After rebuff from retirees, UFT’s Mulgrew bails on Medicare Advantage

In a dramatic reversal, Michael Mulgrew, president of the United Federation Teachers, notified the Municipal Labor Committee on Sunday that it was withdrawing its support of a controversial Medicare Advantage plan as well as from “the current healthcare negotiations for in-service and pre-Medicare retirees” with the Adams administration.

The bombshell news came in the form of a letter that Mulgrew sent to Harry Nespoli, the chair of the Municipal Labor Committee and leader of the city’s largest Department of Sanitation union. 

“It has become apparent that this administration is unwilling to continue this work in good faith,” Mulgrew wrote in the letter. “The city has delayed our current in-service and pre-Medicare retiree healthcare negotiations for months, and we no longer feel that it is in the interest of our members to be part of that process. This administration has proven to be more interested in cutting its costs than honestly working with us to provide high-quality healthcare costs to city workers.”

Mulgrew also sent a separate letter to retired UFT members explaining his decision.

“The city's losses in the courts and the needless anxiety created among retirees has made it clear to us that our support for this initiative cannot continue … You did not deserve the angst and fear you went through as we worked toward our goal of improving our health care in an increasingly difficult national landscape,” he wrote in the letter. “I have heard your voices. And as we have all grown increasingly frustrated with this process, we will use our strength in the MLC to push for a new strategy moving forward.”

Following the news, a spokesperson for the city’s Law Department defended the city’s Medicare Advantage plan.

“We have been clear: the city's plan, which was negotiated closely with and supported by the Municipal Labor Committee, would improve upon retirees’ current plans and save $600 million annually. This is particularly important at a time when we are already facing significant fiscal and economic challenges,” the spokesperson said.

Going back several years to the de Blasio administration, the Municipal Labor Committee – which includes representatives of every municipal union – had been working collaboratively with the City of New York to try to reduce the city’s health care costs while maintaining the quality of coverage and ensuring that city workers would still not have to pay health insurance premiums.

As part of that grand bargain during the de Blasio era, the Municipal Labor Committee agreed to shift New York City ‘s 250,000 retired civil servants from their current Medicare plans to a Medicare Advantage plan managed by a private, for-profit health insurance company. Boosters of the controversial Medicare Advantage plan that insisted that it would save the city $600 million annually.

Almost instantaneously, a racially and economically diverse coalition led by retired FDNY EMT Marianne Pizzitola formed the NYC Organization of Public Service Retirees. With close to 50,000 members, Pizzitola’s organization helped fund a successful legal challenge to the plan that has already won several rounds in the courts. State court judges have consistently ruled in favor of the retirees, finding that under the legal doctrine of promissory estoppel, the city’s past commitments to its retirees as active employees were still binding.

Opponents of Medicare Advantage say that the privately-managed plan will make it more difficult for retirees to receive care, citing investigative reports in The New York Times and Kaiser Health News that documented how private plans were ripping off the federal government while restricting retirees’ access to critical medical care through pre-authorizations. The Times investigation, published in October, ran under the headline: “‘The Cash Monster Was Insatiable’: How Health Insurers Exploited Medicare for Billions – By next year half of Medicare beneficiaries will have a private Medicare Advantage plan. Most large insurers have been accused in court of fraud.”

According to the Times, “eight of the 10 biggest Medicare Advantage insurers – representing more than two-thirds of the market – have submitted inflated bills, according to the federal audits. And four of the five largest players – UnitedHealth, Humana, Elevance and Kaiser – have faced federal lawsuits alleging that efforts to over diagnose their customers crossed the line into fraud. … The additional diagnoses led to $12 billion in overpayments in 2020, according to an estimate from the group that advises Medicare on payment policies – enough to cover hearing and vision care for every American over 65.”

Despite the concerns from retirees, Mulgrew and other leaders of municipal unions repeatedly defended the Medicare Advantage plan as the best solution to bring down health care costs. At times, they even warned that if retirees were not forced into Medicare Advantage plans, then the city could require active workers to pay health care premiums – an apparent attempt to pit retired municipal workers and current municipal workers against one another.

