COUNCIL OF THE CITY OF PHILADELPHIA PUBLIC HEARING BEFORE THE COMMITTEE ON LAW AND GOVERNMENT - - - Room 400, City Hall Philadelphia, Pennsylvania Monday, 6/19/01 12:16 p.m. - - - RES. 000476 - Authorizing Committee on Law and Government to investigate whether the City-administered health plan current and in the past has provided the most comprehensive and cost-efficient coverage to City employees for the premiums paid, and whether the City could provide more comprehensive and less costly coverage to the approximately 8,000 employees and retirees currently covered by this plan if the other operation were pursued. PRESENT: COUNCILMAN DAVID COHEN, Chair COUNCILMAN MICHAEL A. NUTTER - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 /01 LAW AND GOVERNMENT COMMITTEE I N D E X Joyce Wilkerson, Mayor's Chief of Staff . . . Linda Berkowitz, Deputy Secretary . . . . . . 3 Financial Oversight Joseph Goldberger, Retired City Employee. . . 20 3 /01 LAW & GOV'T - BILL 2 P R O C E E D I N G S
Will the staff retire to the. . . The continued meeting of the Law and Government Committee on health items related to Resolution 000476 will continue. I'd ask Miss Berkowitz and Miss Wilkerson to please come to the stand. (Witnesses come forward.)
Before you testify, will you identify yourself for the record. Is it going to be Miss Wilkerson?
Yes. My name's Joyce Wilkerson, and I'm Chief of Staff to Mayor John Street. I guess the Administration has been asked to provide additional documents. Linda, do you want to just describe what we have?
I'm Linda Berkowitz, Deputy Secretary of Financial Oversight. And at the hearing last Thursday, I mentioned the fact that we had been attempting to get certain information from the unions, including DC 47, and I committed to share a letter that we had 4 /01 LAW & GOV'T - BILL 2 received, in terms of a copy, a letter of June 8, 2000 from IBC to Mr. Cronin, and we're prepared to share that now, as well as a copy of a letter from the City's Personnel Director to Bob McAllister of District Council 47, dated June 15th, asking for additional information on utilization and their rate coverage, and we're prepared to hand that out now.
All right. Will the Sergeant-at-Arms please deliver the letter to the committee.
There also is a request for documents pertaining to the City's contention that there are cost savings to be achieved through consolidation. We've managed to identify additional documents. We've referred those to the legal department to --
Could you hold it one minute. Could the Sergeant-at-Arms please close the window in the rear. I'm having difficulty hearing even with my hearing aids because of the competing noise from the streets. And if the Sergeant-at-Arms could close the blinds so that there won't be the glare shielding the witnesses. Thank you very much. 5 /01 LAW & GOV'T - BILL 2 All right. Now, could you repeat what you were saying about that document.
Council has requested documents that support the City's position that there are cost savings to be achieved through consolidating of the plans. Thus far, we've not produced the documents. We've conducted further investigations and have, through our counsel, identified documents that appear to be responsive. We've referred them to the Law Department so that we can be assured that they're not protected by some kind of privilege or otherwise confidential. Those were referred to the Law Department today. I hope to have a response from the Law Department after it's had an opportunity to review the documents.
Well, perhaps you could help me. I cannot possibly conceive of any documents which would not be confidential to the Mayor but which would then be confidential to the Council.
I think that there are documents that are developed in connection with labor negotiations that may be protected -- I don't 6 /01 LAW & GOV'T - BILL 2 know for sure. I've sent them to the Law Department to ask for guidance on that. As you know. . . I don't have anything to add to that.
Well, we'll see. But we're going to ask whether -- first when you're going to furnish that document to us. Will it be by the point end of the week?
All right, if you could do that, I would like to ask that it be sent to my office by the end of the week so that it could be examined, and included, I would like to know whether or not it represents the total document or whether any part of it has been kept back on a confidential basis.
