Insurance Premium Transparency is Good; Next Stop: Provider Transparency

MVP Health Care CEO Dave Oliker shares his thoughts on a wide range of topics related to health care and health reform on his blog. Dave’s posts reflect his unique perspective based on his more than 30 years of experience in the health care industry.

Here’s his latest post:

Determining health insurance premiums every year is a complicated business. A health plan has to look at what services its covered population used this year, see how close it came to predicting that correctly, try to determine how the population will change, then project how much that population will use next year, and how much that is likely to cost.

And that’s the oversimplified version. There are people who are very good at math—actuaries—who do this job. Then, when the health plan files its premium rates with the state, government actuaries analyze and certify the data.

Starting this year, New York’s Department of Financial Services wants to make all that data and all the calculations for every health plan available to the public. I say, good. Transparency is almost always in the public’s interest.

Of course, the public isn’t composed entirely of actuaries. They may not be able to make sense of the numbers they see. Or they may not care to. Or they may be tempted to take a figure out of context to prove a point.

But that’s the risk we take any time we make information freely available. I’m confident that those who look closely at the data will find something significant there, something they might not have just taken my word for: the fact that rapidly increasing health care costs generally drive increased premiums.

It’s true that sometimes, as I explained in an earlier post, a big increase can come from a change in the coverage pool. If the covered population changes drastically, the change in its health care usage—and therefore its premiums—can be drastic too.

But if health care usage stays the same and premiums go up anyway, the culprit is obvious: rising health care costs. That’s what the data show. And once people understand that, they might even want to see the math behind those costs. Why do hospitals (and doctors and pharmaceutical companies and so on) charge what they charge?

If insurance premium transparency is a public good, shouldn’t we have provider transparency too?

Seeking a Cure for Troubled Hospitals in Brooklyn

by Nina Bernstein

When the pain in his groin was too great to bear, Ralph Hutchins, who works as a mover, headed to the crowded emergency room at the nearest hospital one recent Tuesday, his life at risk. Tanya Boynton, a mother of four who works 12-hour shifts, hobbled into another emergency room from a homeless shelter, afraid illness would end her job.

They needed care in the heart of Brooklyn, not far from the world’s richest concentration of premier hospitals. Only a few private hospitals have survived in neighborhoods like Bedford-Stuyvesant, Brownsville and Bushwick to serve poor patients like them. Now all are in such dire financial shape that a small group of veteran health care planners appointed by Gov. Andrew M. Cuomo is debating last-ditch measures to save them.

For decades, the fallback solution in American cities has been to close such hospitals.

But one of the actions being considered by the group may be even more radical: expunge the hospitals’ debt of more than $1 billion, partly at taxpayer expense, and then let large for-profit companies take over the facilities and restructure patients’ care. Experts say what ultimately becomes of the hospitals could make them a model, or a disastrous experiment, in the delivery of health care to the poor.

The proposals are still being drafted but are already generating concern among public health advocates, who worry that the changes would shred a frayed medical safety net and send the poorest and uninsured patients to other overwhelmed hospitals, especially to three public hospitals that are at capacity and facing new budget cuts.

Proponents say this fear is unfounded. But it runs deep in New York State, which added a right to health care to its constitution during the Great Depression, and is the only state that still prevents large companies and their stockholders from owning hospitals.

“If we don’t figure out a way to redesign the system, we’re going to have free-fall bankruptcies not only in Brooklyn, but all over the state,” said Stephen Berger, chairman of Mr. Cuomo’s Brooklyn Work Group. Its recommendations are due this month.

Brooklyn shows the acute stage of a problem that has vexed the nation for years: how to sustain delivery of major medical care to the poor. After the crack and H.I.V. epidemics of the 1980s, either shrinking hospitals with empty beds or letting them fail was seen as a way to make the system more efficient. But as big cities lost more than half their hospitals, closings were concentrated in places like central Brooklyn, where the bed-to-population ratio is now below state and national averages and busy hospitals are struggling financially despite high occupancy rates.

Kings County Hospital Center, Woodhull Medical and Mental Health Center and the State University of New York Downstate Medical Center, the three public hospitals in the area, could shoot up to as much as 130 percent of capacity and face a third more emergency room visits if even one or two of the most vulnerable private hospitals closed, according to a study submitted to the Berger group by the union representing interns and residents at public and private hospitals.

