NYC Grapples With Hospital Pricing Roulette…

 https://www.work-bites.com/view-all/eha4hq70iqtqp08mwu63jjsk8z83cf

“New York State law does not allow for-profit corporations to own or operate hospitals…despite their non-profit status, these networks increasingly act like for profit corporations.” — NYSNA Executive Director Pat Kane, RN

 

By Bob Hennelly

A New York City Council bill that aims to bring transparency and accountability to NYC’s opaque hospital pricing via a consumer-friendly website is a step closer to consideration by the full body after a Feb. 23 hearing.

Under the initiative sponsored by Council Member Julie Menin, the city would establish the Office of Healthcare Accountability. In addition to the website, the office would audit city expenditures on employee-related health care costs as well as make recommendations on how to contain those costs. The office would evaluate collateral issues contributing to the run up in healthcare costs like the profit margins of major insurance providers.

The proposal has garnered significant union backing as well as attracted early support from four four-fifths of the Council, Public Advocate Jumaane Williams, and four of the city’s five borough presidents.

“This office would help consumers maneuver through the complex world of hospital pricing for approximately 300 procedures since the information will be housed in one specific site and provide a standardized list for all procedures,” testified Henry Garrido, executive director of DC 37 and co-chair of the Municipal Labor Committee. “As consumers we price comparison shop for gas, groceries and even for expensive items such as homes and automobiles. Yet, there is no mechanism available for patients to compare the costs of medical procedures by hospitals.”

Garrido told the panel that a decade ago, “the cost of providing healthcare for city workers was $3 billion, about $800 million of that was hospitals. Ten years later that cost is nearly $12 billion and of that, hospitals are 62 percent.” 

The DC 37 leader continued. “Even when the number of procedures went down during COVID, where elective procedures were reduced because you didn’t have elective procedures anymore, the [hospitals] costs went up by 150 percent. How is it possible for hospitals to continue robbing workers of their hard-earned dollars?”

NURSES WEIGH IN

Pat Kane, RN, the executive director of the New York State Nurses Association, testified that the Office of Healthcare Accountability was necessary for unions and healthcare consumers concerned about affordability. 

“The hospital industry has experienced a wave of consolidation and the creation of large hospital networks that are also acquiring physician practices and other healthcare services to maximize their market power and generate profits,” Kane told the panel. “These hospital networks are all non-profits because New York State law does not allow for-profit corporations to own or operate hospitals… despite their non-profit status, these networks increasingly act like for profit corporations.” 

Kane said as the private non-profits were “shedding maternity and psychiatric services” they focused “their marketing efforts on patients with private insurance and leave low-income, underinsured and Medicaid patients for the safety nets to handle.”

The NYSNA executive director singled out New York Presbyterian Hospital. She said the hospital network had “some of the highest charges for many procedures in the city of New York” and was making “more than $1 billion in profits” while its CEO made more than $11 million, adding that she had “similar examples from many other big hospital networks.”

Representatives from Mayor Eric Adams’ administration said the measure had merit, but expressed some reservations about the proposal in its current form.  Daniel Pollak, First Deputy Commissioner, for the Mayor’s Office of Labor Relations pushed back on having the new office auditing city employee health costs. 

OLR’S CONCERNS

“We negotiate city employee health costs with the Municipal Labor Committee. We work with them,” Pollak said. “We do our own audits, and we really feel that is a matter that is best left to that process between OLR and the Municipal Labor Committee, but overall, we are greatly in support of the effort to improve price transparency.”

Claire Levitt, Deputy Commissioner of Health Care Cost Management, also with the Mayor’s Office of Labor Relations, said the new office’s emphasis on hospital pricing transparency would strengthen the city’s hand in its negotiations.

“All this information on transparency will very much help inform what we are negotiating with the Municipal Labor Committee, with what are negotiating with the hospitals,” Levitt said. “We are to some extent, despite the fact that we have access to a great deal of information, we are still somewhat in the blind about hospital pricing and insurer pricing.”

