The union has taken the city to arbitration for shortchanging health care funding for members and some retirees.

As of July 1, the city refused to fully implement the state-approved annual rate increase for the funding of the health-care plans.

The city’s failure to pay the entire increase in the basic HIP/HMO rate has already hit thousands of members and retirees who are not on Medicare in the pocketbook by raising their premium payments.

The HIP/HMO rate is important because it establishes how much the city pays for the health insurance of each DC 37 member and retiree under the age of 65.

Participants in health-care plans whose basic premium is greater than the HIP/HMO rate must make up the difference through payroll or pension deductions. People enrolled in HIP, DC 37 Med-Team/Choice and GHI are not directly affected by the funding shortfall, because they don’t have to pay premiums for their basic health care coverage.

Over the long term, the city’s failure to pay the full rate increase could result in a significant cost shifting of basic health insurance payments to members and retirees under 65 who are enrolled in plans other than HIP, DC 37 Med-Team/Choice and GHI.

Already, the city’s refusal to implement the full HIP/HMO rate increase has led to a shortfall of several million dollars in city payments to health plans, leading insurance carriers to boost their premiums. All plans report trouble coping with reduced funds for administration.

In its request for arbitration, which DC 37 Senior Assistant General Counsel Mary J. O’Connell filed June 30, the union charged that the city’s action violates the 2000-2002 wage contract.

“The contract is quite clear about the city’s obligation to provide full funding of its health-care plans,” said DC 37 Deputy Administrator Dennis Sullivan, who is the union’s director of research and negotiations. “Frankly, the city’s action puzzles us.”

Earlier this year, the New York State Department of Insurance approved an 11.88 percent increase. But this summer, Labor Commissioner James F. Hanley informed HIP that the city had budgeted only a 4 percent hike for the base plan rate in fiscal year 2002. “Please make the appropriate adjustments,” Mr. Hanley wrote in a June 25 letter to Anthony Watson, president of the Health Insurance Plan of New York.

An arbitration ruling in favor of DC 37 would require the city to reimburse members and retirees for their extra premium payments.

Meanwhile, the Municipal Labor Committee is weighing whether to file a lawsuit over the dispute, DC 37 Administrator Lee Saunders said. Mr. Saunders is secretary of the MLC, an umbrella organization that deals with health benefits and other issues on behalf of municipal employee unions. “This isn’t just an abstract debate about the city’s funding obligation,” said Roslyn Yasser, administrator of the DC 37 Health and Security Plan. She noted that subscribers of one Aetna/US Healthcare plan, for example, were socked with an increase of about 20 percent for their biweekly premium.

“People are getting hurt. They’ve had unforeseen premium expenses imposed upon them.”

“This isn't just an abstract debate. People are getting hurt.”

—Roslyn Yasser
DC 37 Health & Security Plan