Alan Aviles, the president of New York City’s public hospital system, said it was making contingency plans for such a flood but could not go it alone, particularly since the collapse of the city’s Roman Catholic hospital network.

“We have to make sure that we still have voluntary safety net hospitals that are capable of sharing in that effort,” he said, noting that city hospitals already provided 75 percent of all outpatient care to the uninsured.

To stay healthy, experts say, even nonprofit private hospitals need a 3 percent profit margin. Only two of Brooklyn’s 10 private hospitals are doing that well, and of the five considered endangered — Interfaith Medical Center, Wyckoff Heights Medical Center, Brookdale University Hospital and Medical Center, Kingsbrook Jewish Medical Center and Brooklyn Hospital Center — some are hemorrhaging money.

Questions about mismanagement hang over some of these institutions, but analysts agree on the basic problem: Most of their patients rely on Medicaid, the government insurance program for the needy, which has been repeatedly cut as eligibility expanded.

There is no confidence that the national health care overhaul will help. Indeed, federal cuts expected through 2013 will disproportionately hurt the same hospitals. In neighborhoods with mainly black and Latino residents, in a borough of 2.5 million where more than one in five residents live below the poverty line and two in five receive Medicaid, the five endangered hospitals account for 83,000 admissions, 325,000 emergency room visits and 760,000 clinic visits a year.

The case of Mr. Hutchins, who showed up at Wyckoff, illustrates the strain. It was the third time in two months he sought help, he said. This time, at his insistence, the hospital admitted him.

Surgery revealed a strangulated hernia so far gone that cutting out life-threatening infected tissue left an open wound, he said.

Cost efficiency demanded speedy discharge; last year, Medicaid cut by 31 percent what it would pay for a case like his. But before Mr. Hutchins could be released, the hospital had to get him a portable wound pump.

At hospitals that pay suppliers promptly, administrators say, the device typically gets same-day delivery. At Wyckoff, it took a week.

Wyckoff’s general counsel, David Hoffman, said the hospital was like a homeowner with an underwater mortgage. Its buildings are worth a fraction of the $88 million it owes on a $140 million state loan, used in 1994 to rebuild. Its reserves are gone.

Such hospitals have not benefited from recent gentrification in Brooklyn. Affluent newcomers typically keep ties with their Manhattan doctors, who send them to hospitals there with the prestige to get top dollar from private insurance plans.

In 1980, Brooklyn had 26 hospitals; now it has 15, and 41 percent fewer acute-care beds — 2.3 beds per 1,000 residents, compared with Manhattan’s 4.7, the state’s 3.1 and the nation’s 2.6.

That pattern has played out nationwide, said Alan Sager, a professor of health policy and management at Boston University who has analyzed decades of hospital closings in 52 cities.

Professor Sager found that what best predicted that a hospital would be closed was not inefficiency, but location in a minority neighborhood, and for-profit hospitals were likeliest to close.

Proposals to save the Brooklyn survivors include a federal waiver that could redirect state Medicaid savings to so-called safety net hospitals, and a push for additional mergers. Another idea is making one or more of the hospitals a free-standing emergency department, a concept being tried at the defunct St. Vincent’s Hospital in Greenwich Village.

The proposal requiring the most salesmanship, and possibly a change in law, would leave taxpayers, bondholders and other creditors to absorb the hospitals’ net debt and then invite investors into a reformulated health care network.

Steven Moore, an executive with PricewaterhouseCoopers, the consultants invited by Mr. Berger to sketch out this proposal, likened Brooklyn’s indebted hospitals to banks with toxic assets, and suggested a bailout first. “Our premise is you have to design a system that will attract private capital,” Mr. Moore said. “Private capital is more efficient, it demands productivity, it demands creativity, it demands innovation.”

It also demands profits. Many experts doubted the proposal’s contention that 20 percent to 30 percent waste could be safely carved from Medicaid spending in Brooklyn to yield a reliable return of about 7 percent.

At the Greater New York Hospital Association, the lobbying group for hospitals, board members worried about people without insurance, particularly the city’s many illegal immigrants. Getting rid of toxic assets — hospitals’ debt — would not solve the problem of patient mix and revenue, said Kathleen Shure, an association executive, and “the board fears that it will end up in for-profit entities getting rid of ‘toxic populations.’ ”

Mr. Berger, an investment banker and veteran of health commissions, is impatient with such objections. “Health care is not hospitals,” he said. “Health care is an integrated system, a network,” one that requires new patterns of investment.

