CWA 1180 - News

City threatens to terminate PICA program; Rx burden would shift to unions' funds
January 2005

In December, New York City Labor Commissioner James Hanley announced the city's intention to terminate the PICA drug program effective January 31, 2005. As a result, responsibility for provision of these drugs (psychotropic, injectable, chemotherapy and asthma medications) would revert to individual union health and welfare funds.

The fund that has covered the cost of PICA drugs for 1180 members and other city workers for the last several has been hemorrhaging money as the increases in drug prices continue to far outstrip the rate of inflation. According to the city, the fund will run out of money in April or May of this year. Municipal Labor Committee (MLC) and city negotiators have not (as of this writing)) negotiated any new revenue sources for the fund.

Part of the contractual relationship between New York City and its unions requires the city to contribute money annually to a Stabilization Fund. This fund is used to pay for a portion of the health benefits that city workers get; it functions essentially to equalize the contributions to different health plans. (The city pays for health benefits at the HIP rate, but some plans cost more than that and so those costs are covered out of the Stablization Fund.) Several years ago, when the Stabilization Fund had extra money in it on a regular basis, the city and city unions negotiated a deal in which PICA drugs were paid out of the Stabilization Fund instead of the individual union health and welfare funds. (These funds, too, are paid for by employer, i.e., city, contributions, but each union administers its own plan.) Many union health and welfare plans have faced significant financial problems in the face of skyrocketing drug costs; the PICA deal helped ease some of this pressure. Local 1180's own Security Benefits Fund was not in as severe trouble, but the shift in costs to the Stabilization Fund was a welcome relief nonetheless.

The cost of PICA drugs has risen 15-20% every year. This has increased the costs of the Stabilization Fund by tens of millions of dollars every year. The shift of PICA coverage back to union health and welfare funds would only shift the problem. To meet rising costs, additional contributions to the funds must somehow be generated.

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