Municipal labor unions win pact to improve health and prescription coverage and provide largest increase ever in funds for union plan

By GREGORY N. HEIRES

City unions struck a major, multi-million dollar agreement with the city in January to protect and enhance health care, prescription drug and other benefits.

Negotiators on both sides hope the accord will pave the way for new wage pacts for DC 37 and other unions.

District Council 37 leaders played a prominent role as the Municipal Labor Committee and the city reached a two-year agreement that provides for a significant infusion of funds to protect union prescription drug plans, which face tremendous strain due to the soaring cost of medications.

The agreement will also expand health coverage and provide valuable new benefits for members, such as a college savings plan and a novel discount purchasing program to cut costs on big-ticket items like computers, major appliances and possibly cars.

Pact opens door for wage talks
“This agreement will benefit all of our members and the members of other municipal unions. It creates a favorable climate for negotiating a new economic contract,” said DC 37 Administrator Lee Saunders. Mr. Saunders is secretary of the MLC, an umbrella organization for city unions that coordinates bargaining on health-related and welfare benefits.

Tapping into substantial reserves that have mounted up in recent years in the health insurance stabilization reserve fund, the pact will give the city budgetary relief. This should make wage negotiations easier.

Underscoring the importance of winning long-term financing for prescription drugs, DC 37 Health and Security Plan Administrator Roslyn Yasser pointed out that this would be the largest single rate increase in the history of the DC 37 Health and Security Plan.

At a Jan. 4 meeting, DC 37 local presidents voted unanimously to approve the agreement. On Jan. 11, the MLC unanimously approved the deal, which covers the period from July 1, 2000 through June 30, 2002.

Mr. Saunders, DC 37 Secretary and Local 768 President Helen Greene, SSEU Local 371 President Charles Ensley and Local 372 President Virginia Montgomery-Costa represented the union on the MLC Steering Committee, which crafted the pact.

DC 37 Deputy Administrator Dennis Sullivan, Ms. Yasser, General Counsel Joel Giller, and Associate Director Evelyn Seinfeld and Assistant Director Michael Musuraca of the Research and Negotiations Dept. also played key roles in the talks.

Unions achieved goals
Randi Weingarten, MLC chair and president of the United Federation of Teachers, indicated that she and the other negotiators representing the union coalition were proud of being able to accomplish the MLC’s goals.

The MLC’s aims were to obtain financial relief for drug plans, protect and expand benefits, and get rid of a productivity roadblock in negotiations.

While the city may still raise the issue of productivity and merit pay in individual contracts, it has agreed to withdraw specific cost containment goals that range from $250 million in fiscal year 2001 to $300 million in fiscal year 2004.

On the last day of the pact, the union benefit plans will get a permanent $200 increase in the city’s payment rate. Before the permanent increase, the city will make two large payments of $175 per member and retiree into the plans. One will come immediately after the signing of the agreement, and the second payment is due on July 1, 2001.

“The funding increase should protect our prescription drug plan and other benefits over the course of the agreement,” said Ms. Yasser.

The agreement will also help union prescription drug plans save money by having health insurance plans pick up the cost of some expensive medications.

Prescription savings

• Under the agreement, the health plans will now offer asthma and chemotherapy drugs without a co-pay.
  
  
• The funding will also cut members’ out-of-pocket expenses for psychotropic and injectable medications. The $3 co-pay for generic versions of these drugs will be dropped and the $8 or $15 co-pays for brand-name drugs will be cut to $6.

Benefit improvements

Health benefit improvements include:

• Unlimited in-network coverage in the GHI mental health program, which is currently restricted to 30 visits.
  
  
• A new HIP in-patient alcohol and substance abuse rehabilitation program that provides for 30-day coverage without a co-payment.
  
  
• An increase in the fee schedule of GHI physicians in Manhattan to help retain participating providers.
  
  
• A national panel of GHI doctors in targeted areas, such as Florida, where many DC 37 retirees reside.

The pact will allow workers to establish accounts with the New York State College Savings Program and have payments automatically deducted from their paychecks. The program permits participants to earn tax-deferred income on investments and to subtract contributions (up to $5,000 per individual) from their state-taxable income.

401(k), TransitChek and more
In a major breakthrough, the city will now expand its pre-tax savings program to permit municipal employees to make payroll deductions into 401(k) accounts. The existing 457 plans don’t allow borrowing and severely restrict contributions.

Under the agreement, the TransitChek program will expand to include all city and Board of Education employees. The plan lets participants save about $250 a year in taxes through a payroll deduction program that provides vouchers for mass transportation.

The benefit modifications that provide monetary relief for the city include the establishment of a city-union cost containment committee to identify health care savings. During the two-year agreement, the city will not have to make its annual $35 million contribution to the stabilization fund.

Another provision calls for doubling the years of service required for newly hired workers to qualify for health care coverage during their retirement. Pension vesting will remain at five years.

“This historic agreement is a major step toward new contracts for all city unions,” said Mayor Rudolph W. Giuliani. “Now that the important task of resolving health benefits has been accomplished for all unions, the city is free to bargain individually with the various unions on their contracts.”

“It’s time for us to roll up our sleeves and get to work on a new contract,” Mr. Saunders said. He expressed his optimism that the benefits agreement and the removal of the productivity roadblock should enable both sides to work out a new economic contract with substantial wage increases for union members.

Gains in benefit agreement

• More money for welfare fund
  
  
• Prescription drug plan savings
  
  
• Improved health benefits
  
  
• Enhanced and additional benefits

Prescription drug savings

• No co-pay for asthma and chemotherapy in all health plans
  
  
• Reduced co-pays for psychotropic and injectable medications
  
  
  • Generic versions free (now $3)
    
    
  • Brand-name versions $6 (now $8 or $15)
    
    
• Financial safeguards for union drug plan

Better health benefits

• Unlimited in-network coverage by GHI Mental Health (maximum now 30 visits)
  
  
• Increased fee schedule for GHI physicians in Manhattan
  
  
• New HIP in-patient alcohol and substance abuse coverage with no co-payment
  
  
• Creation of national panel of GHI doctors in targeted areas