By law, hospitals must provide emergency care. But it is unclear what that might mean in a reformulated for-profit system, particularly for people in pain who damage the bottom line, like Ms. Boynton, 40, who limped into Interfaith with what turned out to be an acute attack of gout the same day Mr. Hutchins went to Wyckoff.

She would have preferred the Bronx clinic in her Medicaid managed-care plan, but her family had been evicted from its Bronx apartment after the landlord failed to make repairs required for a housing subsidy. At Interfaith, she got a three-day prescription that put her back on her feet and commuting, from a Brooklyn homeless shelter to her $300-a-week job at a home goods store on the Upper West Side of Manhattan.

Mr. Hutchins, 50, now discharged, is also on the mend. The hospital’s prognosis is more guarded.

“We stay open at the grace and generosity of our vendors,” said Mr. Hoffman, Wyckoff’s general counsel. “They know it will eventually get better, because we have to have hospitals. Otherwise, we’ll have sick and dying people lying in the streets, and nobody wants that.”

Bid to Alter Pension Plans Is Criticized

by Steven Greenhouse

Two of New York City’s top labor leaders voiced anger on Tuesday about the agreement by Mayor Michael R. Bloomberg and Comptroller John C. Liu to overhaul the city’s pension plans.

Those union leaders — the presidents of Transport Workers Union Local 100 and Teamsters Local 237 — complained that the mayor’s and comptroller’s offices did not brief them about the proposed overhaul before it was announced two weeks ago, even though the union leaders are trustees on the city’s largest pension plan.

“I don’t know anything about the plan,” said John Samuelsen, the transit workers’ leader.

In a letter dated Monday, Mr. Samuelsen and Greg Floyd, president of Teamsters Local 237, which represents many housing authority workers, joined Bill de Blasio, the public advocate, and presidents of all the boroughs except Staten Island in asking questions about the overhaul. The union leaders’ criticism could make it harder for Mr. Bloomberg and Mr. Liu to persuade Albany to enact legislation needed for the overhaul. Mr. de Blasio and Scott M. Stringer, the Manhattan borough president, are potential mayoral candidates who may oppose Mr. Liu in the race.

Under the overhaul, the city would merge its pension plans’ five boards, which have 58 trustees, into one with about a dozen trustees that would oversee the plans’ combined $120 billion in investments. The plans cover 237,000 retirees and more than 300,000 current city and city-affiliated employees.

The mayor and the comptroller said their plan would most likely yield higher investment returns by minimizing political interference in the pension system and by naming a full-time investment manager. In their letter, the officials asked Mr. Liu to make a presentation at the next pension trustees’ meeting explaining the new board’s structure, the new trustees’ qualifications and how they would be chosen.

They also asked Mr. Liu to explain how the new plan would achieve the comptroller’s hopes of increasing annual investment returns by one or two percentage points, yielding $1.2 billion to $2.4 billion more a year and helping to hold down the city’s budget deficit.

Mr. Floyd said that a majority of the board members of the city’s main pension fund, the New York City Employment Retirement System, were also not briefed before the announcement, and he objected to the proposal to have an unelected person become the fiduciary custodian for the system, replacing the comptroller.

When the plan was announced, the mayor, several union presidents and numerous pension experts praised Mr. Liu for ceding much of his office’s power over pensions to an outside manager.

Michael Loughran, a spokesman for Mr. Liu, said, “The proposal will benefit pensioners and taxpayers alike by transforming an outdated system into a best-in-class investment vehicle.”

Mr. Samuelsen said he feared being squeezed off the new board. “Most important is the fear that we’re going to give large decision-making powers to Wall Street folks, the very people who have made horrific decisions with money over the last decade,” he said.

Analysis: Honeymoon over? Gov. Cuomo faces critics

by MICHAEL GORMLEY, Associated Press

ALBANY, N.Y. (AP) — Gov. Andrew Cuomo is still riding high in polls and may continue to be invincible, but he’s no longer invulnerable.

After more than a half-year’s honeymoon, some critics who were too enamored — or too scared — of the Democrat are beginning to speak out. Cuomo spent his first six months masterfully managing politics in a string of policy wins from cutting the state budget to legalizing gay marriage. Powerful teacher and health care unions let him lead funding cuts to schools and hospitals. Public sector unions watched him threaten layoffs and were forced to accept contract concessions.

But along the way, he has baffled and, ultimately, riled his liberal base.