All right? Good. Now, is that the same document -- this is addressed to Miss Berkowitz -- that we were 7 /01 LAW & GOV'T - BILL 2 talking about at the last session that you last saw in the possession of Mark Foley?
That is correct. All right. So I assume that contact was made with that office, and as a result of that, that's where the document came from, or was it found within the possession of the City directly?
I believe it's from Mark Foley's office. I haven't done an extensive check of the City offices, but I think the document came from Mark Foley.
All right. I'd like a statement as to its origin, you know, whether it came from his office or whether it was yours when it's included, when the material was sent in.
Councilman Nutter is present at this hearing today and we welcome him, even though he's here, even though Council is officially in recess with respect to committee hearings and Council meetings. Let me ask one question on retirees. What happens when a retiree whose policy may cover 8 /01 LAW & GOV'T - BILL 2 -- let's take a woman retiree who has a husband who's covered by her insurance policy. What happens when the retiree dies? Say a retiree retires one day and a day after retirement, the retiree dies. What happens to the insurance coverage for, in this case, the widower? It could be the widow or the widower. Is that coverage maintained or does the widower or widow immediately lose coverage upon the death of the retiree?
I don't know the answer to that, Councilman Cohen, but I would be happy to get you information on that.
I confess that it's the first time over the weekend that that thought ever occurred to me about what a terrible position it must be for a spouse, once the period of time the City gives coverage to the retiree, once that period lapses, or in the event of the death of the retiree. And if the coverage is lost at once, it seems to me to be a huge problem, but get me -- check out that information. 9 /01 LAW & GOV'T - BILL 2
I will certainly get you the information on spousal coverage.
Because we are attempting in Council to make a detailed study of the whole area of the earth with respect to health insurance, 'cause it's the first time we've undertaken such a study. All right. Now, today's meeting was intended to be very brief, just to cover this material that was left over from the last material. Though I'm going to be asked that the material be presented by no later than the close of business Friday to my office so that the staff can go to work on it. With respect to the other material, when would it be expected that the committee would get it?
Councilman, as I've indicated, one of the problems that I am having is locating some of the documents that you've asked for. And what I have done is ask the City's Personnel Department, as well as the Cities's Law Department, to go through all of the documents that they have pertaining to the City-administered health 10 /01 LAW & GOV'T - BILL 2 plan and to provide me with a list of all of the documents available. As I indicated, it's very difficult for me because I don't know the universe of documents. I do not have those chronologies as yet, although I do know that the Law Department and Personnel are working to locate all of the documents. I believe that I can put information together for you on the savings -- there was -- one of the items that Council had requested was documentation on the savings in health benefits accruing to the City as a result of using an outside consultant. I am attempting to put that together for you from using historical documents. Some of the other documents that you asked for, I'm not sure that they exist. And as both Miss Wilkerson and I have explained to the committee, the documentation on the City-administered health plan has been less than satisfactory.
Do you have any additional documents at this time that you've not furnished to the committee?
Have you made up a list of documents that you were asking for people to look for?
Yes. I'm primarily using the list of document requests from this committee.
I mean, it's been circulated, asking, you know, in order to develop a more thorough chronology. We've done the initial review of the Personnel Documents; those documents have been provided to you. We've, you know, had contact with Mr. Foley, you know, where there were documents that we had reason to believe existed that we didn't have, and those are the ones that I commented on earlier. In order to make sure that we're not missing documents, you know, there's this request to develop a chronology and --
Well, can I suggest this, because I think there's got to be some way to cut through this (indiscernible). I'm going to recess this hearing until Tuesday, July the 10th, at 12 o'clock noon. I will expect at that time to receive all of the documents covered by the letters that have been sent to you by the committee. And 12 /01 LAW & GOV'T - BILL 2 with respect to what you don't produce at that time that's covered by that letter, I will issue a subpoena for its production so that we can proceed to go further in our quest for the documentation.
'Cause otherwise, I see no end to our knowing whether or not there is a genuine effort being made to secure the material. It seems to me that there had to have been a lot of study made before the City took the positions it took two years ago at the negotiating table. I believe it's two years now -- time goes very fast, it may be only one year.
