plan, he added, would give enrollees additional options for their care but also keep healthcare affordable. He thanked Campion and union leaders for taking on what he called a “dynamic issue.”

The provisional five-year agreement between the two companies and the city now awaits approval from the Municipal Labor Committee, the umbrella organization of public-sector unions. The MLC is expected to take up the matter toward the end of the month. If the MLC approves the agreement and city officials finalize it, the new plan would be effective Jan. 1, 2026.

Thursday’s announcement, while expected, comes after years of rancorous disputes, including in court, over proposed changes to healthcare plans for municipal workers and retirees, most notably the Adams administration’s efforts to move roughly 250,000 city retirees into a Medicare Advantage plan. 

Although the New York State Court of Appeals, the state’s highest judicial panel, ultimately sanctioned that effort in June, the administration pulled the plug on the plan a few days later, informing union leadership that the city would look for other ways to save on ever-escalating healthcare costs.

Campion credited MLC leaders with helping to shape the agreement, noting that the committee’s executive board had been directly involved in negotiations with the insurers. “This plan will leverage the city's purchasing power to provide more doctors, more mental health providers, and a broad national network,” she said in a statement. 

‘A crafty industry’

According to the United Federation of Teachers, EmblemHealth would provide coverage for doctors and hospitals in New York City, Long Island and the Hudson Valley by adding 14,000 additional providers to the network. UnitedHealthcare would provide national coverage through a network of more than 1.6 million providers. 

The plan also would add 27,000 additional mental health providers to the network, for a total of 418,000 mental health providers nationally.

A review board that would include union officials would monitor its implementation, including prior authorizations, through a monthly review.

An Aug. 28 memo from the MLC’s executive board to union leaders, notes that the contract agreement and related material will be made available for union leaders to review in person, likely on Sept. 8, at District Council 37’s offices. 

Michael Mulgrew, the president of the United Federation of Teachers and the MLC’s executive vice-chair, said the unions took a hard line first with city officials, whose primary goal was to save money, and then with the insurers, to ensure the plan would satisfy their members. 

He said the unions were adamant that they be at the negotiating table, where, for instance, they demanded a larger network of facilities and doctors available to their members, both in the city and nationally. The unions also sought to lower instances where patients had to secure prior authorizations for their care. And they sought a commitment that the plan remain premium-free for five years, Mulgrew said. 

“This is a crafty industry…. And we were insistent,” he said of the insurers. 

“We're not waiting for [the insurance companies] to bring us back contracts anymore,” he said in a phone interview. “Those days are gone. We're not doing it. Because then we're going to land up in the same place as the rest of the United States, which is where everybody's getting screwed. And the workers are the patients and they should be at the table. And we were insistent.”

But Marianne Pizzitola, the president of the NYC Organization of Public Service Retirees, which led the fight against the city’s Medicare Advantage effort, said she was skeptical the plan would offer the coverage touted by union and city officials. She urged officials to release the plan in full to allow union members to judge its merits for themselves.

“We cannot tell you whether this is a good plan or a bad plan if we don't see the contract,” she said during a Friday night video presentation. She said that not even the unions who will vote on the plan had seen it yet. “So that in itself is problematic … because as we all know, the devil is in the details.”

Pizzitola said that although city officials are touting the plan as premium-free, it was particularly important to get clarity on the cost of co-pays and deductibles. “This should be open to everyone, not just the union leadership,” she said of the plan. “And the members should have full transparency.”

Henry Garrido, DC 37’s executive director and co-chair of the MLC who has long pushed for the city to reduce its healthcare costs, sanctioned the proposed agreement. 

“Our aim in this process has always been improving the accessibility and quality of healthcare for our members without the burden of premiums or increased copays,” he said in a statement. “We look forward to working with our fellow unions of the MLC to ratify this agreement and give city workers and pre-Medicare retirees a long-overdue expansion of benefits and providers.”

The city estimates that about 25 percent of municipal employees would remain in their current plans, including HIP-HMO and MetroPlus plans, neither of which requires employee premiums.