Now Democrats have to grapple with their progressive leader who tried to evict the Occupy Wall Street demonstrators in Albany. Protesters camping in “Cuomoville” dubbed him “Gov. 1 Percent” for refusing to extend a tax on people making more than $200,000 per year, and catering to the richest minority, which includes his biggest campaign donors.

“We demand that you get your priorities straight,” said Jackie Hayes, 29, of Binghamton, a student at the University at Albany in a brief rally inside the Capitol. “It is a political platform that only serves your ambitions.”

As a result, Cuomo hasn’t spent much time in Albany since the contingent set up camp across from the Capitol. That’s helped him avoid any uncomfortable photos.

Cuomo also was rebuffed by another Democrat. Albany Mayor Jerry Jennings, despite his usually cozy relationships with governors, refused to push protesters out of the city park, even under pressure from Cuomo’s top aides.

“The state’s position is we have to enforce the curfews if we are going to operate the (state) complex,” Cuomo said.

But the little-visited park isn’t used for state activities and other protests usually bypass it for more visible spots at the Capitol’s main entrances. In the park, protesters have cooperated fully with state police, quieted their chants inside the Capitol and even raked leaves as they railed against a government-corporate alliance they say is making the richest 1 percent even richer at the expense of the other 99 percent.

Cuomo’s opposition to extending the state’s so-called “millionaire’s tax,” which he said would drive the rich to neighboring, lower tax states, has made him a rare target among Democrats nationwide, many of whom publicly support the tax.

“The governor has made a historic mistake,” said Bill Samuels, an upstate CEO who founded the progressive organization called the New Roosevelts that seeks to nurture a new generation of reformers in New York. He said Cuomo was wrong to oppose the millionaire tax because CEOs are more concerned with the quality of life, schools and infrastructure when locating businesses, all of which the tax could help fund.

But Cuomo, like his father Mario Cuomo before him, notes he is governing in hard times. The state faces a projected 2012-13 deficit of more than $2 billion.

From 1989 to 1992, boom turned to bust for the Mario Cuomo administration and he went from cutting the top personal income tax rates to hiking taxes, which critics said worsened New York’s decline and led to his defeat. In 1994, Republican Gov. George Pataki immediately started cutting taxes and spending. He served for three terms.

“I once used the line that I’m progressive, but I’m broke,” said Gov. Andrew Cuomo, paraphrasing President Clinton’s line that he’s a “bleeding-heart cheapskate.”

“We have programs and policies that are seeking to advance this state, are advancing the state,” Cuomo said.

“I have to govern in this situation with these facts,” he said. “And I have to represent the people the best way I can with these facts and these facts are we that are in the middle of an economic recession, it is nationwide, the state has a multibillion deficit, and how are you a progressive leader in that context.

“I could argue this is probably a greater test of leadership. How do you make it work in this moment?”

Although opposition is growing, it’s common when a governor changes the status quo. And it’s still just a “nascent revolt” with the public and Legislature still on his side, said Robert Ward of the Rockefeller Institute of Government.

“There’s a function of time, you always get a honeymoon,” said David Grandeau, the state’s former lobbying enforcer praised by good-government groups as Albany’s most effective watchdog in decades.

“He is probably feared more than he’s loved,” said Grandeau, offering that Cuomo is “the best leader New York has had in a generation.”

“Fear is a better motivator, but the fear thing only works as long as someone’s head is on a pike outside city hall,” Grandeau said. “If you combine those two things — time and the bark sometimes is worse than the bite — you are going to find people coming forward.”

Cuomo faced criticism this year after flooding. He promised flood-ravaged towns would be rebuilt better than they were before, but private insurance handled little of the flooding damage and federal assistance was delayed. Weary residents took it out on the governor.

On Tuesday, Cuomo allowed: “I’m not happy with the results.” He reiterated that flood recovery is primarily a federal responsibility.

Cuomo’s immediate opposition is Occupy Albany, a coalition of unions and those seeking the millionaire’s tax to avoid further cuts to schools, hospitals and public services.

“Are we surprised he’s taken such a hard line on this particular issue? Absolutely,” said Ron Deutsch, a longtime Albany lobbyist working for New Yorkers for Fiscal Fairness, a broad labor and school coalition. “I’m not sure he really believes all the rhetoric himself.”

But Deutsch said the push for a millionaire’s tax is gaining traction just as the legislative session approaches and lawmakers prepare to go back to voters to campaign during the 2012 election year.

