Here's Comes The "Health Care Savings" From City Workers

From the NY Times:

When Mayor Bill de Blasio announced his first labor agreements with New York City unions this spring, he was sharply criticized for granting long-awaited wage increases in exchange for promises of unspecified though sizable savings on health care expenses.

Now, some of the specifics are coming into focus: City officials and union leaders say they hope to push municipal workers to use walk-in clinics more and emergency rooms less, order generic drugs more often than brand-name ones, and buy them through the mail rather than at retail pharmacies to achieve bulk discounts.

The city hopes the unions will agree to steer workers to use centralized, cheaper centers for blood tests, X-rays or M.R.I.s, rather than having those tests performed in doctors’ offices or at costly physician-owned facilities. Patients who resist could face higher copayments, while savings would be passed on to the city in lower premiums.

The cost-cutting comes with high stakes: If the city and unions are unable to save a total of $3.4 billion on health care by 2018, a mediator will be empowered to order increases in workers’ premiums to cover the shortfall, officials said.

As an added inducement, if the unions help the city exceed that goal, the first $365 million in additional savings would be distributed as lump-sum bonuses to workers, officials said. Any savings beyond that would be split evenly between the city and its employees.

The Times article notes that de Blasio did not push for city workers to pay a percentage of salary toward health care contributions - unlike in some of the other union deals made lately:

Missing from the labor contracts with teachers and other city workers that were announced beginning in May was any requirement for union members to begin contributing toward their health insurance premiums. That prompted some critics to say Mr. de Blasio was not being tough enough at the bargaining table.

Earlier this month, the Metropolitan Transportation Authority and the unions representing 5,400 Long Island Rail Road employees agreed that those workers would begin paying 2 percent of their wages toward their health coverage.

But Mr. Linn said the city would gain far more by trimming health costs than by getting municipal workers to pay the same 2 percent of their wages toward their health premiums. That contribution, he said, would translate into $400 million a year.

“Look at it this way,” Mr. Linn said in an interview. “Isn’t it better to achieve savings so an employer pays $16,000 toward health coverage per worker, than to have a total cost of $20,000 per worker, with the employee contributing $2,000 of that?”

We'll see if the approach the unions took with de Blasio works or not.

The worst case scenario would be to make these cost-cutting moves, then still get stuck in 2018 with paying a percentage of salary to health care anyway.

One thing I know is, once you start paying a percentage of salary toward health care contributions, that contribution goes up every contract.

I think the LIRR union leaders were fools to have given what they gave in their contract - they ate their young on salary progression and pension payments AND they agreed to have workers pay 2% of salary toward health care.

You can bet that 2% of salary for health care will go up next contract - and every contract after that.

The municipal contracts give the city an opening to make workers pay a percentage of salary toward health care - but only if the $3.4 billion in "health care savings" isn't hit by 2018.

The Times reports the "savings" calculation will work this way:

Labor leaders and city officials began the talks on health care cuts in mid-July and are to meet again in early August, with the goal of agreeing on $400 million in health savings this year, $700 million next year, $1 billion the year after that and $1.3 billion in fiscal 2018, for a total of $3.4 billion.

Finally de Blasio labor guy Bob Linn tells the Times the de Blasio approach to health care savings is better than getting workers to pay into health care:

Mr. Linn said some critics of the administration seemed preoccupied with getting employees to pay toward their health insurance premiums, while underestimating workers’ ability to embrace cost-saving, innovative approaches to their health care.

Before joining Mr. de Blasio’s administration, Mr. Linn was a consultant who helped restructure health care services for 1199 S.E.I.U. United Healthcare Workers East, the giant health care union. He said he was using that deal, which includes central blood and imaging labs, generic drugs and mail-in prescriptions, as a model.

The city’s new agreements create strong incentives for the unions to find savings.