But I believe it's two years, but it seems to me that the material exists and that the effort has to be produced. Councilman Nutter.
Thank you, Mr. Chairman. Just one quick question. Good afternoon, Miss Wilkerson. Good afternoon, Miss Berkowitz. Miss Berkowitz, I tried to recall the tail-end of the statement that you made in response 13 /01 LAW & GOV'T - BILL 2 to a question Councilman Cohen asked a little while ago, and maybe it was just an affirmative statement on your part. You said that the documentation on the City-administered health plan has been less than. . . ?
What that means is that -- we've been testifying to that effect that it has been arduous gathering all of the information that this committee has requested.
I understand that the request may be voluminous but --
Your statement was that the documentation on the City-administered 14 /01 LAW & GOV'T - BILL 2 health plan has been less than adequate.
Some of it may not exist. Some of does not exist in an organized fashion.
All right. Now, when you talk about the City-administered health plan, you're talking about the plan that everyone who's not in the union is in?
How could the documentation not exist or be less than adequate? How is that possible?
Well, I didn't say no 19 documentation exists. If you look at the requests articulated by Councilman Cohen in his June 4th letter to Miss Wilkerson, there were very specific requests for information. I believe that we have provided Council with most of that, but it was very difficult to do that because it was not -- it did not exist in any organized fashion. And so we had 15 /01 LAW & GOV'T - BILL 2 to put it together incrementally. Some of the requests that we have not yet responded to may in fact not exist in the way of actual documentation, such as some of the analyses that have been requested.
Well, just so I understand, you're saying that analyses may have taken place at some point in time about various proposals, but that the -- either the underlying assumptions that led to whatever the proposal was or the decision-making may not presently exist but may have existed at that time and subsequently no longer exists. Is that --
I am saying it may have not existed or it may have existed and folks can't find it.
I mean, wouldn't you want to hold on to some of that material just for both in constitutional memory and -- I mean, if something was a good idea at one time, you might think it's an even better idea based on further research history or whatever. I mean, if you tried to come back to the same idea, wouldn't you want to have the previous information that made you think it 16 /01 LAW & GOV'T - BILL 2 was a good idea in the first place?
Councilman, I'm going to say this as diplomatically as I know how. I wish I could say that I thought that there was enough thoughtfulness behind some of this that somebody might have actually contemplated shredding things, but I don't believe anything has been shredded.
For the record, it's Shoshana Bricklin. I work on the technical staff for City Council. Miss Berkowitz, you indicated that you were having the Law Department put together a list of every document or all of the material that pertains to the City-administered health plan; is that correct?
No, that it has within its own files, but it does not have everything. 17 /01 LAW & GOV'T - BILL 2
Well, would it be possible, as you were going through, for you to ask specifically what we requested to also have that list of what exactly they have, because perhaps my question -- my sense is that if you do not -- if the City does not have the analysis in the form that we want, they may have the underlying documents from which we could make an independent evaluation. So we'd like to see your analysis but it would be good to see the list of the documents that are in the Law Department's hands in terms of the City-administered health plan.
I would have to discuss that with the Law Department in term of what's in its own files. I will be happy to share with the committee the list of documents that I received from the Personnel Department, which should have a much more comprehensive file on all documents pertaining to the City-administered health plan since the Personnel Department is the benefits administrator.
I'm going to ask for a momentary recess. (Short recess taken.) 18 /01 LAW & GOV'T - BILL 2 - - - (Proceedings resume.)
I don't have in front of me the requests that appeared under my signature addressed to you, but the intent was not limited to the Personnel Department; the intent is whatever exists anywhere under the jurisdiction of the Mayor's Office, because we don't know how the functions and duties may be assigned. So please interpret the request for production of documents not to be limited to the Personnel Department. It never once occurred to me that anybody would so construe it. We want everything in the possession of the City, and "the City" in this case means anything under the jurisdiction of the Mayor or any of the departments also under the jurisdiction of any department where the Mayor has any influence.