“You are seeing legislators more emboldened than before because of all the support and because of the Occupy movement,” Deutsch said.

Not least of whom is the powerful and cagey Assembly speaker, Democrat Sheldon Silver.
“The public is clearly with us,” Silver said Tuesday. “I think we and the public can win that discussion.” Then he said of Cuomo, “I didn’t say he wouldn’t change his mind.”

PEF Members Ratify Revised Tentative Agreement, 3,496 Jobs Saved

Albany – By a count of 27,718 to 11,645, members of the New York State Public Employees Federation (PEF) ratified a revised four-year agreement with the state that averts significant layoffs.

The ratification of the new agreement saves the jobs of 3,496 PEF members and preserves the vital services our members provide.

The agreement preserves the pay-scale, the employment and the careers of PEF members. It maintains increments and salary-grade parity, longevity payments and co-pays for doctor visits at their current levels. It calls for no salary increases for years 2011, 2012 and 2013. A salary increase of 2 percent is included for 2014.
The new contract increases the share members will pay of their health insurance premiums, but includes changes to the productivity enhancement program which will allow members greater opportunity to use vacation time to offset health insurance costs. The new contract includes reimbursement for the 9 furlough days payable at the end of the agreement.

“More than 75 percent of our membership voted on the agreement,” said PEF President Ken Brynien.

“Although this was a difficult decision for our members, it demonstrates they are willing to do their part to put New York state on a stable financial footing, as all New Yorkers should, and are helping to resolve a fiscal crisis for which they were not responsible.
“This agreement preserves our members’ jobs and the services they provide. During this economic downturn, the state’s citizens are more dependent on these vital services than ever, in the wake of the flooding earlier this year.

“We are certain the governor understands the sacrifice our members have agreed to accept, and recognizes the value PEF members and other public employees provide to the citizens of the state.

“We now call on the governor as part of his efforts to increase the efficiency of state government, to direct his attention to areas where PEF has highlighted cost savings. These areas include the elimination of wasteful contracting out and reducing the state’s excessive authorities, commissions and public benefit corporations that make up the state’s shadow government,” Brynien said.

PEF is the state’s second-largest state-employee union, representing 55,000 professional, scientific and technical (PS&T) employees and other public and private employees. The contract covers the state’s PS&T employees.

Statement of CSEA President Danny Donohue in response to Gov. Andrew Cuomo’s Let NY Work agenda

President Danny Donohue

November 3, 2011

“The package of so-called public sector reforms put forward under the banner of the Let NY Work coalition — apparently at the urging of Gov. Andrew Cuomo — is another despicable broadside on working people. Their bile is a perversion of reality that misrepresents the facts about very complex issues facing our state.

Obviously, the Occupy Wall Street Movement has Gov. Cuomo and his corporate allies worried and with good reason:

Pressure is mounting because corporations evade paying their fair share of taxes through loopholes and political favoritism, while the superwealthy look forward to an indefensible $5 billion windfall at year’s end. All this as state and local governments continue to struggle with their finances because of state budget cuts demanded by Gov. Cuomo.

It’s always easier to change the subject and scapegoat rather than face up to the ugly truth. Gov. Cuomo and his front group are in the wrong place on these issues, as they talk about shared sacrifice and the common good. Clearly they mean for some, not all.”

COMPTROLLER LIU, MAYOR BLOOMBERG AND LABOR LEADERS ANNOUNCE AGREEMENT IN PRINCIPLE TO REFORM PENSION INVESTMENT GOVERNANCE AND MANAGEMENT

Proposal Delegates Investment Authority for All Five Pension Funds to One Newly Created Body Authorized to Hire an Independent Professional Manager

First Major Reform of Pension Investment Structure in 70 Years

NEW YORK, NY – City Comptroller John C. Liu, Mayor Michael R. Bloomberg and organized labor leaders today announced an agreement in principle to reform and professionalize the investment governance and management of the City’s pension funds. The proposal would place investment advisory authority for all five of the currently independent City pension funds under one new pension board, supported by an independent, full-time staff led by a Chief Investment Officer, who would be appointed to a fixed term. The proposal is intended to insulate management of pension assets from any political office, further professionalize it and make it more consistent with industry best practices. The proposal aims to increase investment returns, lower the City’s pension costs, protect and strengthen pensions for current and future retirees, enhance accountability and guard against the possibility of fraud and corruption. The City’s five pension funds currently have 58 trustees, each with a different weighted vote, who decide investment policy. No two systems are governed, managed or operated in the same manner, resulting in complexity, inconsistency and inefficiency. The Mayor and Comptroller made the announcement at City Hall, where they were joined by District Council 37 Executive Director Lillian Roberts, United Federation of Teachers President Michael Mulgrew, Uniformed Firefighters Association President Stephen Cassidy, Patrolman’s Benevolent Association President Patrick Lynch, Detectives’ Endowment Association President Michael Palladino, Captains Endowment Association President Roy Richter, and Pension Board Trustees.

