City, Unions Achieve Health-Care Savings Goals a Year Early
Greater Emphasis on Primary Care, Drug Savings And ‘Wellness’ Are Keys
By RICHARD STEIER
Jul 10, 2017 Updated 18 hrs ago
A deal between the de Blasio administration and city unions to produce $3.4 billion in health-care savings over a four-year period met its goal more than a year ahead of schedule, officials disclosed last week.
Labor Commissioner Robert W. Linn said the collaborative effort had produced the needed economies through a mix of tougher negotiations with health-care providers, changes in employee co-pays designed to reduce hospital emergency-room visits in non-emergencies while encouraging participants to visit their primary-care physicians, and a wellness program that has enrolled more than 20,000 workers and their dependents in Weight Watchers at a discounted rate. The city is covering half the tab.
No Employee Premiums
Mr. Linn called it “the culmination of three years of very important work together” and said one key to its success had been telling union leaders during an initial meeting on the subject back in March 2014 that he was concerned solely with financial savings and would not insist that city employees pay a portion of their health-care premiums.
Under Mayor Michael Bloomberg earlier in the decade, city officials had presented the Municipal Labor Committee a list of changes it planned to save money, only to have the unions successfully challenge in court the attempt to unilaterally deal with the problem. And with noncontributory health-care plans becoming increasingly scarce in the private sector and other public employees here paying for a piece of their coverage, it had begun to seem inevitable that city workers would fall into line.
A transit-union contract that followed a three-day strike in December 2005 has required members of Transport Workers Union Local 100 since then to pay 1.5 percent of their salaries towards their health coverage. That trend gained further momentum when Governor Cuomo used the threat of nearly 10,000 layoffs in 2011 to compel state-employee unions to have their members pay 16 percent of the premium costs for individual coverage and 31 percent for family plans.
But in not pressuring union leaders under the banner of the Municipal Labor Committee to agree to those kind of employee contributions, Mr. Linn was able to find common ground with them to produce savings in other areas.
Tripled ER Co-Pays
MLC Chairman Harry Nespoli said one key change was an agreement to triple the co-pays for emergency-room visits from $50 to $150 while eliminating or reducing them for trips to primary-care doctors. This became acceptable to both the unions and their members, he said, because in cases where an employee goes to the emergency room and is admitted to the hospital, the co-pay is waived, making clear the intent was to cut costs without jeopardizing employees’ health.
“Some of the city workers were going there for colds,” he said in a July 7 phone interview.
Coupling that change with a cut in co-pays to see primary-care doctors while also financially “incentivizing” those physicians to spend more time with their patients “really hit a home run,” Mr. Linn said in an interview a day earlier. It provided, he explained, “a very low-cost opportunity to receive the services that are better or best for you.”
Claire Levitt, the Deputy Commissioner for Health Care Cost Management, did several re-negotiations of the specialty-drug program with providers that have saved $81 million so far, with $57 million expected for this fiscal year.
Costs were significantly reduced through a Dependent Eligibility Verification Audit that ensured that the city was paying premiums based on accurate headcounts for the dependents listed for city employees and retirees. And lower fee schedules were negotiated for radiology and durable-medical-equipment programs.
Special Diabetes Effort
In a June 19 memo to Mayor de Blasio and First Deputy Mayor Anthony Shorris, the two labor-relations officials noted that patients with Stage 2 or 3 diabetes or gestational diabetes are now receiving individual attention from registered nurses to improve their care. While only $2 million has been saved through that program so far, with another $2 million anticipated in the just-begun fiscal year, Mr. Linn said what was more important was that it was “a long-term investment in the health of our employees.”
A similarly modest savings is anticipated from a recently-launched program under which Weight Watchers classes are being held at city worksites, making it more convenient for employees to attend and take advantage of the program. The 20,000-plus employee participants offered added bargaining power, gaining a discounted rate that further reduced the share of the cost to those workers that the city isn’t picking up.
Early in the program, skeptics questioned whether the savings were going to be genuine, pointing out that if health-care costs for the city increased by less than the 9-percent annual average they had for a 15-year period preceding the agreement, the unions would be credited with that despite no actual economies being made. But Mr. Linn noted last week that even allowing for that sort of easy savings, the changes made allowed the city to reduce costs far more than other jurisdictions had. While a study by the Segal Company found that other HMO plans nationally absorbed 6.6-percent average increases in health-care costs the past three years, the city’s costs including those for the current fiscal year are rising by just 4.2 percent.