Saving the savings

In another setback to the city’s Medicare Advantage Plus plan for retirees, which would produce $600 million in city savings by tapping federal funds, Acting Manhattan state Supreme Court Justice Lyle Frank ruled that the Adams administration cannot charge $191 a month to those opting out. The legal defeat was followed by a political one as teachers union boss Michael Mulgrew, a longtime advocate for the new deal, caved and pulled his support. The going got tough, he got going.

Now, with overheated rhetoric and no more disincentive to staying out, a large number of retirees likely won’t make the switch, nullifying much of the expected $600 million in savings — savings which, detractors seem to forget, were set to be channeled into the Health Care Stabilization Fund to supplement retiree benefits.

The administration shouldn’t throw in the towel. An appeal won’t overturn the ruling before the April 1 deadline, but the city can proceed with the rollout to establish the plan’s bona fides as an appeal moves forward.

The judge’s order hinges on a city law that mandates the municipal government pay the totality of the cost of health insurance for employees, retirees and their families. But the law doesn’t require any particular plan. As an extreme solution, the city could attempt to phase out the older plan altogether.

That effort might get tripped up by union contracts or other legal arguments, but there are a variety of other options. Once the new plan launches and retirees begin using its benefits, the city will have more ammunition to demonstrate that it provides robust coverage, and that the dreaded preauthorization stipulations won’t needlessly delay necessary care (incidentally, the city should commit to strictly monitoring this and ensuring that this cost-saving measure does not end up hurting retirees).

If charging those who opt out winds up legally verboten, the city might consider providing incentives for those who opt in. The expected savings are enough that it might sweeten the deal with greater prescription drug subsidies or some other goodies. Get creative.