No Good Deed By An Elected Official Goes Unpunished: Michele Madigan’s Insurance Savings

Last week I posted a release from Finance Commissioner Michele Madigan’s office announcing that the city would be changing its health insurance contract and would be saving $300,000.00 this year and more in coming years.

An anonymous commenter who goes under the name “Bartelby” attacked Commissioner Madigan for failing to do this earlier.  This is not the first time this person has tried to post a comment containing misinformation that was meant to damage the credibility of Commissioner Madigan.  In the past I have just put the comment in the trash rather than post it, but in this case I am publishing the text in order to make a point.  I expect this person has taken their name from the great Herman Melville short story “Bartleby, The Scrivener” but in a wonderful example of irony, the person misspelled the name.  In other words, he/she cannot get his/her own name straight.

Here is Bartelby’s (sic) comment:

“So the taxpayers have been missing out on a $300,000 savings because Madigan was holding out for a promise to, if cheaper, convert back to a community-rated plan? This was completely unnecessary, as a proper competitive bid would have allowed for both options because there would have been more than one insurer competing.”

This comment is so inaccurate and misleading in so many ways that it is hard to  know whether Bartelby is just  ill informed or consciously malicious.

The following is a an account of how this policy change evolved.  I think it is worthwhile going into the weeds on this.  Most people are appropriately cynical about their elected officials and not without reason, but it is a mistake to assume that all are self serving, incompetent, and lazy.  The effort that went into this project is very much worth understanding and acknowledging.

The History:

There are two general methods used to determine the cost of health insurance to employers. In “Experience Based” plans premiums are based on the actual costs incurred by the insured group compared to what was expected.  For instance, if you were a modest size firm and you had more employees undergo expensive procedures than expected, you were at risk of a major hike in your insurance.  The other method used is referred to as “Community rated.”  In this case the insurer identifies a pool of companies and sets the premium rate based on their overall utilization.  By expanding the pool theoretically one minimizes the potential for hikes.

Prior to the Obama Affordable Care Act (ACA), heath care companies were under no obligation to allow employers who had changed from a “Community” plan to an “Experience”  plan to change back to a “Community “ plan.  In 2018 the State of New York issued a directive requiring providers allow both options as required under ACA.

Still, the issue remained complicated.

1. There are only a handful of providers in the area, limiting the city’s ability to make such jumps.
2. Not every community-rated plan is the same, and a new provider would almost certainly include different doctors.  Any change could expose the City to grievances from employees based on the union contracts.

So the new found flexibility to change plans provided the city with the potential for greater savings but actually determining what changes would be best both in terms of cost and consistency with union contracts was not simple.

Like most individuals and families the City uses brokers to get insurance and to assist in claims and general support.  You may have an insurance agent who you buy your house insurance through, for example.  They provide you with support in selecting the actual insurance company and in addressing any claims you may have.

So the City first issued an RFP requesting brokers to submit proposals for a package that included their support to the city for its insurance issues, claims, etc. along with an actual health provider who would deliver the service.

Eleven brokers submitted proposals.  A committee to review the proposals was established and they whittled the potential brokers down to four.  In the end, Amsure which is operated by Adirondack Trust was selected.   As part of that decision, Amsure was directed to pursue creative solutions to address the City’s increasing healthcare burden. Moving to an “Experience Based” plan was one option presented by Amsure, at which point the City asked them to approach medical providers in the area. MVP ultimately came up with the lowest price.

Interestingly, MVP had been the existing health provider for the city.  Since MVP had been servicing the city, it was a good sign that their low bid reflected a realistic understanding of the city’s employees and usage.

One of the benefits of the change was that MVP Experience Based plan included out of network benefits to employees which would not have been allowed under the “Community” pool model.

The City then sought out agreements from its unions.  The city has seven different bargaining units.  The City met with all seven groups.  The range of services in the new contract would be the same as the old with the one added benefit of additional out of network coverage.

One union offered to accept the plan but only if the existing contract (which includes an annual 2% raise) was extended for an additional year.  The City had already reached agreements with a number of units but it then went back to the all of them, whether they had agreed already or not, with the one year extension proposal.  As of this writing five had signed.  The bargaining unit for the police needed more time because a number of its union officers were away.  The Department of Public Works bargaining unit rejected the deal.

It is important to note that Commissioner Madigan’s office involved the unions early in the process.  While the city can unilaterally change health plans, the unions can grieve the actions if they believe the changes violate their agreements with the city.  In the past, administrations had unilaterally made these kinds of changes and in so doing generated bad feelings on the part of the unions.  Since the health care change represented no loss of benefits, it appears likely that the change will survive a challenge by the DPW bargaining unit.

On February 27 the City Council convened a special meeting to authorize the Mayor to sign the updated healthcare rate renewal forms with MVP Health Care.

A Lesson

If you waded through this narrative regarding what it took to save  money on the City’s health insurance it should be clear that Commissioner Madigan and her deputy Mike Sharp deserve praise and acknowledgement for their initiative.  People in general forget that in the commission form of government, elected officials need to work hard as administrators.  The public is usually acutely aware when their leaves are not picked up when they think they should be or when their taxes go up, but they are often unaware of other work or lack thereof of their elected city officials.   It is fully understandable. Who but geeks like me spend time sorting through this stuff?   Still, I wish efforts like this were better understood and acknowledged.

It is unfortunate that misleading and inaccurate  comments such as “Bartelby’s” often resonate with the public and  that it has become common for comments such as this to be  uncritically circulated and amplified on social media.   I would not have posted his/her comment normally.  Comments that are as inaccurate as this do not contribute to a constructive dialog about issues and are trashed.