Bloomberg offers municipal unions a raise, with conditions

Cas Holloway at the Princeton Club. (Dana Rubinstein)
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The Bloomberg administration just made an offer to the city's 300,000-strong municipal workforce that the unions can certainly refuse.

“The Bloomberg administration is prepared to settle a new contract with any union, with wage increases, that agrees to two conditions: no retroactive salary increases and a meaningful contribution to health care costs structured in a way that incentivizes employees to live healthy," said Cas Holloway, New York City's deputy mayor for operations, in a speech before the Citizens Budget Commission this morning.

On Monday, Holloway sent a letter to Harry Nespoli, the head of the Municipal Labor Committee, requesting a meeting to discuss issuing a request for proposals for new health care providers.

In 2005, HIP and GHI, the city's two health care providers, merged, and premiums have gone up significantly since then. Since the 2008 fiscal year, for example, HIP's family plan premium has increased by more than 200 percent.

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In the 2014 fiscal year, the city will pay about $6.3 billion for health care coverage for active and retired employees. This year, health care is supposed to cost the city about $15,200 per capita, or 33 percent higher than the national average.

The city projects those costs to grow 32 percent in the next five years.

The Bloomberg administration would, first, like to find new health care providers, or at least come to a new agreement with the existing ones, and it would also like municipal employees to pay part of their premiums, which they don't do now.

Further, the administration would like any new contract with a health care provider to include "wellness incentives," which would induce patients to, say, quit smoking in exchange for lower costs.

Holloway estimated that wellness incentives could save the city $400 million a year.

A couple of years ago, the city surveyed the market to find out if other service providers were interested in New York City's business.

“I can’t tell you how extreme that interest was from the providers across the country," said Holloway. "I mean, a $6 billion book of business with one million covered lives is an enticing thing.”

At the same time the city's health care costs are skyrocketing, most of the city's workforce is now operating on expired contracts, an issue that has begun to loom large in this year's mayoral election and overshadow Mayor Michael Bloomberg's other accomplishments.

Some of the unions are seeking retroactive raises for their work during the recession years, and some of the candidates have left themselves open to that possibility, a circumstance Holloway says could blow a hole of between $3.7 and $8 billion in future budgets.

"Clearly, retroactive, across-the-board salary increases for the recession period are unrealistic and completely unaffordable," Holloway said today.

Rather, Holloway argued, municipal employees should consider themselves lucky to have jobs, given the layoffs that occurred in surrounding municipalities.

"I think it’s important at this moment just to take a minute and remember how bad things got during the recession: 97,000 private sector jobs were lost just here in the city," said Holloway. "National unemployment hit 10 percent for the first time since the Reagan administration. ... Around the country, many cities laid off police officers, firefighters and other critical personnel."

On the other hand, "[Bloomberg] chose to protect thousands of city workers who would have otherwise been at risk of losing their jobs."

All of which is what led Holloway to offer his deal to the unions: raises moving forward in exchange for no retroactive ones, and the unions' cooperation in reforming the city's health care system, reforms that would likely include union members paying more for their own health care.

Emblem Health had no immediate comment.

In a phone interview, Nespoli, the labor leader, seemed unimpressed.

"So far, I know that none of the city workers are complaining about the services that they’re getting from the health carriers here," he said. "And he's got 277 more days left in this administration. Something like that takes a little more time to sit down and to go over some of the points and some of the new ideas before you turn around and look to replace the carriers you have now."

Nor did Nespoli think much of Holloway's argument against retroactive raises.

"Right now, municipal workers are living on plastic," he said. "We have some contracts that are out five years, six years, four years. ... He’s going to compare other cities with New York City? That’s not being fair. ... This work force, the police force, the sanitation, during the disasters that hit this city—and the fire department and clerks—everybody has performed for the people of New York City better than any other city throughout the world. To indicate the fact that they should be lucky they have a job is a disgrace. Put that down."