Blog Pensions & Benefits

Possible City Savings From Health Insurance Changes

June 19, 2011

The Mayor and City Council are discussing ways to avoid the layoffs and service cuts proposed to balance the fiscal year 2012 budget.  They should consider reforming health insurance arrangements for employees and retirees as a way to create meaningful savings and prevent the cuts.  CBC suggests three specific changes that could save the City over $1.5 billion in fiscal year 2012:

  1. Institute health insurance premium sharing for current employees at 10 percent for individual coverage and 25 percent for family coverage.

    Currently, most City employees do not contribute to the cost of their health insurance.  Adopting premium sharing requirements mandated for State employees – 10 percent for individual coverage and 25 percent for family coverage – would save the City over $600 million in fiscal year 2012.

  2. Require retirees to pay 50 percent of their premium cost.

    Retirees also receive health insurance without contributing to the cost of the basic premium.  Requiring a 50 percent contribution by retirees would save close to $700 million in fiscal year 2012.

  3. End reimbursement of Medicare Part B premiums.

    New York City currently reimburses retirees over the age of 65 for the full cost of Medicare Part B premiums.  This benefit is rare in the private and in the public sector: only four states reimburse most or all of the premium cost.  Ending the reimbursement would save $250 million in fiscal year 2012.

By Connor Mealey