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Sue Ellen Dodell, January 20, 2023




JANUARY 9, 2023

Thank you, Chair De La Rosa and other Committee members. 

My name is Sue Ellen Dodell and I am a life-long New York City resident. I live in Council Member Eric Dinowitz’s district. I have been an attorney in City government for more than 43 years: I worked at the Corporation Counsel’s Office, the Comptroller’s Office, and the Campaign Finance Board, where I was the General Counsel for 17 years and from which I retired in 2017. I am now a hearing officer at OATH.  In my years in City service, I have drafted many bills and have appeared many times in this room to testify before the Council. I have devoted my professional life to serving the City and have derived much satisfaction from that service. 

I realize that today is only a hearing and you will not be voting, but I ask that you vote no if there is a vote on this bill. Let the Mayor try to put all retirees into the Aetna “DisAdvantage Plan.” He cannot do legally do that, which is why he is coming to the Council to give him cover. If he does this without changing the law, we retirees will sue and we will likely win, as we have already won in State Supreme Court and in the Appellate Division. If we don’t win, the Council can always pass a law to actually protect retirees (which is not what this bill does). 

The MLC says that Int. 874 is necessary to enable the unions to bargain for “choice” in health care benefits, but that is not true: the MLC and the City can bargain right now and should do that. Nothing in any court decisions prevents the MLC and the City from engaging in collective bargaining.  

Section 12-126, which has been around since 1967, protects “choice” of health care plans for current employees like you and for retirees, and requires the City to pay for your health insurance and mine, up to a cap provided for in the statute. Don’t be fooled by the Mayor’s and the Municipal Labor Committee’s argument that you have to change the law in order to save our “choice.” Right now, we can choose from several Advantage plans and the Medigap plan, and the vast majority of retirees choose the Medigap plan. You and I are protected by the current law. 

This bill creates “classes” of employees and retirees (what does that even mean?) which would have their health benefits capped at different amounts for each “class.” This creates “haves” and “have nots” and enables the Mayor and the MLC to change the classes at any time. Why would you want to give the Mayor and the MLC that power?  if the law is changed, many retirees will not be able to afford to opt out, like DC 37 retirees, 1/3 of whom make under $12, 000 per year. 

Prior mayors have tried to change 12-126 several times in the past and the Council always resisted. You must resist the Mayor and the MLC!

You are being given false information when the Mayor and the MLC claim that “the arbitrator” has given the City a “deadline”: there is no deadline to act, and the Council should have retirees and other stakeholders sit down and come up with ways to save the City money on health care. There are many ways to save money: we have suggestions and want to sit down with Council members to share them.  Certainly the City can find ways to save the amount of money it claims to need, $600 million, in a budget of $104 billion! (That’s 0.00576 of the budget.)  

Any savings from passing this bill won’t even go into the General Fund: I bet that the City has never explained to you that any savings — the $1 billion taken from the Health Stabilization Fund to pay teacher salaries years ago — would be replenished on the backs of vulnerable retirees. 

Is this the legacy that you want? Do you want to be remembered for having privatized Medicare for City retirees, which will set a precedent for states and cities across the country? Is it worth it for your short-term political future to endanger the lives of retirees and current City employees? Do you understand that this legislation will harm you and other current City employees, by restricting your health care as well?  

I know that you are all under pressure from the Mayor and from the UFT and DC 37. You may be subjected to a primary challenge this year, you may lose out on fundraisers. But I urge you to do the right thing, for yourself, for your staff, for city employees, and for vulnerable retirees. 

You know what the right thing is to do: vote “no” on this bill if it comes before you.   

Leave Admin. Code Section 12-126 as is, to protect yourselves and retirees.

Thank you and I ask that my entire written testimony be included in the record of this hearing.

Additional testimony:

Medicare Advantage is the biggest financial boondoggle in American history: it is a transfer of money from the federal government, from all of us, because we pay for it, to insurance companies that rake in huge profits. Is this really what you want the City to support? 

If the Aetna Medicare Advantage Plan is so good, why doesn’t the City offer it as an option for retirees, while continuing to offer Senior Care as a premium-free option, as it does now? Are any retirees clamoring to be in an Advantage Plan? No, because we know it is inferior to what we have now, which is traditional Medicare and a Medigap plan.   

The City claims it needs to do this to save money, but even during the darkest days of the City, the 1970’s fiscal crisis, the Council stood up to the Mayor and didn’t alter 12-126. 

The City should keep the promise it made to us and not change a law to go around the courts’ decisions.  