“The City’s pension system dates back more than one-hundred and fifty years,” said Comptroller Liu. “This new paradigm will enable us to achieve better results in today’s more complex financial markets. Depoliticizing, professionalizing, and streamlining the management of our pension funds will enhance investment returns and reduce pension costs. Our labor leaders and trustees have delivered a huge win for taxpayers and City workers alike with this game-changer.”

“In Washington these days, government seems to be hopelessly gridlocked, with each party stressing only what keeps them apart,” said Mayor Bloomberg. “But in New York City, we thankfully act differently – bridging differences and bringing people together to find common ground on the toughest issues and working together for the good all New Yorkers. We’re overhauling an antiquated pension management system that has needed restructuring for generations – depoliticizing the process, further professionalizing the staff and implementing industry best practices. While these reforms should make a big difference in the management of City pension assets, we still desperately need pension benefit reforms to significantly reduce the pension costs that are siphoning dollars away from City services.”

The investment reform proposal will simplify a complex, outdated investment structure to ensure the $120 billion New York City Pension System is best-in-class among peer institutional investors worldwide. Investment expense savings will be realized, primarily by developing in-house investment expertise for certain asset classes. Over the long term, superior returns would generate significant taxpayer savings through consistent long-term investment direction, strategic risk management, increased accountability and authority, first-mover advantage and a high-caliber, specialized staff.

The major provisions of the investment reform proposal are:

* The five New York City Pension Funds would delegate investment authority to a newly created pension investment board composed of City and labor representatives. The board would set strategic objectives and policy for the funds.
* The Bureau of Asset Management would be moved out of the Comptroller’s Office and be re-established as an independent investment entity that will determine consultant and asset manager pools and manage certain asset classes in-house. The proposal calls for the investment entity to be staffed by experienced industry professionals and for compensation packages to attract those investment professionals.
* A Chief Investment Officer will lead the new investment management entity. The Chief Investment Officer will report to the new pension investment board – not to any individual elected official – and will be appointed to a fixed term that will not coincide with citywide election cycles.
* The new pension investment board and new investment staff will adopt best-in-class ethics, governance, training, and code of conduct policies and procedures to protect against fraud, waste and abuse.

The assets of the five pension funds will remain separate under the proposal and each fund will continue to administer benefits and make disability determinations independently.

“We strongly support these efforts to bolster the pension investment returns for New York City Firefighter pensions,” said Steve Cassidy, UFA President. “We’ve been encouraging the city to develop a strategic plan for the pension investments that allows it to enhance investment returns for beneficiaries and be much more responsive to changes occurring in the global financial marketplace.”

“The proposal to create an investment board is a win-win situation for the taxpayers and the participants of the retirement system,” said District Council 37 Executive Director Lillian Roberts. “District Council 37 members receive an average annual pension of $17,000. Therefore, a proposal that would help secure the pension of the workers without reducing what is already a small pension is welcome. We applaud Comptroller John Liu for thinking outside the box and for bringing all affected parties to reach consensus on moving forward with this proposal.”

“It sounds like an innovative approach to providing relief to taxpayers while maintaining pension guarantees to our past and present employees,” said Detectives’ Endowment Association President Michael Palladino. “The details are critical to any deal but it is certainly worth listening to.”

“The world of finance has changed dramatically over the last few decades,” said Roy T. Richter, President of Captains Endowment Association. “Any modification to our current pension system that enables it to adapt quickly to shifting market conditions and preserving pension assets needs careful review and consideration. In difficult economic times, our leaders must examine unconventional partnership to carry us through. Vision, coupled with outside the box thinking is the brand of resilience that makes New York City great.”

“New York’s business leadership has long advocated for efficiencies in the City’s pension systems,” said Bill Rudin, Chairman of the Association for a Better New York. “Today’s innovative agreement is a step toward reducing taxpayer burdens while protecting current and future municipal employee pensions. Congratulations to Mayor Bloomberg, Comptroller Liu and labor leaders for this historic initiative.”