Levitt continued. “And we hear from both the hospitals and the insurers that the information is confidential and while we have our own data, we don’t know all the things that drive that data.”

Witnesses at the hearing were not universally in support of the bill. In addition to push back from the Greater New York Hospital Association, members of the NYC Organization of Public Service Retirees testified in opposition over concerns the new office could undermine existing protections of their healthcare benefits.

END RUN?

“Our fear is that this new office proposed by Intro 844 may be a way for the city and the union to get around the judge’s decision in our last round of court and usurp the current protections the City Council currently offers retirees,” said Mary Pizzitola, retired FDNY EMT and the president of the NYC Organization of Public Service Retirees [NYCOPSR]. “Why do we think this? Because the city and the MLC have made a practice over the last few decades to water down health coverage, create obstacles in that coverage with prior authorization, narrowed networks of providers and increased co-pays on employees and retirees in the name of savings.”

Pizzitola added that she was skeptical that creating another Mayoral office would make any difference calling out what she said was OLR’s current inability to “manage its current fiduciary responsibilities” with it taking “hours” for OLR “to answer a call.”

The president of NYCOPSR reiterated her group’s call for a Blue-Ribbon panel of all stakeholders to come up with ways to ensure quality affordable healthcare for New York City civil service retirees without forcing them into a controversial for-profit Medicare Advantage style plan. Pizzitola testified her group had flagged many examples of waste in the current system including, “the city paying for two deceased spouses of retirees for over five years, and the city paying for full family GHI plan for a couple on Medicare Advantage, and these are just a few.”

David Rich, Greater New York Hospital Association’s executive vice president of government affairs, testified the new office “oversteps the city’s jurisdiction by re-interpreting federal regulations and then judging hospitals according to its own interpretation of federal rules.”

Specifically, Rich cited recent requirements being promulgated by the federal Centers for Medicare & Medicaid Services that he said were already in place requiring hospitals to publicly disclose their pricing.

“There’s been more heat than light surrounding this bill and the rhetoric has been unfortunate,” Rich said. “Accusations of greedy hospitals making enormous profits are unwarranted and couldn’t be further from the truth. More than 75 percent of hospital payments in New York City are set by the state and federal governments through Medicare and Medicaid.”

According to Rich, “hospitals lose money on every single Medicare and Medicaid patient because of these government-set rates. Medicare only covers 85 percent of costs and Medicaid only covers 61 percent. No enterprise can survive for such underpayment of their services unless they can negotiate higher payments from insurers, or they are subsidized by the state.” 

Rich said he believed the measure “virtually ignores behemoth national for-profit health insurance companies that make enormous profits in New York’s healthcare economy and ships those profits out of New York to their parent organizations and shareholders. It is ludicrous to believe that if somehow hospital payment rates were reduced these plans would share savings with consumers. They would merely add to their profits.”

Council Member Julie Menin, the bill’s lead sponsor, took issue with Rich’s assertion the measure would not help drive healthcare costs down.

“I strongly rebut that,” Menin countered. “If you look at other jurisdictions that have done price transparency — the state of California saw a 20-percent reduction and some savings. The state of New Hampshire five percent, the state of Massachusetts similarly. Obviously, we know price transparency works. That’s the intent behind the bill to drive down costs and to give consumers the valuable information they need to be able to look at the different price disparities.”

Menin, who previously served as the New York City Commissioner of Consumer Affairs and Worker Protection, insisted the wide variation in pricing needs more public scrutiny and the federal regulations on pricing disclosure were not yet effective.

“The issue is really the skyrocketing hospital prices,” said Menin. “Whether it’s $55,000 at Montefiore for a C-section versus $17,000 at another hospital — whether it’s a $10,000 colonoscopy at one New York City hospital versus $2,000 for another — it’s the skyrocketing hospital prices that are causing this issue and that’s why this bill is meant to address transparency.”

