Testimony of the United Federation of Teachers by Geofrey Sorkin, UFT Welfare Fund Executive Director, before the New York City Council Committees on Health and Committee on Hospitals

My name is Geofrey Sorkin and I serve as the Executive Director of the United Federation of Teachers Welfare Fund, providing access to health benefit coverage for roughly 400,000 lives, including our in-service members, retirees and their dependents. On behalf of all of our beneficiaries, I would like to thank Chairs Mark Levine and Carlina Rivera, and all the members of the New York City Council’s Committees on Health and Hospitals, for holding today’s oversight hearing on hospital costs in New York City and the impact they have on access to health care.

I would like to start by highlighting that our city spent nearly $3 billion paying for hospitals bills in fiscal year 2021, which is a 50% increase from the $2 billion we spent just five years ago in 2016. It’s time to intervene. Driving this outrageous surge in health care costs for our city are primarily double digit increases in hospitals costs. We cannot maintain the status quo; it’s time to address this issue straight on before it becomes a fiscal crisis in the future.

New York City’s health care plan, which we are a part of, is a self-funded insurance plan that pays hospital claims using city taxpayer dollars. For educators and the union members we represent, this means the more money we invest in paying hospital claims, the less money we have to better pay our educators so we can continue to attract top talent, and the less money we have to improve our public schools by doing things like lowering class sizes.

An overall lack of transparency and anti-competitive behavior exhibited by the largest New York City hospital networks are to blame for the surge in hospital costs. Contract negotiations with hospitals are plagued with convoluted rules and a lack of transparency as it relates to pricing. This ultimately allows for the biggest players in the city’s hospital industry to raise their prices 6% to 10% every year.

We are at a place where hospital networks like New York-Presbyterian charge 2 to 3 times more for routine medical services compared to other hospital networks for the same quality of care. A normal baby delivery at New York-Presbyterian in 2018 cost 50% more than a normal delivery at Mount Sinai, Lenox Hill, North Shore University Hospital and Long Island Jewish Hospital. And in the event of a hip replacement, New York-Presbyterian charges $83,000 while others charge $58,000.

Standard hospital admission in New York City hospitals ranged from $12,000 to nearly $36,000. We need to rein this in and get it under control. These types of disparities should not exist, especially when most are providing the same quality of care. It’s time to address the price gouging; it’s time to get more transparency.

We need hospitals to disclose information related to pricing when we negotiate our contracts. We also need for hospitals to stop steering away members from innovative treatments offered at competitor hospitals because those treatments may be cheaper than the traditional procedures they offer.

We need to level the playing field so that all hospitals are at an equal footing and we don’t have some charging excessive prices compared to others that offer the same quality of care. Hospitals cannot continue to demand double digit increases every single year and gouge taxpayers and patients for the costs of routine procedures and treatments.

Again, I thank you for taking the time to convene today’s important hearing. Our healthcare costs are ballooning and it does not have to be that way if we address the lack of transparency and anti-competitive behavior demonstrated by some players in the city’s hospital industry. I know that working together we can find a solution before this becomes a true fiscal crisis for our city.