Lower Health Care Costs For Municipal Workers

The de Blasio administration Wednesday provided details of specific savings it had achieved from last year’s agreement with the Municipal Labor Committee to lower health care costs in the city’s contracts with municipal workers. Incorporated into contracts with the committee is an agreement to achieve $3.4 billion in health care savings from fiscal years 2015 through 2018, and $1.3 billion in savings every year after.

The City Council heard a reckoning of the savings from Robert Linn, commissioner of the Office of Labor Relations, who reported the city would reach the goal of $400 million in health care cost savings in fiscal 2015. The text of Mr. Linn’s letter to Mayor Bill de Blasio outlining the specific savings is included online here.

Skeptical of the plan, the City Council had asked for specifics on how the savings would be achieved. Mr. Linn delivered a rundown of how the city will meet the $400 million savings target this year.

The largest portion, $153 million, comes from “mental health parity relief.” The city’s labor contracts must be compliant with federal mental health parity regulations that require mental health benefits be equal to medical benefits.

The Bloomberg administration tapped the Health Insurance Premium Stabilization Fund, which is administered jointly by the city and labor unions, to pay for the higher cost of parity. According to Mr. Linn, the action was arbitrated, and in late 2014 it was ruled that the city had to reimburse the Stabilization Fund for mental health benefit costs covered by it from 2011 to 2015. The unions agreed the city could keep money expected to be paid into the Stabilization Fund and have that count toward the health care savings goal.

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Jeffrey R. Ungvary President

Jeffrey R. Ungvary