Cora Opsahl is the director of 32BJ SEIU’s Health fund which provides healthcare benefits to over 210,000 32BJ union members and their families. According to Opsahl, the building services union provides health benefits with no employee premium sharing and is self-funded.

As a consequence, 32BJ’s Health Fund has access to hospital pricing information through the claims data they receive from their third-party administrator.

“We have a 20-person analytics and data engineering team that uses this information in addition to other publicly available data, to drive our decisions,” Opsahl testified. “However, because a recent report showed that less than 10 percent of New York hospitals are in full compliance with federal transparency laws, we are very limited in our ability to make valid comparisons across hospitals and providers.” 

Opshal continued, “It is also very challenging to gather data from so many different sources and do the work to make sure it is viable. For employers that don’t have the analytics team that we have, it is even more challenging. A centralized entity that collects and disseminates this information would be a game-changer for us and many other employers who are trying to manage hospital prices.” 

 

 

 

 

 

 

AARP AFL CIO Push Medicare Disadvantage - Instead of fighting, they are joining with the insurance companies to corporatize Medicare

Even as labor negotiations continue to be inhibited by rising healthcare costs, labor refuses to expose the corruption and waste within the ongoing privatization of Medicare, harming its members, reducing union credibility, and contributing to the downward spiral of health benefits for all,

https://www.corporatecrimereporter.com/news/200/aarp-afl-push-medicare-disadvantage/

AARP and the AFL are now partnering with insurance companies to push Medicare Disadvantage – euphemistically called Medicare Advantage – on their own members.

That’s according to a report in the January 2023 issue of the Capitol Hill Citizen. (Print only. To get a copy go to capitolhillcitizen.com)

Medicare Disadvantage insurance plans induce seniors by offering advantages that traditional Medicare doesn’t offer – like vision and dental coverage. That’s the upside. The downside is that when you actually get seriously ill, the disadvantage is that when you get sick, you might not get the coverage you were promised.

Now, about half of all seniors in the United States are in Medicare Disadvantage. The unions should be fighting against the move to privatize Medicare.

Instead of fighting, they are joining with the insurance companies to corporatize Medicare.

The big daddy of unions, the AFL-CIO, is itself now partnering with the giant insurance company Anthem to push Medicare Disadvantage plans on its retired union members.

The first ad for the campaign read: “Introducing AFL-CIO Medicare Advantage group plans, provided by Anthem. Comprehensive coverage available exclusively to retired union members.” 

The ad featured a picture of a retired union member getting a hug from his wife.

Last year, the AFL-CIO reiterated its support for traditional Medicare.

“Medicare is a pillar of the healthcare system,” the AFL-CIO said.

Then why is the AFL working to privatize it?

Ed Grystar is a labor organizer and founder of the Western Pennsylvania Coalition for Single Payer Healthcare.

“Even as labor negotiations continue to be inhibited by rising healthcare costs, labor refuses to expose the corruption and waste within the ongoing privatization of Medicare, harming its members, reducing union credibility, and contributing to the downward spiral of health benefits for all,” Grystar told Capitol Hill Citizen.

According to the federal Medicare Payment Advisory Commission’s 2022 report to Congress, at least $12 billion in overpayments were made to Medicare Advantage plans in 2020 by the federal government.

“It might instead be time to stick it to the entire non-profit industrial complex, and the insurance industry with which they stand, and move across the street and stand with the grassroots citizen movements, kick the private insurers out of Medicare altogether and bring the USA into the 22 century by adopting full public and far more efficient Medicare for All with free choice of doctor and hospital,” the Citizen wrote.

What about Bernie Sanders (I-Vermont), the champion of Medicare for All in Congress?

In an e-mail blast to his list of supporters at the end of last month, Sanders says that he will be taking the gavel as Chair of the powerful Senate Committee on Health, Education, Labor and Pensions Committee (HELP).

Number one on his list? 

Health care.

“We must have the courage to stand up to the greed and recklessness of the insurance companies and the pharmaceutical companies,” Sanders writes.

