Pew Trust Report In Error Says DC 47

The Pew Charitable Trusts recently released a flawed and one-sided study that is mostly a repeat of old arguments, charges AFSCME District Council 47. The Pew report, said Cathy Scott, president of District Council 47, “serves as a source for many who argue significant cuts in the health care of City workers are necessary for Philadelphia to survive.”

Scott singled out various statements of misinformation in the Trust report. She said, “It is important to dispel some myths that persist in the public discourse about City employee benefits. We want to provide the real facts about the health-care benefits unionized City workers receive.”

Scott cited as misinformation the claim the City pays unions for their health care, so the unions in turn can negotiate their own coverage, while keeping the savings to use for union purposes.

She said, “In fact, the unions don’t get the benefit money. All monies must be used for the exclusive purpose of providing benefits to participants and beneficiaries and to defray the reasonable costs of administering the benefits. The City has representatives on all of the Boards of Trustees of the health benefit trust funds. The City has full access to all the books and records of the trust funds. Copies of annual audits are available.”

As for the misinformation in the report that states union funds don’t live within their means and are imprudent when using negotiated contributions, Scott answers, “Most other cities set a level of benefits in collective bargaining and then have to fund those benefits, regardless of increasing costs during the life of collective-bargaining agreements. The City gives each of the funds a budget – and the job of the Trustees is to make sure that the benefits are provided within that budget. And they do. The funds need ‘reserves’ in order to weather crises – including those inflicted by the City. The DC 47 plan, back in the early ‘90s for example, was practically starved to death by the City’s refusal to come to a reasonable agreement on increases. The funds need reserves to weather premium and cost increases that might be higher than anticipated.”

Scott cited also as misinformation the claim retiree health benefits are excessive compared to other cities.

She noted the Pew Study compared Philadelphia to cities that offer lifetime benefits. They note the benefit package is in line with what other cities offer, but claim Philadelphia’s annual average costs are higher. Philadelphia provides health-care benefits for only five years after retirement. In cities that offer lifetime coverage, the average cost goes down when retirees reach 65 because Medicare, and not the private insurer, is the primary payer. But in Philadelphia, most of those on retiree coverage exhaust their five years of coverage before they reach age 65 and then pay premiums out-of-pocket.

She also ridiculed the claim that consolidating all of the health plans into one will save money for the City. In reality, she states, “There has never been a credible study that shows such a move would reduce costs. In fact, it is apparent the union-administered Health and Welfare Funds are far more efficient and offer better health care, with real money-saving wellness plans, disease-management programs and generic-drug incentives. The City, on the other hand, has much work to do to gain more accountability for the benefits it offers to its non-union workforce.

Former City Deputy Secretary of Financial Oversight Linda Berkowitz summarized her view of the City-administered plan during testimony back in 2001 before City Council, ‘The documentation regarding the City-administered plan is poor … is poor, P-O-O-R ... it may be among the poorest I have ever experienced.’”