A key fund that has been covering health benefits for New York City workers is now empty, leaving the city with a $600 million budget gap and forcing officials to figure out what comes next. This gap in funding sadly leaves New Yorkers with very few options and none of them good, like making potential cuts to benefits or new costs for employees who have never had to pay out of pocket for their healthcare plans.
This fund, called the Health Insurance Stabilization Fund, has helped cover insurance premiums and extra perks like prescription drugs, dental, and vision care. But after years of dwindling reserves, the money finally ran out in October, according to meeting notes from a major city workers’ union, DC37, obtained by New York Focus.
So far, nearly a million retired city employees under 65 and their families have not felt the impact because the city has been stepping in to pay the bills. “The city is responsible for paying for employee medical coverage and continues to do so. There has been no interruption of care nor is any expected,” said Dina Kolker, an attorney and spokesperson for the Municipal Labor Committee (MLC), a coalition of city unions.
The New York City options to stop the money hemorrhage
But that arrangement might not last much longer. City officials and union leaders are now in talks to figure out how to refill the fund and cut healthcare spending overall. There have been many proposals on how to do this, but the one that seems to have garnered more traction is to charge municipal workers a $1,500 annual fee for a plan that has always been free. Implementing this change would not be as easy as it seems, as despite the lack of funds and the immediacy of the problem, any changes will have to be negotiated between the unions and the city, which does not guarantee aproval.
For workers like Tali Zabari, a preschool assistant teacher in Manhattan, the idea of paying more is frustrating. “I already don’t get paid enough, and now you want to charge me extra?” she said. Earning $1,300 every two weeks and dealing with rising costs, she is even considering moving back in with her parents in Brooklyn.
The roots of this crisis go back to 2021, when the city tried to save billions by shifting retirees onto private Medicare Advantage plans, which limit provider options and require more red tape than traditional Medicare. Retirees fought back in court, blocking the switch, for now, but that left the city scrambling for other ways to cut costs.
Overseeing these negotiations is arbitrator Martin Scheinman, who has handled past disputes between the city and the unions. “The City simply wants a solution to the shortfall and is suggesting various alternate ways to accomplish this. Understandably, the MLC is against additional financial costs being shouldered by the people they represent.” […] “It’s my job to find the right answer.”
And finding it will be key, as the City Comptroller Brad Lander’s office estimates that covering the Stabilization Fund will cost the city $612 million during its current fiscal year, which ends in June. And this is not a one time expense, the cost will repeat every year until a solution is found.
Although many have found this service superfluous and unfair, through the years it has been perceived as a small perk of working for the city at a lower pay than the same job would be paid in the private sector. Many, like City budget expert Ana Champeny of the fiscally conservative Citizens Budget Commission do not see a problem with having employees pay the proposed $1,500 annual amount, she explained “It is a very rare benefit to not have any contribution to your premium. State employees contribute, most private sector employees contribute, and that should be on the table.”