“The New York City Pension System has now adopted a world-class public pension governance model,” said Andrew Ang, Ann F. Kaplan Professor of Business at Columbia Business School. “The reforms should allow the new entity to significantly impact returns – by actions as simple as bringing in-house and managing cheaply what had been previously outsourced at much higher costs.”

“The newly proposed changes would move New York City Pension Funds to the front of the class of public pension organizations not just in the USA, but internationally as well,” said Keith P. Ambachtsheer, Director of the Rotman International Centre for Pension Management at the University of Toronto and President and Founder of KPA Advisory Services.

The New York City Pension Systems consist of five separate funds: The New York City Police Pension Fund, the New York City Fire Department Pension Fund, the New York City Teachers’ Retirement System, the New York City Employees’ Retirement System, and the Board of Education Retirement System.

Full implementation of the investment reform proposal requires State legislative approval. Representatives from the Mayor’s Office, the Comptroller’s Office and organized labor will work together to finalize the proposal and work with elected officials to implement the plan.

Details of the proposal are available online at http://pirnyc.com

PEF Executive Board approves sending revised tentative contract to membership

Albany – The Executive Board of the New York State Public Employees Federation (PEF) today voted to send a revised contract agreement with the state to the full union membership for ratification.

The board is made up of 137 union leaders representing PEF members from every state agency. Ballots for ratification will be mailed immediately to union members. Votes must be returned by Thursday, November 3 for counting that day by the American Arbitration Association in Manhattan.

“The Executive Board recognizes the changes we were able to obtain under the revised agreement address many of the concerns of our members,” said PEF President Ken Brynien.

“Today’s vote gives hope to the 3,496 members who face losing their jobs if the contract is not approved. The revised agreement balances the needs of all of our members and I am strongly encouraging our membership to ratify the new agreement to save the jobs of their co-workers while preserving the level of service to taxpayers,” Brynien said.

The revised agreement is a four-year contract that includes reimbursement for the nine furlough days, payable at the end of the agreement. Additionally, since the deficit-reduction leave would now be a wage deferral, there is no effect on final average salary for purposes of retirement. The agreement also includes changes to the productivity enhancement programthat would allow members greater opportunity to use vacation time to offset health insurance costs.

The agreement calls for no salary increases for years 2011, 2012 and 2013. A salary increase of 2 percent is included for 2014. The lump-sum payment included in the earlier tentative agreement would be exchanged to reimburse furlough days.

Downloads:

Tentative Agreement
Heads of Agreement with the State
Side by side comparison of the July and October tentative agreements

St. Luke’s-Roosevelt nurses take strike vote this week

Manhattan, Nov. 1, 2011 — Registered nurses at Manhattan’s St. Luke’s-Roosevelt Hospital will vote from Tuesday, Nov. 1 – Friday, Nov. 4 to decide if they will strike the hospital in the coming months.

The 1,367 nurses, members of the New York State Nurses Association, have been at the table with hospital management for months – but have been unable to reach a settlement, due to the hospital’s refusal to move on issues important to the nurses and their families.

Two major issues separating the parties are management’s desire to raise employee premiums for health benefits, up to $100 a month, and also a pay offer that does not keep up with metropolitan area costs.

“The hospital says it cares about nurses and their families, but their stance in bargaining shows the opposite attitude,” said Elaine Charpentier, the NYSNA negotiator. “These key issues affect all our nurses, as health care and salaries are worries for all New Yorkers.”

The association has proposed reasonable financial packages that address the hospital’s concerns, but management has rejected them. In addition, the hospital has not addressed the association’s concerns about staffing, safe patient handling and workplace violence.

“We hope when we return to the table that management will offer a proposal that doesn’t hurt nurses and their families,” said Charpentier. “We are committed to quality care for our patients and community, by having a hospital whose working conditions can help recruit and retain the best nurses possible.”

St. Luke’s-Roosevelt nurses are the second NYSNA bargaining unit in Manhattan to cast a strike vote within the past two weeks over unreasonable management contract demands. New York-Presbyterian nurses voted last week to authorize a strike.

NYSNA is the voice for nursing in the Empire State. With more than 37,000 members, it is New York’s largest union and professional association for registered nurses. The Association represents registered nurses, and some all-professional bargaining units, in New York and New Jersey. It supports nurses and nursing practice through education, legislative advocacy and collective bargaining.

