City tried, but Medicare Advantage can’t pass legal muster

With a permanent injunction against City Hall’s effort to move 250,000 municipal retirees to a new Aetna-managed Medicare Advantage health insurance program, Acting Manhattan state Supreme Court Justice Lyle Frank has dealt what seems like a killing blow to the long-running effort.

The city, of course, has a right to appeal, but staying on this track at this stage risks only prolonging this debacle and injecting more uncertainty for the many seniors who’ve been trying to plan around the shifting landscape, the vast majority of whom would have been perfectly happy to switch to the new plan but who need clarity most of all.

The Adams administration has tried pretty much every administrative fix, from allowing retirees to opt into the existing Medicare for an additional fee to getting rid of it entirely and leaving only Medicare Advantage, but none of it has managed to pass legal muster for the straightforward reason that the courts view the effort as conflicting with the relatively explicit language of a local law, Administrative Code 12-126. Additional tinkering is probably not going to square that circle.

The City Council had the opportunity to clear the path with a bill to change the law, but found it politically unpalatable and shied away. We’d urged the opposite result, but it is what it is; we’re a city with a legislature and a mayor, and you need both to act. We have maintained throughout this ordeal that while some retirees were raising valid questions about the proposal, the ominous criticisms they levied failed to really hold water.

Much of the opponents’ charges centered around comparing the plan to off-the-shelf Medicare Advantage programs, which admittedly have definite shortcomings around issues including the pitfalls of pre-authorization and network limitations.

This, however, was not an off-the-shelf plan, and involved significant negotiations with Aetna to ensure that it would provide a much more robust coverage to the city’s retirees, who after all were promised this coverage as a trade-off for what were often decades in public service. The size of the contract and the city’s economic weight provided a potent counterbalance to the private insurer’s cost-cutting incentives, and we have yet to see concrete evidence that this plan wouldn’t be substantially similar or even slightly better in some cases than what retirees have now.

In the end, the collapse of the program deprives the city of $600 million that could have been reinvested into a supplementary health care fund for current city workers — who, like retirees, pay absolutely no premiums in an arrangement that is practically unheard of in private or public employment — meaning this victory by retirees may well trigger some consequences for their contemporary counterparts.

Contrary to detractors’ insinuations, the plan was not unilaterally imposed by greedy administrative bean-counters. It was agreed to, rather enthusiastically, by the Municipal Labor Committee, the umbrella group that represents city workforce unions (albeit after the MLC short-sightedly agreed to drain the fund to pay for raises and other expenditures). Yet none of that changes the legal calculus, and the endless litigation is verging on the counterproductive. The mayor can’t violate the law, and if the Council refused to change the law, then that’s that. Savings will have to be found elsewhere.