Healthcare Savings

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Healthcare Savings Update

Second Health Savings Agreement (FY 2019 to FY 2021)

On June 26, 2018, Mayor Bill de Blasio announced a second health savings agreement with the Municipal Labor Committee (MLC) covering the fiscal period 2019 to 2021 which builds on the first savings agreement of fiscal year 2015 to 2018. The key features of the new savings agreement are as follows:

  • A commitment to generate cumulative healthcare savings of $1.1 billion over a 3-year period (fiscal year 2019 to 2021) of which $600 million will recur annually beyond FY’2021. [Savings targets in each of the fiscal years are: 200 million in FY’2019, $300 million in FY’2020, and $600 million in FY’2021.]
  • In the event that the savings target is exceeded, the first $68 million over the $600 million recurring savings in FY 2021 will fund a $100 per member health and welfare fund increase; savings thereafter will be shared equally between the City and its unions.
  • Savings will be measured against the City’s projected budget increases of 7%, 6.5% and 6% for fiscal year 2019, 2020 and 2021, respectively. Savings will be achieved through a series of measures including a cap of City healthcare increases of 3.5% in FY’2020 and 3% in FY’2021. Other savings initiatives will be pursued in joint agreement with the MLC.
  • A Tripartite committee comprising City representatives, union representatives, and an arbitrator is being established to advance the goals of the new agreement. The tripartite committee will issue its final recommendations by June 30, 2020. This committee will operate in conjunction with the existing City and MLC Technical Committee.
  • The carriers of the City’s two major health plans, the Empire Blue Cross/GHI CBP plan and the HIP HMO plan will provide detailed claim level data to facilitate decision-making by the Tripartite and Technical Committees. 
  • Healthcare savings under the agreement are guaranteed and enforceable through arbitration.
  • In recognition of the union’s efforts to jointly pursue health care savings with the City, its welfare funds will receive two $100 per member lump sum payments funded by the Joint Stabilization Fund effective July 1, 2018 and July 1, 2019. 

First Health Savings Agreement (FY 2015 to FY 2018)

In 2014, Mayor Bill de Blasio and Labor Relations Commissioner Bob Linn committed to a respectful and collaborative labor management process, changing the dialogue with

Health Savings Trajectory
the municipal unions from one of confrontation and deadlock to collaboration and problem solving.

 

As a result, in collective bargaining, labor and management agreed to address the issue of escalating health care costs by working together to generate cumulative healthcare savings of at least $3.4 billion over the four fiscal years 2015 through 2018, with at least $400 million for fiscal year 2015, $700 million for fiscal year 2016, $1 billion for fiscal year 2017 and $1.3 billion for fiscal year 2018.

 

This plan did not specify exactly how the health care savings were to be accomplished, only that it would be done by an ongoing collaborative effort between the City and its municipal unions, aimed at bending the health care cost curve for NYC health programs.  For Fiscal Year 2015 and Fiscal Year 2016, the $400 million and $700 million savings goals were met. In fiscal year 2017, the $1 billion goal was exceeded by $51 million and in fiscal year 2018 the $1.3 billion goal was exceeded by $35 million. Overall, the City achieved total savings of $3.486 billion exceeding the four year goal by $86 million. Pursuant to the FY 2015 – FY 2018 Agreement, the participating unions have elected to use the excess to carry over to the next health savings agreement.
 
 
The savings initiative was accomplished using the Institute for Healthcare Improvement’s “Triple Aim” initiative as its guidepost –improving the population health, improving the patient experience of care (including quality and satisfaction) and reducing the per capita cost of care.
 
 
For information on the  FY’15 to FY’18 and FY’19 to FY’21 health benefits agreement and details on how the savings are being achieved, please use the links below.