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De Blasio Looks to Purge Health Care Rolls to Save Millions

By Colby Hamilton on May 23, 2014 7:20am 

 Mayor Bill de Blasio's deal with labor unions comes with an expected $3.4 billion in health care savings, some of which could come from removing those ineligible for city-funded health insurance from the rolls.
Mayor Bill de Blasio's deal with labor unions comes with an expected $3.4 billion in health care savings, some of which could come from removing those ineligible for city-funded health insurance from the rolls.
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DNAinfo/Colby Hamilton

CIVIC CENTER — City officials say there are an estimated 20,000 people they can prove don’t belong on the city’s health insurance rolls.

They range from divorced spouses to children too old to be on their parents’ health plans, and officials plan to find them and purge them from the list in a bid they say will save the city $100 million a year, over the four years of union contracts — or 12 percent of the $3.4 billion in health care savings the city is counting on to offset some of the increased costs of union pay.

Mayor Bill de Blasio’s office says the city is counting on moving thousands of city workers from family plans they shouldn’t qualify for, to individual plans. That shift will save roughly $8,500 per person, they say.

“As mandated by binding agreement, these savings are both achievable and enforceable," de Blasio spokesman Wiley Norvell said in a statement.

This isn’t a new idea. Last summer, the Bloomberg administration said it removed 7,000 people who had been receiving taxpayer-funded health care from the rolls. That came only once municipal unions relented after they initially sued to keep the city from auditing enrollees.

“The [unions] just didn’t trust the Bloomberg people, and didn’t feel it was an honest negotiating environment,” James Parrot, chief economist with the Fiscal Policy Institute, said at the time.

The move saved an estimated $16 million, according to those involved in the process.

However, the number of people removed from the rolls last summer ultimately fell to about 2,500 because of appeals and other factors, such as city employees who couldn’t be counted towards future savings because they had quit.

Now, the current administration says it’s targeting a pool of about 40,000 city workers, half of which officials believe will ultimately be eligible to move from more expensive family plans to cheaper individual plans.

Administration officials acknowledge that the 20,000 number is an estimate, and that they don't know exactly how many enrollees they will get to make the switch. The number could end up being closer to 12,000 — a figure that more closely fits the city's equation for getting to $100 million in savings.

Budget observers warned that drawing a bull's-eye around health insurance fraud is a precarious way to balance a budget.

Ousting fraud should be a given in reducing government bloat — not a way to close a yawning budget gap — said Nicole Gelinas, senior fellow at the Manhattan Institute.

“That is what they should be doing anyway,” she said.

For their part, labor leaders, some of whom fought the idea under former Mayor Michael Bloomberg, now agree on the basic need for the insurance roll audit.

“I think that’s something that should be done on a regular basis,” said CWA Local 1180’s president Arthur Cheliotes.

But rooting out fraud can be costly and time consuming, said Carol Kellermann, president of the government spending watchdog group Citizens Budget Commission.

“It’s a longer, more intense auditing process," she said. "It’s not going to happen overnight.”

Kellermann also expressed concern over the cumulative $400 million savings figure.

“It’s a one-time reduction in the base number of people receiving health insurance,” she said, noting that it alone did nothing to curb the rising cost of health care, which she said is estimated to be about 9 percent per year.

City officials pushed back, saying the result will be a penny saved through targeted reductions like the insurance roll scrubbing, and a penny earned through measures aimed at reducing the rate at which health care costs are expected to grow.

"We are going to fundamentally bend this cost curve," Norvell said. "For years, people have sounded the alarm on fast-rising healthcare costs — we are actually doing something about it."

Union and city officials are still negotiating the details of the agreement. They've so far declined to discuss how, exactly, the city and its workers will ultimately achieve the $3.4 billion in savings.

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