That's what we're seeking, not just a narrow listing where something happened to be filed or initiated. If there was a study, for example, in the Managing Director's department, we want that 19 /01 LAW & GOV'T - BILL 2 material. We want anything pertaining to the broad range of the health aspects that the City deals with in its representation of exempt employees.
It never once occurred to me that anybody was limiting it to any one department. That's the reason we deal with it as a City-administered plan; it involves all of the departments.
And I did not mean to imply that we were limiting it; we were not.
And if there exists any documents outside of the Personnel Department, whether it's in the Law Department and thought to be confidential for whatever reason or any other reason, we would want to know that it exists and why it's not being made available. Now, please interpret everything in that respect because that's how the subpoena's going to be -- is going to be that inclusive. And this committee would like to proceed if possible without the use of the subpoena because once we get involved 20 /01 LAW & GOV'T - BILL 2 with a subpoena, we run into the problem of having to swear in witnesses with respect to the production under the subpoenas. We would rather maintain the less formal procedure if it's possible so to do. Is there any other question from any staff member or member of Council? Councilman Nutter? If not, this committee will stand in recess until Tuesday, July the 10th -- what's that? Are any of the witnesses here -- is there anything they wish to say? Come forward. Is it Mr. Lamb? Mr. Goldberger, would you come forward. (Witness comes forward.)
My name is Joseph Goldberger, a retired City employee. And my question has to do with specifically retired City employees who are not represented by anyone as well as present City employees who are in prohibited classes. In January of the year 2002, a new health package will go into effect, and my questions concern that new health package. Who is presently working on the package which has been promised to us in the fall of this year for our consideration? 21 /01 LAW & GOV'T - BILL 2 What possibility is there that City Council can cooperate fully at this time with whoever it is that's doing the negotiating so that we can prevent what has happened in the past? I think it's extremely important to look at what happened in the past, but I think it is probably more important at this time to talk about what is imminent. And let's not repeat what happened in January of this year -- in December of this year when we were handed a package -- accept or don't accept -- and we lost our drug benefits. I would like to see City Council fully participate in that, and I personally would like to see retired and other employees involved either by questionnaire or by committee or by whatever means. We should not be left out this time or we will again have again the same problem that we presently have -- only it will be a year later. Thank you.
All right, thank you. Councilman Nutter, were you raising your hand? If not, I was going to suggest that that will be included as part of the subject on July the 10th at noon. We will want to, I think, discuss it among 22 /01 LAW & GOV'T - BILL 2 committee members.
I'm sure this issue came up at the first hearing on this particular subject matter or maybe at another hearing, but my memory is failing me.
I've waited many years to be able to have that opportunity.
Thank you so much. Nothing like coming in for a hearing and being abused by the chairman in the middle of the summer. Who actually -- I mean, this will sound like a bizarre statement, but who represents the non-represented employees? I mean, who determines or figures out for that group of people what their benefits are or what the package is and what the composition of the package is? We went through, I 23 /01 LAW & GOV'T - BILL 2 think, some of this --
-- at the earlier stages of these hearings or some other hearings.
The Mayor and his office. Generally we've been told it's the Mayor working through the Personnel Director. We don't know whether there is any form of negotiations or whether it's just an RFP that's put out. We don't know what happens once it's put out. We have not been able to find anybody at the mayoral level or at the City Council level that's ever participated in anything that I could reasonably call negotiations. There doesn't seem to be any negotiating.
Well, I mean, what's the basis of deciding what we get or what we pay versus -- I mean, all of the other represented folks have people who -- I mean, they take it as a part of their obligation to try to get the best possible package for what is, I think -- what is it, 80 to 90 percent of the public employee workforce. And then there's, I mean, this other group. And I understand that by our choice, we are generally not, quote/unquote, represented, but it seems to me that, 24 /01 LAW & GOV'T - BILL 2 I mean, someone should say to the companies and for this other group of people, we want to have X package and that there's been some level of discussion with us about what the options are or what the proposals are or what's on the table and what's not on the table, and you have some exchange for feedback.
