April 2024
Myths and Facts about NYC Employee Health Insurance
New York City plans to announce a new health insurance plan that will replace current plans that cover
acve employees, rerees under age 65, and their dependents. Expect a major change.
As soon as the contract for the new plan or plans is available, the PSC leadership and health team will
provide you with as much informaon as we can about the details. But even before the new contract is
made public, you may hear claims about it from the mayor’s oce, other unions, and the media. The
PSC leadership wants to help you sort the myths from the facts. The overview that follows is based on
the PSC’s analysis of the economics of NYC health policy and the cost-reducon strategies that have been
publicly discussed.
Background: The City’s Goal
CUNY employees and rerees are covered by the NYC employee health insurance program, which costs
about $9.4 billion per year. Roughly 70% of those covered (acve employees, pre-65 rerees, and their
families) are covered by the “Comprehensive Benet Plan” (CBP), more commonly known as GHI and
Blue Cross. For the last 18 months the City administraon and the Municipal Labor Commiee (MLC, a
coalion of the municipal employee unions) have been solicing bids from insurance companies to
replace the current Comprehensive Benet Plan. The intenon is clear from the City’s own published
request to potenal bidders:
Our joint goal of the redesign is to reduce the cost of delivering healthcare by at least 10% while
connuing to provide ecient, high-quality healthcare to all City employees and pre-Medicare
rerees without signicant increases in member out-of-pocket cost. (RFI 6/10/22)
The goal is completely unaainable. It is impossible to cut $1 billion from the City’s annual spending
without reducing access to medical care and/or shiing signicant costs to the plan parcipants, NYC
workers.
Details of the new health insurance program have not yet been made public, but we can expect it to be
introduced with great fanfare and a number of broad promises. One aspect of the new plan will remain
the same as the old one, at the insistence of the MLC unions: Employees will sll not have to pay a
monthly co-premium for health insurance.
Myth: NYC workers are the beneciaries of very expensive health insurance.
Fact: The amount the City (including CUNY) pays in health insurance premiums is comparable to other
plans. In fact, the cost to the City of the CBP is on the low side, compared to other private and public
employer plans, considering that the cost to employers for health insurance in New York State is the
highest in the country. CUNY employees covered by GHI know it is adequate coverage for outpaent
doctors and services, but not “generous.” Some GHI parcipants may (and are nancially able to) see a
doctor not in the GHI network by paying the dierence between the doctor’s charge and what GHI
reimburses. Others work hard to nd a doctor who accepts GHI’s reimbursement. Blue Cross hospital
coverage has also been adequate, and—importantly—allows access to almost all the hospitals in the NYC
area and covers most costs.
Myth: Your co-pays and deducbles will not increase.
Fact: Under the new plan, it is likely that many hospitals, doctors, and other outpaent providers will be
“in-network,” but there will be dierent levels of cost to the paent. The hospital network will almost
certainly be “ered,” meaning that the cost to paents will be higher at the hospitals that charge the
insurance company more. It is likely that the current annual deducble ($200/person) and copay
($300/hospital admission) will remain the same if you use a lower-cost hospital like Bellevue, Lincoln, or
a select group of private hospitals. Other hospitals will sll be in-network, but if you are admied to the
most expensive ones, like NY Presbyterian or NYU-Langone’s Manhaan campus, you will likely have to
pay a larger deducble and/or copay.
The same principle applies to primary care doctors and specialists. Currently, the GHI doctor network is
very limited and has low co-pays except for Advantage Care clinics, which have no co-pays (another form
of ering). Everyone is charged a $200 deducble once each year under the current GHI plan, and then,
if you see a non-GHI-network doctor, you pay the dierence between what GHI reimburses and what the
doctor charges. The new plan is almost certain to cost more up front for a non-network doctor, but the
outpaent provider network may be larger. And the annual deducble for outpaent care as well as
copays for in-network doctor visits may be increased. Addionally, the standard for total out-of-pocket
expenses incurred before insurance pays 100% of your costs is likely to increase from the current $2,600
(individual) and $5,200 (family) to a higher number.
Myth: All NYC hospitals will be included.
Fact: All NYC hospitals may be in network, BUT, as explained above, there will be dierent out-of-pocket
costs depending on the hospital you choose (or to which you are referred). Your family’s income will be a
key factor in determining which hospitals and doctors you can aord to visit. If one of the higher-cost
hospitals becomes unaordable to your family, you may face having to change doctors to a doctor linked
to a more aordable hospital.
Myth: Your doctor is the one who decides what care you need.
Fact: The insurance company is likely to impose more requirements, such as needing to issue prior
approval for expensive services like inpaent hospital care, rehabilitaon services, or high-tech imaging.
While the current CBP insurance companies already reserve the right to reject a doctor’s
recommendaon, they rarely do so. Because the City is demanding that the new insurer reduce the
City’s costs, the belt will be ghtened. You and your doctor may need to go through more hoops, and
some requests may be denied. The PSC will be calling for a robust appeals process in whatever plan is
selected; parcipants and doctors need to be able to appeal denials of care.
Myth: The new insurance plan can save money by paying providers less than they are paid now, but
the quality of care will not be diminished.
Fact: Even a purchaser as large as the City of New York, which covers one million people, does not
control hospital pricing. Hospitals and insurance companies negoate how much the insurance company
will pay the hospital for each type of care. Dierent insurers reimburse dierently. (For example,
contractually agreed-upon payments to hospitals and doctors for roune maternity care and delivery can
vary widely from insurer to insurer and from hospital to hospital.) City workers are a small subset of any
one hospital’s paents, and the hospital will be paid what they negoate with each insurance company,
whether the paent is a NYC worker, or someone covered under a dierent plan. What might be
dierent is how much of the bill falls on the paent. If the new City plan pays hospitals a smaller share of
the agreed charge, the paent will have to pay the provider more.
Myth: Employee health insurance costs are a signicant element of the City’s budget, and costs have
risen so dramacally that there is no alternave to negoang for a plan that costs less.
Fact: It is true that health costs naonally and in New York have risen dramacally, but it is false that the
only way to approach the problem is to shi costs to workers or reduce care. There are several dierent
steps the NYC administraon could take to reduce costs. First, NYC government should have a health
insurance policy oce to design and monitor benets that beer meet the needs of its employees rather
than depending on an insurance company to do so. Under “self-insurance,” the City would be directly
responsible for plan design and paying medical expenses for City employees and their families. It would
contract with an insurer to take advantage of their discounts and to process the claims. Self-insurance
allows exibility in what is oered to employees. Further, it could save 1-2% or more, some of which
should be invested in a professional oce to manage this work. The City should aggressively monitor
claims payments to minimize fraud and overuse. The "self-insurance" approach is preferable to the
current scheme where private insurance companies design and implement health benets with their
boom line in mind.
Second, and most important, NYC and the municipal labor unions should use their considerable polical
muscle to pressure NY State to implement programs to control health care spending, as a dozen other
states have done. One way the State can control hospital prices is by enacng legislaon to require all-
payer (government and commercial insurance) reimbursement rates for hospital-based services, like the
program that existed in New York from 1978 unl 1996. There are other approaches, including capping
annual increases and establishing global budgets, to develop a fair and controlled system to replace the
current crazy patchwork that rewards the richest and the most opportunisc.