Mayor and Comptroller Seek Joint Management for 5 Pension Plans

by Steven Greenhouse

Mayor Michael R. Bloomberg and the New York City comptroller, John C. Liu, proposed a far-reaching overhaul of the city’s five pension plans on Thursday, saying they believed that a new, consolidated investment strategy could save the city at least $1 billion a year.

At a City Hall news conference, the mayor and the comptroller, backed by the leadership of several unions representing city workers, said they would seek to merge the pension plans’ five boards, which have 58 directors, into one far smaller board that would oversee the plans’ combined $120 billion in investments. The plans cover 237,000 retirees and more than 300,000 current city and city-affiliated employees, like teachers, firefighters, police officers, sanitation workers and correction officers.

“We’re overhauling an antiquated pension management system that has needed restructuring for generations,” Mr. Bloomberg said.

The proposal, which calls for the first time for a full-time in-house professional investment staff to manage the city’s pension plans, requires state approval.

Mr. Bloomberg expressed confidence that Albany would approve the plan because the unions are backing it.

Gov. Andrew M. Cuomo voiced interest in the proposal, saying that he would like to reduce the “terrible financial burden” of public pensions, and that, for the city, “this seems like an initiative that could accomplish that goal.”

Mr. Bloomberg and Mr. Liu said their proposal was in many ways modeled on the pension plans of Harvard and Yale, which have enjoyed high investment returns in recent decades. They said they hoped the city could attract a star investment manager who would be appointed by the new unified pension board, and not by an elected official. Under current law, the city comptroller picks the investment staff that advises the five pension plans.

In an interview, Mr. Bloomberg said the proposed new system would help attract top-notch investment managers, because the system would not be politicized and because the manager would oversee such a large investment fund.

“The more investment returns you have, the less that taxpayers have to put in,” he said, “and that’s money for doing the kinds of services and the quality of services the public wants.”

But Mr. Bloomberg also said he remained intent on persuading the city’s unions and Albany to agree to a less-generous pension package for new employees, in the hope of holding down the city’s future pension costs.

Mr. Liu, calling the proposal a “game-changer,” said it would allow faster decision-making and generate substantially larger returns for the pension funds, saving the city money because it would need to contribute less each year out of its budget toward its pension plans. He said that the city spent about $400 million each year on pension consultants, and that under the new plan, it would cut that amount by bringing much of its investment management in-house.

“We’re not reinventing the wheel here,” he said. Union leaders praised Mr. Liu for spearheading the pension plan consolidation. They said his push to revamp the pension plans had been going nowhere for months but came together swiftly over the past two weeks.

The city’s municipal union leaders generally praised the proposal, and they are expected to help persuade the trustees of the five plans to vote to delegate their decision-making powers to the new, unified board.

“The current system is like trying to turn around the Queen Mary in the Hudson River, and by the time you turn it around, it may already be in the wrong direction,” said Steve Cassidy, president of the Uniformed Firefighters’ Association.

Harry Nespoli, chairman of the Municipal Labor Committee, the umbrella group for the city’s public employee unions, also praised the proposal. “Any time you’re talking about larger returns for the city, it’s less of a burden for the city,” he said. “And when you’re talking about larger returns for the members, it’s better for the members. It’s definitely something worth pursuing.”

But Pat Lynch, president of the Patrolmen’s Benevolent Association, said, “The devil is in the details.” He praised the proposal, but said he would reserve a full endorsement until he knew how the board would be chosen.

City officials have not specified the makeup of the investment board, but said it would have about a dozen members, some named by unions and some by the mayor and the comptroller.

The proposal was welcomed by business leaders and pension experts.

Keith P. Ambachtsheer, director of the Rotman International Center for Pension Management at the University of Toronto, said that when cities or states replaced old-fashioned, inefficient, often politicized pension management plans with ones that call for independent, professional managers who oversee large plans, that generally improves their investment returns by 1 percent to 2 percent a year.

With $120 billion in the city’s pension funds, such an increase could mean an additional $1.2 billion to $2.4 billion.

Mr. Ambachtsheer also praised the New York proposal for seeking to make sure that the members of the smaller single pension board would be well informed about investment management.

“It’s good to see New York City sort of jump to the head of the queue in terms of how it runs its pension system,” he said.

Andrew Ang, a business professor at Columbia Business School, also praised the proposal, saying, “The New York City pension system has now adopted a world-class public pension governance model.”