So far as I've been able to determine in the yearlong course of these hearings, there has never been an opportunity for the retirees to participate, nor has there been any opportunity for any current group of employees, including City Council, in any form to participate in making any final decision or even in being informed of the proposals. The only people that have been involved in decision-making that I've been able to find are the Mayor -- one mayor is alleged to have said, okay to a certain percentage or a substantial or significant percent has to be given to more than one company, something like that. And then somehow or other magically, two companies got business that year and for some years to follow. When the Mayor said that's no longer required, I understand there 25 /01 LAW & GOV'T - BILL 2 were different mayors. Then it went all into one company, particularly when it was pointed out that the savings to the City would be considerable if one company was used. That was what resulted, as I understand, it in the choice this last year of going to one company only. That's the first year that I've known that health benefits go to one company. But no one from City Council -- President Verna has informed me that she's never participated. The staff member said that nothing was ever put before a committee for consideration.
So that the question the retiree raised has full application to City Council as well as to retirees or any other group that are covered.
Councilman, I think there's a great danger in using as a precedent that there is this terrific saving by using one company. I would suggest to you that the evidence, as presented by District Council 47, is that their drug program, which utilizes a separate drug company or a drug maintenance organization, seems to work out a lot better for them. And I would like to see /01 LAW & GOV'T - BILL 2 something like that for the non-represented group. That would mean that it would not be Blue Cross. I don't think personally that Blue Cross's drug selection programs, as represented at least in my case, are an adequate program. I mean, I can give some evidence of what's been happening to me utilizing their Plan H.
I have Plan H Medigap supplement to Medicare, and I do not conceive of that plan as being very adequate. I have had continuing problems with that plan and --
No, I'm asking the question, who administers that drug plan?
It's administered by a pharmaceutical administration company hired by Blue Cross. I think it's Merk-something. I don't know the full name of the Merk organization.
And in the exempt, the company is Rite Aid, which hires a subsidiary to manage its program. There may be differences which, I assume, should be taken into account by anybody doing the negotiating to arrive at the best plan. 27 /01 LAW & GOV'T - BILL 2
That's a most important aspect of finding an adequate drug program. Maybe we can't all have our best wishes, but at least let's look at some of these alternatives and not be bound by precedents. I don't know where the precedent came from that it's better to have only Blue Cross that we're dealing with. I don't think that's necessarily factual in terms of the results.
Oh, I can't share them on the record, Councilman. It would be completely inappropriate at the moment.
I think Mr. Goldberger probably speaks far beyond just the retirees. I think we're all desperately seeking for what seems to be a sensible way of informing different groups that are affected by health plans and drug plans, we're seeking a way for them to participate in the decision-making and arriving at the plan most efficient, most productive, and most 28 /01 LAW & GOV'T - BILL 2 economical all wrapped up in one package, whether it involves one company or a series of companies, but we think that the method that's been used in the past is totally inadequate.
I need to ask Miss Berkowitz from the City Administration a question. (Miss Berkowitz returns to witness table.)
Hi. Thank you for coming back up. Miss Berkowitz, based on the conversation that we've kind of have been having here at the table, what is your knowledge with regard to the review, or some would call it "negotiation," with regards to the non-represented or retiree population with regard to health benefits. What do you know about that?
Linda Berkowitz again. Councilman Nutter, that is one -- because I have very limited knowledge, as I 29 /01 LAW & GOV'T - BILL 2 explained over the course of the last couple of weeks, the whole arena of the City-administered health plan is very new to me. And one of the things that I have been asked to do over the course of the next several months was to review all aspects of the is City-administered plan, including the process by which we negotiate and select coverage, rates, providers for -- and it's the non-represented employees that are included under the City- administered plan.
