New York City government has decided to save money by forcing its 245,000 retirees and their dependents to leave traditional Medicare and move to a private Medicare Advantage plan. Most retirees today are on Medicare, which covers 80% of the cost of their care. The city pays for a supplemental Medigap plan that picks up the rest.
Starting Jan. 1, the city’s retirees will be switched to a Medicare Advantage plan funded by the federal government but run by two private insurance companies, Empire Blue Cross (part of Anthem, a for-profit national chain) and EmblemHealth, a New York-based non-profit. This so-called “alliance” purports, somehow, to provide the same quality of care that retirees now enjoy while spending, according to current estimates, nearly 25% less. Anyone who believes that might like to purchase a bridge in Brooklyn.
Since its inception in 1965, Medicare has proven to be a just and efficient system for covering medical expenses. It provides insurance to everyone over age 65 as well as those with certain chronic illnesses and disabilities, regardless of race, ethnicity, income, gender, gender identity or sexual orientation. As a federally run program, it is a non-profit system that avoids the high administrative costs associated with private insurance (14-18% for insurance companies; 2% for Medicare). And since the vast majority of physicians and hospitals accept Medicare, patients have a wide range of choices.
The U.S. Congress, following failed efforts in the 1980s and 90s to open up Medicare to private insurers, in 2003 created a new system of private insurance for Medicare beneficiaries which they labeled “Medicare Advantage.” In reality, it is Medicare Disadvantage. Required to provide full coverage but with only 80% of the money, these insurance companies use a variety of measures to limit their spending on actual medical care (which they refer to as “medical losses”). They impose numerous copays which not only shift costs to the patients but discourage those who might seek care. They limit the choice of physicians and hospitals. Unlike Medicare, they require patients and providers to obtain prior authorizations for tests, treatments and procedures, leading to repeated denials and cuts in care. A CAT scan will be deemed unnecessary; the 30 days of rehab will be reduced to three. Patients will call all over town trying to find a specialist who will accept their Medicare Advantage plan. These limitations can be costly and even deadly to patients.
In promoting this plan, the city and the insurance companies have been spreading confusing misinformation. The most blatant appears in Mayor de Blasio’s press release announcing the change, falsely claiming that “As long as the provider takes payment from Medicare, they are obligated to accept the NYC Medicare Advantage Plus Program payment.” In fact, many Medicare providers refuse to join Medicare Advantage plans because of the hassles and delayed payments.
Worst of all, the city’s move will harm those least able to protect themselves. City employment data show that white workers are twice as likely as Black workers, and 1.6 times as likely as Hispanic workers, to have the higher incomes that will allow them to pay the extra $2,000 to $5,000 to buy their own Medigap plan and remain in public Medicare. Male workers are 60% more likely than female workers to afford that extra cost.
This will increase the inequities in our health care system already displayed in the past year’s pandemic crisis. Who will suffer? The people who usually suffer: Blacks, Hispanics, women.
In truth, the city is not in a financial crisis. It does not need to save money on the backs of its lowest-income retirees. It has been buoyed by an influx of billions of federal dollars that make it unnecessary to impose these cuts.
Eric Adams, the likely incoming mayor after the November election, should declare now that, on taking office Jan. 1, he will rescind this unjust, unnecessary cut in the living standards of the city’s retirees. Adams will not want to be known as the mayor who inflicted this harm on those who served the city, as well as those now serving who will eventually retire. He should do the right thing and retain the current fair and equitable health system. We already have something in place that works.
Rodberg is professor emeritus of urban studies at Queens College/CUNY. He taught health policy and other topics until his retirement in 2017.
