New York City has issued a request for proposals for a new health care provider for its municipal employees, deputy mayor for operations Cas Holloway said Wednesday.
Speaking at a breakfast meeting of the Citizens Budget Commission watchdog agency at the Princeton Club in midtown Manhattan, Holloway called labor contracts and health care overhaul the most pressing challenges.
"The city's budget is fragile at best," said Holloway. "Unless we address these issues together, realistically and comprehensively, we cannot sustain the level of services to which New Yorkers are accustomed."
Mayor Michael Bloomberg presented his preliminary $70.1 billion budget to the 51-member City Council, which must approve one by June 30. While the city's proposed budget for fiscal 2014 is balanced, it faces out-year gaps of $2.3 billion in 2015 and $1.8 billion for each of the following two years.
The health care RFP comes as city employees are working under expired contracts, and with only eight months remaining in Bloomberg's 12-year tenure.
Group Health Inc. and HIP Health Plan of New York now administer employee health plans. GHI and HIP began in 1937 and 1947, respectively. In 2006 they affiliated under the common parent, EmblemHealth.
Holloway said a health plan with wellness incentives that parallel those in the private sector could save about $400 million annually. "The stakes are very high, $400 million is real money and I think that's only the beginning."
Moody's Investors Service rates the city's general obligation bonds Aa2, while Fitch Ratings and Standard & Poor's assign AA ratings.
Holloway said he is seeking the help of the Municipal Labor Committee, the coalition of unions that represents all city workers.
"We've been working on this for a long time, though [Hurricane] Sandy delayed us a little bit," he told reporters after his speech. "This is not even cutting edge at this point. We're about 10 years behind and that's being generous. This needs to be done. We hope to wrap this up before the end of the term."
The city last solicited requests for proposals in 2007, said Holloway, whom CBC president Carol Kellermann called "a straight-shooting, data-driven analyst and manager." Holloway is a former city environmental protection commissioner.
Holloway, who said employee wages account for nearly 55% of the fiscal 2014 budget, said a new labor agreement rests on two fundamentals -- no retroactive raises and health care overhaul. But he acknowledged that the labor unions might want to wait until a new mayor takes office.
"The conventional wisdom is to wait, because the devil you don't know is better than the one you do. But whoever is coming in will be looking at the same fundamental top sheets that I'm looking at. It's an interesting and difficult situation."
