NYC mayor: City workers should pay more for health

By Joan Gralla

NEW YORK, Aug 12 (Reuters) - New York City's public workers should pay more for their health benefits given the "new economic reality," Mayor Michael Bloomberg said on Tuesday, adding co-payments encourage people to make wiser choices.

The term co-payments refers to the charges, often around $10 to $20, that individuals pay when they see doctors. People who work for companies also often have to pay for some of their health insurance premiums.

But about 90 percent of New York City's work force pays no health insurance premiums because they select one of two plans that only has co-payments, according to Doug Turetsky, a spokesman for the city's Independent Budget Office.

New York City has around 310,000 workers, a headcount that includes people the state and federal government pay for.

The city's budget is getting hammered as its hometown industry, Wall Street, has suffered through market declines and massive charges for subprime mortgage losses.

Banks and brokerages are asking the city to return tax payments because they overpaid, and Gov David Paterson wants to cut $250 million of aid counties, cities and towns.

Bloomberg was asked if he would try to cut health costs for new hires the way Verizon Communications (VZ.N) did with its contract. A telecom spokesman said the company will save hundreds of millions of dollars over the next 15 or 20 years.

"Anybody who thinks the state and city are not going to have to look at all of these things in the new economic reality is just making a mistake," Bloomberg told reporters.

The mayor, speaking at a news conference, warned: "All of the choices that are painless have already been made."

Verizon Spokesman, Eric Rabe, said anyone hired after Aug. 2 will only get $430 for each year of service when they retire to spend buying health insurance, for example. People hired before then instead get a more generous defined benefit plan.

The Bloomberg administration has already started saving the billions of dollars that will be needed to pay for its retired workers' health care, a step fiscal watchdogs have applauded.

But the city's health bill for current workers is also daunting: about $4.5 billion this year, according to Turetsky. The mayor, an independent whose second and final term ends in January 2010, wants to prune $200 million from this expense in next year's budget, which starts on July 1, 2009, he added.

That will have to be negotiated with the Municipal Labor Committee, an umbrella group of unions. New York City now is negotiating a new contract with one of its biggest non-uniformed unions, DC 37, whose accord expired in March. A DC 37 spokeswoman was not immediately available.

Bloomberg, noting private workers usually pay more for health care, said this could be an uphill battle for the city. "The public sector unions have always fought that," he said.

The mayor also said a plan to make millionaires pay higher income taxes was a "crazy idea" that would drive people to move to Connecticut and New Jersey. "Only in New York City do you have the people they're proposing to tax," he said.