This Special 65-2 outlines important changes in your health care benefits resulting from the recent agreement reached with the City and its Unions. We are pleased to announce that as a result of our efforts and a very public fight, we have been able to limit reductions and maintain significant benefits in critical health care coverage during this recent round of negotiations with the City.
As you are likely aware from the numerous reports in the press, the City had initially asked the unions for nearly $600 million in health benefits givebacks including what would have resulted in the elimination of the critical PICA drug program. (Please see Appendix A for a full description of the City's initial and our final negotiated positions.) It is critical to understand that during these contentious negotiations, a number of large labor unions were willing to acquiesce to the City's demands, and it is only as a result of our refusal to accept any real health care givebacks, that both the PICA program and the overall healthcare package remain intact. During the process, our strategy resulted in the formation of a strong coalition consisting of all police and fire unions that forced the City to turn over information regarding PICA drug utilization for all members of the coalition so that we could make an informed decision about the value of the program to both our active and retired members. In addition, forming the coalition served to strengthen our bargaining position relative to some of the other municipal unions who were advocating acceptance of the City's terms. Had we failed in our efforts, there would have been estimated annual out-of-pocket increase per member to basic health care coverage of nearly 10% or approximately $700 per family based on the current costs of city provided coverage, and further, the PICA program would have been eliminated entirely.
By way of history, three years ago, the Giuliani administration negotiated a deal with the Municipal Labor Committee which allowed the MLC to use an approximately $300 million surplus that had existed in the Health Insurance Stabilization Fund to fund PICA drugs. With only $300 million initially available for the fund and an annual operating cost of $140 million, the fund was quickly being depleted and the City's required contribution of $35 million was not on its own sufficient to sustain the fund. The PICA program provides coverage for a range of drugs including Psychotropic, Injectibles, Chemotherapy, and Asthma medications, drugs which we believe are critical given the nature of our work. If PICA coverage was to have lapsed, two possibilities emerged. First, that current health plans could have offered this coverage at additional out-of-pocket costs or second, the UFA's SBFs could absorb some or all of the costs related to currently covered PICA drugs. Neither of these solutions was acceptable and the UFA fought aggressively to preserve these benefits with no significant additional costs to our Members.
While there are some limited increases in the co-pays and deductibles as a result of this negotiation, it is important to understand that the preservation of the PICA program, no out-of-pocket cost for basic health care coverage, and the important precedent of not capitulating to City demands was accomplished in a fiscal climate which is considered to be the worst in over 30 years. (See Appendix B for a description of the contemplated changes in your healthcare coverage.).
