The Medicare Advantage fraud, a bait and switch, is affecting many unionized retirees all over the country — many times unbeknownst to them.
New York is forcing Medicare Advantage on retirees.
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Summary
New York’s highest court green-lit City Hall’s plan to push roughly 250,000 municipal retirees into a private Medicare Advantage contract, rejecting the workers’ claim that they were promised traditional Medicare coverage for life.
Key points
- Unanimous ruling: Judge Shirley Troutman’s opinion for the Court of Appeals found no enforceable promise of traditional Medicare in past labor pacts, overturning lower-court blocks.
- Privatization windfall: At the current benchmark payment of roughly $ 8,000 per enrollee, the switch delivers more than $ 2 billion a year in guaranteed federal subsidies to private insurers.
- National context: Medicare Advantage now covers 32.8 million people—54 % of all beneficiaries—and commands over half of all federal Medicare spending.
- Documented profiteering: Investigators have tallied at least $612 billion in overcharges since 2007, including $82 billion in 2024 alone, as plans up-code diagnoses and deny care.
- Accountability gap: The GAO warns that Medicare-wide improper payments topped $100 billion in 2023, underscoring systemic leakage that privatization exacerbates.
New York’s retirees now stand at the leading edge of a national struggle: Wall Street’s appetite for predictable government cash flows versus workers’ demand for the public, nonprofit Medicare they already paid for.
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The Court of Appeals decision that clears the way for Mayor Eric Adams to funnel New York City’s retirees into a Medicare Advantage contract exposes a brutal arithmetic of neoliberal governance. Progressive observers long warned that the 2018 cost-cutting deal between City Hall and major municipal unions set a trap; now that trap has sprung, and the first victims are the civil servants whose labor built New York’s public wealth.
A broken promise in black-and-white contracts
For decades, city workers accepted lower cash wages in exchange for a clear benefit: guaranteed, city-paid supplemental coverage that sat on top of traditional, federally administered Medicare. By ruling that no such promise exists, Judge Troutman effectively declares that any welfare benefit not hammered into the narrowest statutory iron can be privatized at the stroke of a mayoral pen. The decision aligns with a trend in public administration that treats retiree healthcare obligations not as moral debts but as budget lines to be arbitraged.
The mechanics of the windfall
Under Medicare Advantage, insurers receive a fixed “capitation” payment per member. That payment averages close to $8,000 but can climb significantly higher once risk-adjustment add-ons are factored in. When the city’s 250,000 retirees transition, private carriers will enjoy a revenue stream north of $2 billion annually, cash ultimately drawn from the same Medicare trust fund that retirees financed with payroll deductions.
Critically, the capitation model incentivizes companies to inflate diagnostic codes (making patients appear sicker on paper) and to restrict access to costly care. A 2025 progressive policy analysis pegged the nationwide overcharge at $612 billion since 2007. That sum dwarfs the entire annual budget of the U.S. Department of Housing and Urban Development, illustrating the scale of wealth flowing upward from elder care to corporate balance sheets.
Why the public option was created in the first place
Traditional Medicare exists because the private market once refused to insure older adults at an affordable price. The public program succeeded precisely because it spread risk broadly, negotiated pricing powerfully, and operated on a lean 2% administrative overhead—far below the 15-20% norm in commercial insurance. The GAO’s warning that Medicare and Medicaid lost over $100 billion to improper payments in 2023 should spark a call to abolish private health insurance; instead, privatizers cite the myth of government “inefficiency” to justify handing even more of the funds to the very firms that exploit it.
The racial and economic justice dimension
Kaiser Family Foundation data reveal that Medicare Advantage enrolls a disproportionate share of Black and Latinx beneficiaries. When coverage denials hit, these communities—already burdened by wealth gaps—bear the brunt of delayed diagnoses and unaffordable copays. In New York City, many retirees are women and people of color who integrated public service during the post-civil-rights era. They now face narrower provider networks and prior-authorization mazes that undermine both financial security and health outcomes.
Labor’s strategic misstep—and the path forward
Some New York union leaders signed the 2018 pact assuming that “saving” $600 million annually on the municipal budget would secure raises for active workers. The court’s ruling shows the danger in exchanging deferred benefits for immediate wins without watertight contract language. Progressives must push for reopeners to stipulate “traditional Medicare or equivalent public plan” as the non-negotiable floor. That organizing echoes national calls—led by National Nurses United and the American Postal Workers Union—for a full repeal of the Medicare Advantage program and a transition toward Medicare for All.
The policy alternative: strengthen, don’t segment, Medicare
Congress could claw back Advantage overpayments simply by aligning diagnostic coding rules with evidence-based clinical criteria, as the Medicare Payment Advisory Commission recommends. Redirecting the recovered $88–$ 140 billion per year into Part B and Part D would eliminate premiums and close coverage gaps without requiring any benefit cuts. Taken further, folding retirees back into an upgraded, universal Medicare would create the large risk pool and administrative simplicity that economists from the Congressional Budget Office to the World Health Organization identify as prerequisites for cost control.
Political stakes in 2025
Mayor Adams’s corporate-friendly move comes as he positions himself for an independent re-election bid. Retiree associations, backed by progressives on the City Council, vow to make the privatization backlash a ballot-box issue. Nationwide, the administration’s Center for Medicare & Medicaid Services must decide whether to tighten Advantage regulations or quietly tolerate industry lobbying. The outcome will set a precedent for every public employer grappling with healthcare inflation.
Conclusion: choose solidarity over subsidy
The New York ruling lays bare a conflict between two fiscal imaginings: one views public revenue as a commons for the many, while the other sees it as a revenue stream for shareholders. In the face of evidence—wild overcharges, denied treatments, and sky-high executive pay—progressives insist that healthcare dollars belong at the bedside, not on Wall Street ledgers. Retirees paid taxes under that social contract; the movement’s task is to ensure the contract is honored, not bought out. New York’s retirees may have lost this court round. Still, their fight crystallizes a national demand: end the Medicare Advantage experiment and let public insurance serve the public good, without a profiteer in the middle.
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