Martin Scheinman’s December 15 document has no force of law.  He was not acting in his capacity as an arbitrator, nor was he issuing a decision or order.  As the signature page at the end explains, the document is just his “Recommendation,” which the City is free to disregard.  Mr. Scheinman has no authority to order the City and the MLC to force retirees into Medicare Advantage, nor does he have the authority to make anyone to act by any particular date.

Scheinman recommended that the City reach an agreement with Aetna by today, January 9, 2023. How can this Council committee reasonably assess the agreement if it was just entered into and cannot be finalized before the end of the month? 

Why upend the lives and health of thousands of retirees before we see what the plan is?

There should be a Blue Ribbon Panel to identify ways for the city to save on health-care savings. But the MLC has adamantly opposed an independent fact-finding investigation, probably because they don’t want anyone exposing years of collusion and mismanagement. 

Don’t be bullied by Harry Nespoli and Michael Mulgrew. They do not have the interests of vulnerable, frail retirees in mind. They want to force us into a plan from a profit-making insurance company that will make millions of dollars from covering the City’s retirees and which is not as good as what we have now, no matter how you state it.

Some history for you: 

Section 12-126 passed the Council unanimously in 1967. Since then, the City has paid the entire cost of health care coverage, and has offered a choice of health care plans, for all employees, retirees, and their dependents, up to a cap that currently is $918 per month. There have been several attempts by former mayors to amend the section, but even during the 1970’s fiscal crisis, this provision was never altered, and it should not be changed now!

In 2021, the City attempted to auto-enroll retirees into an inferior Medicare Advantage Plan, which is a private plan run by a health insurance company, rather than retirees’ current choice to remain in traditional Medicare, a government-run plan. The City tried to force us to pay a $200/month penalty premium, and we sued the City and won our case in March 2022, and we won on appeal as well. Now, you are considering legislation that provides that the Mayor and the MLC may jointly agree to an alternative cap on what the City will pay for health care coverage, for any “class of individuals.” 

On October 28, 2022, the Commissioner of OLR threatened in a letter to the MLC that unless the proposed legislation is quickly enacted, the City will place all retirees into an Advantage Plan and eliminate all other plans, without changing the law. This would violate the law, which provides retirees with a choice of plans.  Then, on December 15, 2022, Martin Scheinman issued his recommendation that the Mayor and the MLC adopt the Aetna Advantage Plan. 

The legislation enables the Mayor and the MLC to define a “class” any way they wish, which will create “classes” of “haves and have nots.” It takes away choice from employees and retirees.

It also permits a new cap on what the City pays for our health care, which the City and the MLC are proposing to be $7.50 per month, down from the current $918 per month. 

Retirees accepted lower pay and did not get raises for several years, which translates into lower pensions, in exchange for lifetime health care without premiums.  The proposed legislation will disproportionately affect the many retirees who are living on small pensions, who are mostly people of color. DC37 has the largest number of retirees who are Black or Latino, and two thirds of those retirees have pensions under $25,000, with one third under $10,000. No City retiree has planned for this major increase in cost for their health care, which will be at least $200/month per person.

The City and the MLC have already permitted Emblem Health to impose co-pays of $15 per doctor visit, procedure, or test. This has already forced retirees to choose between paying their rent or getting needed treatment.  

If retirees are forced into a Medicare Advantage Plan (MAP), we will lose access to our doctors (who may drop out of a MAP at any time). 

Traditional Medicare doesn’t have pre-authorizations for tests and procedures. In contrast, under an Advantage Plan, we will face literally hundreds of pre-authorizations and many denials of care. This isn’t something I am just saying to you: the Inspector General of the federal Department of Health and Human Services found that Advantage Plans wrongly delay and deny care. The General Accounting Office has found that seniors in the last year of their lives moved out of MAPs and into traditional Medicare because of delays and denials. We should not have to fight with a MAP over access to health care, because it literally will mean life or death.

The New York Times recently had a front-page article revealing how virtually all insurance companies behind Medicare Advantage Plans deny services and “upcode” patients to make them seem less healthy, to increase their profits. Aetna, the insurance company with which the City is negotiating now to provide an Advantage Plan, is under investigation by the Justice Department right now for fraud.   The Mayo Clinic announced a couple of weeks ago that they won’t be accepting Advantage Plans in their locations in several states. 

If this bill is adopted, retirees will be thrown out of senior care “STEP facilities”—those are places where retirees can start in independent living and transition if needed to nursing care – because retirees sign a contract to maintain traditional Medicare and their Medicare Supplement in order to live there. If this bill is adopted, retirees likely will be denied hospice care, because many such facilities do not accept MAPs or if they do, the MAPs require pre-authorizations which take time which those who are dying simply do not have.

Also, retirees on Medicaid long-term home health care will lose that care if they are forced into an Advantage Plan because these plans do not permit any other coverage. Further, Advantage Plans do not permit any outside drug plans.