No mention of Medicare for All.

In fact, last month, Sanders was calling public interest leaders to get their ideas on what hearings he should hold in the committee.

“Of course, we can’t do Medicare for All,” Sanders told a number of the activists, including Susan Rogers, the outgoing chair of Physicians for a National Health Program.

Why not? 

He didn’t say. But the answer was clear to all.

“The Democratic Party isincapable of standing up to the greed and recklessness of the insurance companies and the pharmaceutical companies,” the Citizen wrote.

“And Bernie has become a player.”

“Of course, we can’t do Medicare for All.”

 

Cross-union Retirees Organizing Committee Update

 

Cross-union Retirees Organizing Committee crocnyc22@gmail.com

Talking Points - What's happening Now?

In May 2021, word of mouth got out that the City was planning to switch all 250,000 City union retirees from Medicare into Medicare Advantage, which is neither Medicare nor Advantage, but nothing more than a dressed-up name for Managed Care run by private for-profit insurance companies, with a whole bureaucratic structure of preapprovals and denials. If we retirees wanted to keep our Medicare – the benefit that has been in place since 1967 – we would have to pay for the supplemental part of the insurance -- Senior Care-- out of our own pockets – a cost of about $2400 per person a year, a not-insignificant sum for many of us and an absolutely impossible sum for thousands of City retirees on pensions of $10, $15, $20,000 a year – people in their 80s, 90s, over 100; people who had worked in low-wage City jobs for years, mostly women and people of color. A handful of us formed CROC – the Cross-union Retirees Organizing Committee – and started spreading the word to other retirees, pressuring our local politicians and contacting the media, organizing rallies at City Hall, etc. Other groups were also reaching out: DC37 Retirees Assn.; UFT’s retirees group Retiree Advocate; COMRO (Council of Municipal Retiree Organizations), PNHP (Physicians For A National Health Plan), PSC (Professional Staff Congress), etc. The movement got a major boost when Marianne Pizzitola, a DC37 retiree, pulled together the NYC Organization of Public Service Retirees (NYCOPSR) and found a law group that would take our case. With that, we were off to the races: Yes, you can fight City Hall – we did, and we won. In February 2022, The NYS Supreme Court ruled that, under Administrative Code 12-126, the City did not have the right to charge retirees for our Senior Care. The City appealed – and lost. What’s Happening Now? That should have been the end of it, but of course it wasn’t. Two things: Copays: As of January 2021, the City and Emblem Insurance, which handles our Senior Care, started charging $15 copays for every single encounter with medical professionals. Sounds like nothing, but those copays sure add up when you’re getting PT or chemotherapy 3-4 times a week – not uncommon for many seniors. And many of us are seeing multiple doctors for multiple conditions. So NYCOPSR has taken City Hall to court again and the court immediately issued a temporary injunction against the copays, effective January 12 of this year. For the moment, retirees are no longer liable for these copays. We’ll see how this plays out in court. Administrative Code 12-126: When it lost its appeal in October 2022, the City tried a new tack: change the law. Right now, 12-126 provides the same coverage and protection for all active City union members, retirees, and their dependents. The City wanted to add some extenuating language to 12-126 that would create different “classes” and levels of coverage. In other words, it would shatter equal coverage for all and pit different groups against each other at the negotiating table: retirees versus actives; teachers against school kitchen workers, uniformed workers against admin staff, etc. The City – and its helpmate, the Municipal Labor Committee – went all out to get City Council to amend 12-126 with this new language. The retirees came out in force to oppose the amendment – emails, phone calls, zoom meets, rallies, culminating in an 11-hour hearing before the Civil Service and Labor Committee. And by now, a lot of active workers were recognizing the threat to their benefits as well. Divide and conquer didn’t work: City Council decided to table 12-126 for now but can resurrect it at any time. The language stands: equal coverage, cost-free, for all – active workers, retirees, and dependents. What’s at the Heart of All This? Money. And the Health Insurance Stabilization Fund. What is the Stabilization Fund? It was created under