Bloomberg: NYC to seek bids on health insurance

August 6, 2013 By Jennifer Peltz Associated Press
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The city will seek bids within days for its multibillion-dollar health insurance contracts, Mayor Michael Bloomberg said Tuesday, invoking other cities’ fiscal struggles as he deepened his stance in a standoff with unions.

Devoting a speech to economic issues, the mayor again drew the hard line he has taken on labor issues in recent years, outlined a challenge for whoever succeeds him in January and mentioned Detroit’s recent bankruptcy to illustrate what he said were the potential consequences of not trimming government health care and pension costs.

“We may be a long way from Detroit,” he said, touting New York’s rebound from the 2008 financial crisis and recession, “but we are only a short ways from relapsing into decline if we allow health care and pension benefits to crowd out the investments that make New York City a place where people want to live, work, study and visit.”

Teachers, jail officers and many other city employees have been working with expired contracts, some for several years. Many workers haven’t gotten cost-of-living raises since the contracts lapsed, although some get pay boosts for longevity or acquiring new credentials.

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Bloomberg’s administration has said it would reach contracts if workers pay more for health insurance and forgo back raises, which he says the city can’t afford.

Union leaders have said Bloomberg is spurning workers, and they’ve noted that the city has ended recent budget years with surpluses. Some mayoral candidates say he’s leaving an expensive problem for the next mayor.

Bloomberg acknowledged Tuesday that the issue would extend beyond his term, but he argued his successor would have “enormous leverage” to win concessions from unions eager to try for new contracts with a new mayor.

“The question is: Will the next mayor continue to hold the line — or capitulate?” he said pointedly during his speech at a former Brooklyn pharmaceutical plant recently refashioned as a business incubator space.

The city’s major unions have endorsed various Democratic candidates, and some have emphasized that they chose candidates they felt would strike a less confrontational tone with unions.

Bloomberg wants more city employees to contribute to their health insurance — currently, about 5 percent of them do, he said — and he said the upcoming request for proposals from insurance companies will aim to save up to $400 million a year. The city’s health insurance costs have doubled since 2002, to $6.3 billion this year, he said.

He also wants changes to a pension system that now costs the city more than $8 billion a year, compared with $1.4 billion in 2002.

He suggested that city workers have a choice between a traditional, “defined benefit” pension and what’s known as a “defined contribution” plan, such as a 401(k). Traditional pension plans usually cost employers more.

In general, advocates of defined contribution plans say they offer workers more control over how their retirement money is invested and the potential for higher returns. A counterargument is that the returns aren’t as predictable as pension payouts.

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