If the prospect of lump-sum bonuses does not do the trick and the unions fail to agree to steps that reach the savings target, then the mediator in the contract dispute with the teachers, Martin F. Scheinman, is to step in and order cost-saving measures to reach that goal. Those measures could include requiring the workers to contribute to their premiums for the first time.

Carol Kellermann, president of the Citizens Budget Commission, said the potential bonuses could be an important catalyst. 

“We haven’t tried it before,” Ms. Kellermann said. “I think it will motivate the managers of the unions. There’s nothing like getting your members a bonus.”

Mr. Linn said many New Yorkers underestimated the potential benefits of collective bargaining.

“Our approach is, how do you get people to work together and find common interests to achieve savings?” he said. 

“We’ve created a system in which labor and management have a joint incentive to achieve health savings.”

It behooves us to watch closely and see what happens here.

You Can Have A Raise, But Only If You Pay For Your Health Care

That's the message from the plutocracy for NYC municipal union workers:

A mayor who signs costly contracts would face the politically fraught prospect of raising taxes, budget experts say. Pushing for big concessions risks a continued stalemate, which isn't a palatable alternative for the Democratic candidates—one of whom is likely to be the next mayor in the overwhelmingly Democratic city—who depend on union support.

The unions want any new deal to include raises for the years since their contracts ran out. The city calculates that retroactive raises plus future raises at the rate of inflation would cost $3 billion a year—more than the annual $2.4 billion budget of the city's sanitation department.

Mr. Bloomberg's union offer didn't include retroactive raises and would have provided future pay increases of just over 1% a year. He also wanted workers to pay 10% of the cost of their health plans for individual coverage and 20% for family coverage.

Currently, 95% of city employees pay nothing for basic health plans—a rarity even among public employees.

"I don't think there's any chance that they can resolve this without employee contributions to health care," said Kathy Wylde, the president of the Partnership for New York City, a business group that opposes raising taxes. "The numbers just don't work."

Here's the union response:

Harry Nespoli, the head of the sanitation-workers union who also is president of an umbrella municipal-union group, said workers want to help the city find health-care savings, but they don't want to contribute to premiums. He said, for example, the unions would be willing to help the city negotiate savings from vendors of services like health insurance. But unions recently sued to stop a Bloomberg administration attempt to shop for a new provider for the city's $6 billion health plan.

And here's where the candidates are on health care:

Two of the four leading Democratic candidates for mayor—Ms. Quinn, who has the support of Mr. Nespoli's sanitation workers, and Mr. Weiner—have said employee health-care costs should be on the table.

Another, Mr. de Blasio, who has been endorsed by the health-care workers union, wants to reduce costs by creating 20 city-run clinics to provide basic care at job sites. Mr. Thompson—who is backed by the teachers and firefighters unions—has been less specific, saying he doesn't want to negotiate in public.

Paying for health care to get a raise would essentially nullify that raise.

Once unions open the door to paying for health care, even some small percentage of the overall cost, the door will remain open forever in future negotiations.

If we sell out the health care benefit now for raises, the increases on health care payments they'll force through in future negotiations will eat away whatever little raise you get now.

That's my take.

How about you?

Any of you out there willing to pay for health care in order to get a retro raise (or just a raise)?

If so, explain to me why you are willing to do so.

Maybe I'm missing something on this issue.

NYC Municipal Union Health Care Audit Postponed While Sides Work Out Groundrules

From the Daily News:

A city audit of employee health care plans — part of an ambitious effort to weed out ineligible recipients — has ground to a halt after a legal dustup with the unions.

A coalition of municipal labor groups repping roughly 250,000 workers sued to stop the three-month-old audit, saying the city should not have started it without first negotiating the terms.

A Manhattan judge last week issued a temporary restraining order stopping the review while the two sides work it out.

I've been away for a the last week, so I don't know if the UFT has informed members that they don't have to comply with the audit until new rules are established.

The city has complained about the delay, although interestingly enough, I bet they;re supportive of Eva Moskowitz suing the state to keep the comptroller from auditing her schools.