I understand that. And is it a part of -- I have not seen what's been referred, I believe, as the June 4th letter from the Councilman, I have not seen that. Is one of the requests for information a laying out of the process in a timeline for how and when different things happen related to the City-administered plan from whenever the -- what do they call it at the end of the year, the open-enrollment period? If you kind of took that as either the end or the beginning of the process from there in the November-December time period, what happens in the course of the next year going forward? 30 /01 LAW & GOV'T - BILL 2 Could you -- I know you're trying to get up to speed very quickly, although I know you to be a very quick study. Could you, as a part of the July 10th hearing, lay out for us or be in a position to lay out for us in memo form just once open enrollment closes, so take us back to December -- I believe December 31st, 2000 and lay out for us what has happened since that time up to when you get here July 10th and what will happen July 10th going forward in terms of meetings, discussions, negotiations, documents going back and forth and how the City arrives at whatever the agreed-to price and scope of services for these non-represented and/or retiree populations and what is all involved in that.
I will do my best to put that chronology together for you.
Okay, thank you. Including who actually talks to whom.
All right. Mr. Goldberger, I think that will be the beginning of the process you're talking about. 31 /01 LAW & GOV'T - BILL 2
It's the beginning of the process; I hope it is not too late. It does take a while to do the negotiating and to put things together, and if the letter we received from the Pension Board, which says we will receive our options in the fall, not November or December but in the fall of this year, I think the time period is getting shorter, shorter, and shorter.
Mr. Goldberger, I don't believe our staff has a copy of the letter you're referring to, so I'd appreciate it if you would make a copy of that letter available to Miss Bricklin for our records.
Mr. Chairman, just so the witness is clear on my comments, or I'll give you the background for why I said what I said. For all intents and purposes at least around here, the first notification that we get, we in the City Council -- I'm not sure what happens again with the 32 /01 LAW & GOV'T - BILL 2 retirees. We usually get a letter from the Personnel person out of the Council President's office dated anywhere from December 1st, I think, to as late as one year, maybe December 11th or December 18th, telling us, along with a little red booklet or something, that open enrollment is now open and will be closing usually in about two weeks. That is from my standpoint, from my experience -- I don't know if Councilman Cohen's is the same. That's when we basically get our notification, make a decision, and the end of the process all takes place over about a three-week period of time.
But by that time, the options have already been decided on.
Yeah. Well, I think that takes place probably more in the summer into the fall on the City's side, and then we get, a couple months later, all of the information. I assume that that's how that takes place.
And I understand that 33 /01 LAW & GOV'T - BILL 2 technically, the Ad. Board, the administrative board consisting, I think, of the Finance Director, the City Solicitor or the Mayor is -- no?
The Mayor, the Managing Director, and the Finance Director.
The Mayor, Managing Director, and Finance Director make the decision in accordance with what's conceived to be a provision of the Home Rule Charter so that no groups are involved in the process. All we're involved in is labor individually choosing which of the options are being provided by the Ad. Board.
And I think -- and I'm not sure that the decision that the Ad. Board acts in an unlimited and uncontrolled basis is accurate, but that's the way it's been. And I think Councilman Nutter's suggestion for a statement by Miss Berkowitz in the whole process on July 10th is very much in order, and I think that will be in time to affect what may happen in the future. We thank everybody for attending today, and the session's in recess until Tuesday, July 34 /01 LAW & GOV'T - BILL 2 10th, at 12 noon -- with the understanding, of course, that the documentation concerning that material that purports to show the savings of unification of the health plan will be presented to the staff -- Miss Bricklin, Mr. Shapiro of the staff, Council technical staff, by the end of this week. Thank you and I thank everybody for attending. Thank you, Councilman Nutter. (Adjourned 1:00 p.m.) 35 C E R T I F I C A T E I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia of Monday, June 19, 2001, were reported fully and accurately by me, and that this is a correct transcript of same. RE: COUNCIL COMMITTEE ON LAW AND GOVERNMENT RES. NO. 000426 __________________________________, JOSEPHINE CARDILLO, Registered Professional Reporter