The alleged “savings: 

Putting retirees into an Advantage Plan appears to save money because there is a federal subsidy. But, if the federal subsidy for the Advantage Plan is reduced in the future, either the City will have to pay more, benefits will be diminished, or retirees will have to absorb the costs. This happened with HIP VIP, a Medicare Advantage Plan, in 2017, and benefits were reduced.   

The City and the UFT claim that the “savings” from this deal will be $600 million (coincidentally, the amount of money that the unions owe the City in recurring savings). This number is overstated for a couple of reasons: 

OLR provided a document recently that states that it costs the City $439 million for Medicare coverage for these retirees, considerably less than the $600 million estimate.

Another reason that the $600 million number is overstated is because Aetna, the company with which the City/MLC is negotiating right now for an Advantage Plan, has recently lost a star in its rating by the Center for Medicare Services, a government agency. CVS Shares Drop on Expected 2024 Aetna Hit From CMS Star Ratings Downgrade – MarketWatch (Advantage Plans are evaluated based on a rating of one to five stars for several quality measures and the ratings are based on patient satisfaction and other quality indicators such as screenings.) The reduced rating will mean that the federal government will reduce the subsidy provided to the company, making it more expensive for the Mayor to contract with Aetna. 

Remember that any so-called “savings” won’t go into the City’s general fund: it will go into the Health Insurance Stabilization Fund (“Fund”) which is jointly controlled by the MLC and the Mayor and is supposed to be used for health care. Instead, the Mayor and the MLC have used it as a slush fund without any oversight by the Comptroller or Council, and it has been misused several times. 

The real motivation of the MLC in promoting this legislation is to provide money for the MLC’s obligation, under 2014 and 2018 agreements with the City, to pay back about $1 billion to the City. 

The MLC took $1 billion from the Health Stabilization Fund for raises for teachers and promised the City another $2.4 billion in savings, $600 million of it recurring, and is trying to get this money on the backs of retirees. 

At the September 8, 2022, MLC meeting, the attorney for the MLC stated that the City will “eat the debt” if the MLC supports changing the Administrative Code; permits the City to place retirees into an Advantage Plan; and issues an RFP for current City employees’ healthcare. 

In other words, the City’s labor union bosses – the two men who head UFT and DC37, who under the State’s Taylor Law cannot represent retirees, negotiated this deal with the Mayor behind closed doors to give away retirees’ and current employees’ health care benefits.

The MLC’s claims:

In an email to his members sent on Saturday, October 29, UFT President Mulgrew claims that the legislation is needed so he can negotiate to preserve choices of health care, but if you look at the language of Administrative Code section 12-126, it provides that the City must offer a choice of health plans, up to a maximum cost set forth in the statute. It is the current language of the Code that preserves choice of health plans, so the current law must be kept intact. 

The MLC claims that the legislation is needed because the judge in our case took away the MLC’s ability to bargain over health benefits, but that’s not true: a 1992 agreement between the City and the MLC requires that the City negotiate all aspects of health care with the MLC.

The MLC claims that this is an emergency, but the Council has many options. The MLC claims that the Stabilization Fund is “belly up,” but the balance in the Fund is approximately $1 billion and would be more if the MLC hadn’t used it as a slush fund. The MLC claims that the Advantage Plan mirrors the Senior Care plan, but Advantage plans are inferior to traditional Medicare because of limited networks and prior authorizations. 

Again, before you consider any proposal to alter 12-126, the Council, along with the Mayor, should immediately appoint a Blue-Ribbon Commission to address healthcare costs and potential savings — with all stakeholders at the table.

Some suggestions for savings on healthcare: 

There should be competitive bids for the Senior Care Medicare Supplemental plan. Two leading insurance companies have told the NYC Organization of Public Service Retirees that the City is over-paying by at least $50 million a year.

There should be competitive bids for a PPO program pegged to the HIP-HMO cap. The City is subsidizing EmblemHealth by $165 million annually – from the Health Insurance Stabilization Fund – allowing Emblem to avoid having to find savings or efficiencies.

There should be consolidation of the MLC’s welfare funds for increased purchasing power and reduced administrative costs.

Drugs covered by PICA should be put into the medical plan and/or made it a rider for which everyone pays a small premium.

There should be auditing of the eligibility rolls.

The City Council should also ask for the last three years of Emblem’s annual “Statement of Experience” which details members’ usage of the GHI-CBP plan – the City has refused to share them despite our FOIL requests.

We were promised and deserve quality health care, and we hope that you feel an obligation to retirees and current employees based on our many years of service to the City.

Thank you.

Sue Ellen Dodell

5901 Delafield Avenue

Bronx, NY 10471