Testimony submitted to the New York City Council Committees on Hospitals and Health

My name is Anne Goldman, and I’m the vice president for non-DOE members of the United Federation of Teachers (UFT) and the head of the Federation of Nurses/UFT. On behalf of the union’s more than 190,000 members, I would like to thank the members of the New York City Council’s committees on hospitals and health for holding today’s public hearing on establishing an office of health care accountability and creating an independent commission to oversee hospital services pricing.

The UFT strongly supports the Council’s proposal to establish an office of health care accountability that would review city expenditures on employee-related health care costs, make recommendations on how to lower these costs, create a publicly accessible website that would provide information on the costs of hospital procedures and summarize the cost transparency of each hospital. The office also would report on the factors external to hospitals such as the operating costs and profit margin of major insurance providers. We also strongly support the bill to create an independent commission to oversee hospital services pricing for the purpose of increasing access to hospital services, promoting financial stability for hospitals and lowering health care costs for New Yorkers.

As the UFT stated when the bill for the independent commission was originally introduced, hospital costs and insurance profits have been black boxes that municipal unions have sought to penetrate with minimal success. We need greater transparency as we fight to keep quality, premium-free health care for city employees. No one should be afraid of transparency if they are doing the right thing by patients.

The UFT has done significant work over the past years to curb hospital billing, including participating in the Coalition for Affordable Hospitals to rein in out of control hospital costs. Research has shown that New York City hospitals charge record rates. A Rand study conducted in 2020 found that NYC hospitals in 2018 charged an average of 302% of the Medicare reimbursement rate for some procedures. Convoluted rules allow NYC hospital systems to raise their prices 6% to 10% every year.

A lack of transparency also kills competition by allowing the largest NYC hospital networks like New York-Presbyterian to charge two to three times more for routine medical services compared with others – for the same quality of care. For example, a normal delivery at New York-Presbyterian in 2018 cost 50% more than a normal delivery at Mount Sinai, Lenox Hill Hospital, North Shore University Hospital and Long Island Jewish Hospital. New York-Presbyterian also charged $83,000 for a hip replacement versus $58,000 at other NYC hospitals. Over the past several years, the cost of a standard hospital admission (with case mix and severity of admission adjusted) has ranged from $12,000 at some NYC hospitals to nearly $36,000 at other NYC hospitals.

Double-digit increases in hospital costs are also fueling a rise in health care costs. The City of New York spent nearly $3 billion on hospital bills for municipal employees in fiscal year 2021, a 50% increase from the $2 billion spent just five years before in 2016. Despite these enormous costs, numerous studies have found that higher hospital pricing does not directly correlate to higher quality care.

Since New York City’s health care plan is a self-funded insurance plan that pays hospital claims using city taxpayer dollars, these high rates also mean more money is forked out for claims for the educators and union members we represent, and less funding is available for wage increases and other workplace improvements. The high prices that hospitals charge are hurting working families. Every dollar that goes toward costs is one less dollar that can go to wages for workers and, in the case of government spending, that can be used to fund important public services.

We need more transparency. We need hospitals to disclose information related to pricing when we negotiate our contracts. We need hospitals to stop steering members away from innovative treatments that are often cheaper than traditional procedures. We need to level the playing field so hospitals can’t keep demanding double-digit increases every single year and gouging taxpayers and patients for the costs of routine procedures and treatments.

We applaud the City Council for acting on these issues, and we look forward to continuing to work with you to make health care affordable for and accessible to our members and all New Yorkers.