Waste of the Day: NYC Healthcare Fund is Out of Cash

Topline: Former New York City Comptroller Brad Lander claims one of the city’s health insurance funds has “no path to solvency” after labor unions used it to cover pay raises, Weight Watchers and more.

The unions illegally drained the fund

Key facts: New York’s taxpayer-funded Health Insurance Stabilization Fund owes $3.1 billion to outside vendors and the city that it’s unable to pay. The actual amount is likely much higher because expenses from 2024 and 2025 have not been totaled yet, according to Lander’s Dec. 30 audit.

The fund was created in 1985 to help employees afford the city’s Group Health Insurance (GHI) plan, a more costly alternative to the older Health Insurance Plan (HIP).

The fund has since been used for several other purposes, which Lander claims is illegal. The city’s labor unions, in their response to the audit, argued the fund can be used for “any mutually agreed upon purpose” reached through collective bargaining.

From 2001 to 2024, the unions used $4.3 billion to fund pay raises, avoid layoffs and cover added benefits like dental and vision insurance. That included $1 billion in 2014 “to support wage increases and other economic items.” 

In 2024, the fund spent $166 million on additional benefits like Weight Watchers, Teladoc virtual doctors’ appointments and a mental health subsidy. However, most of that sum —$131.4 million — was for the city’s Psychotropic, Injectable, Chemotherapy & Asthma program, the audit found.

The audit claims the unions have known since 2018 that the fund was insolvent.

The fund is almost totally out of cash

Since then, the fund’s cash balance has depleted almost entirely. In fiscal year 2019, the fund had $1.1 billion in cash available. But only $3 million was available as of 2024, when considering the cost of health care that has been provided but not yet paid for.

The fund’s shortfall cost the city an estimated $612 million in fiscal year 2025, according to Lander.

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Background: The GHI plan, run by Anthem Blue Cross Blue Shield, was replaced this year by a new plan run by UnitedHealthcare and EmblemHealth.

Lander was also replaced this year by newly elected Comptroller Mark Levine, who said on Jan. 2 that he was going to read the health-care audit “soon.” Mayor Zohran Mamdani said in a press conference that he takes the findings “seriously.”

Summary: There is no medicine that will be able to improve New York’s fiscal health if the city continues spending beyond its means.

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This article was originally published by RealClearInvestigations and made available via RealClearWire.