Earlier this month, Mulgrew was dealt a major internal setback when members of his United Caucus, which supported the Medicare Advantage strategy the UFT leader had promoted, were soundly defeated in a leadership election for the UFT’s Retired Teachers Chapter. They were defeated by the Retiree Advocate slate, which was expressly created to shut down the mandatory shift to the for-profit Medicare Advantage plan.

Mulgrew got the message.

“He’s kind of listening to his members – he turned around on this after a big loss with the retirees last week,” Nespoli, the chair of the Municipal Labor Committee, told City & State. “The City has had a terrible run in the court and Mike is looking at what we have to do and we have a meeting set up for Wednesday. I don’t tell presidents how to run their unions.”

With 120,000 members, the UFT makes up close to a third of the city’s workforce.

“We will assess the impact of the UFT’s withdrawal from the process and determine next steps with our partners in the MLC,” said Henry Garrido, executive director of District Council 37, which represents close to half the city’s workforce. “The very stark fact remains that healthcare for City workers and retirees needs to be funded, and absent a viable solution such as the one underway, those premium-free benefits are on the line.”

In his letter to the Municipal Labor Committee announcing UFT’s withdrawal from the Medicare Advantage plan, Mulgrew did not mention the recent leadership election for the Retired Teachers chapter – a fact that upset Bennett Fischer, who won that election by running on an anti-Medicare Advantage platform.

“President Mulgrew should have acknowledged that he is changing his position because elections have consequences,” Fischer wrote in a statement. “He could have acknowledged that he is taking these steps because Retiree Advocate wrested control of the 70,000+ Retired Teachers Chapter from his Unity caucus, and because he sees that his control of the UFT is slipping away. … Until now, Michael Mulgrew and Mayor Adams have been on the same page.”

In a free-ranging interview with City & State, Mulgrew said that the decision to pull the plug had been coming long before the recent electoral rebuff by his retirees, though he conceded it was part of his  final calculus.

“About eight weeks ago, I started talking to people at the MLC that this was ridiculous with the courts clearly saying over and over again through all the appeals that this [Medicare Advantage] was not going to work,” Mulgrew said. “And when I read this latest decision out of the Court of Appeals of New York State, half of the decision was about the incompetence of the city’s attorneys.”

Mulgrew continued. “At the same time, we were getting nowhere, I mean nowhere with the negotiations for health care for our in-service active members,” he said, adding that when some of the unions wanted to meet with Mayor Adams to jump start the talks, they were rebuffed by management’s representatives at the table.

“This has got to stop – the members have spoken, the courts have spoken – so why are we continuing to do this?” Mulgrew asked. “Why would the city continue to put its retirees through this process anymore?”

The UFT leader also suggested that this controversy only highlighted his strongly held conviction that health care needed to be the number one issue in the 2024 national election. 

“As we keep saying, we need a national solution, we have a president trying to lower drug costs and doing things, but we need much bolder action,” he said. “We need them to wake up at the national level. I know the hospitals are making billions of dollars – the insurance companies are making billions and every year they are coming at everybody with double digit increases.”

Pizzitola, the president of the NYC Organization of Public Service Retirees, said that the city should finally give up on its attempt to force retirees to Medicare Advantage plans.

“For three years, an ad-hoc coalition of retirees has been fighting this illegal scheme in the courts and in the City Council,” she wrote in a statement. “And while retirees have been continuously successful – winning 9 victories over three separate lawsuits and thwarting an attempt to change the law  – the City still can’t seem to get the message: enough is enough!”

Pizzitola continued. “It is time for the City to come to its senses and end its senseless, illegal war on retirees. If retirees are forced off of traditional Medicare and into the City’s new Medicare Advantage plan, thousands will be denied access to the doctors they depend on and the medical care they desperately need. And, as the director of the NYC Independent Budget Office testified, City taxpayers will not save a dime.”