Bloomberg in 1984 to pay for active workers’ health insurance premiums when they exceed the benchmark set in 12-126. It also puts money into the various City unions’ welfare funds, used for other health-care expenses: podiatry, dental, hearing, eye glasses, drug plans. The problem is, the Stabilization Fund is going broke. Why? Because since its inception it has been used as a slush fund, to pay for non-health-care-related costs, primarily negotiated wage increases for active workers. A few hundred million here, a billion there – pretty soon, there’s nothing left. So the City and the MLC, which basically means the UFT and DC37, the two biggest unions, came up with a plan: dump all the retirees out of Medicare/Senior Care and into Medicare Advantage, which is funded by a subsidy from Medicare itself – an amount that is significantly less than is currently being spent on retirees’ health care. Use the money saved to replenish the Stabilization Fund. It’s a win-win for the City and the unions. The only losers are the retirees, who have no voice in their former unions. As for the actives, they won’t find out what’s in store for them until it’s too late!  The city is already looking for ways to save money on their health care. Now What? We’ve won this battle but the war continues. Eric Adams is threatening the “nuclear option,” eliminating all other health care plans except Medicare Advantage. Anyone who refuses to accept the MA plan would no longer be a “covered City retiree” — i.e., would lose all health care coverage currently paid by the City, possibly including drug plan and reimbursement for the Medicare premium as well as Senior Care medigap insurance. This would add up to about $12,000 for a couple. It would be a severe blow to those of us on “middling” pensions, but it would be utterly devastating to the tens of thousands of City workers who had worked in low-wage jobs or retired 15, 20, 25 years ago and are now caught by the effects of inflation and fixed incomes. So the fight is now even more dire, because people believe that we have won when in fact we are now entering a much more dangerous phase of the war. Our next step appears to be a fight to enshrine our right to premium-free Senior Care coverage in the City code. We expect that this will be a long and difficult fight. Are There Better Solutions? Yes! But what we need is time – and a Time-Out. And for that we turn to the PSC – the Professional Staff Congress, which has come up with a plan. It goes like this: There is another City fund, the Retiree Health Benefit Trust. It was created in 2006 to pay exclusively for retiree health benefits, including: • Pre-Medicare health insurance • Medicare supplemental health insurance, Senior Care(for those age 65+) • Medicare Part B & IRMAA reimbursements At the start of FY2023, the trust had a balance of $4.58B. Retiree benefit costs are anticipated to be $3.6B in FY2023, leaving a surplus of close to $1B. The PSC is proposing that for the next two to three years, the City not reimburse the Trust by $500 million a year and instead deposit that money into the Stabilization Fund. During this Time-Out period – and this is crucial – a stakeholders committee that would include the City should research and enact changes that will result in the long-term containment of health-care costs. Some of these changes, all considered briefly by the City and the MLC but never pursued, include: •        Creating a self-insurance plan to cover the million City workers, retirees, and their dependents, resulting in vastly reduced overhead costs now currently incorporated into private for-profit insurers’ charges •    Having the City negotiate directly with the private nonprofit hospitals for limits on reimbursement rates, which are extortionate at present •   Consolidating the 100+ union welfare funds into a single group, which would have greater clout in negotiating group drug purchasing costs •   Auditing current insurance providers for potential fraud, duplication, and waste Health-care analysts, such as Prof. Barbara Caress, member of the Professional Staff Congress (PSC) estimate that such changes could potentially result in annual savings of $1B – at no cost or threat to the existing coverage of City workers, retirees, and their dependents. That is a true win-win.

Favor oprimir aquí para versión en español

Talk about fraud? Here's another example

New Medicare Rule Aims to Take Back $4.7 Billion From Insurers Read about in the New York Times

 

Talk about fraud? Here's another example

New Medicare Rule Aims to Take Back $4.7 Billion From Insurers Read about in the New York Times

MLC Leader On Medicare Advantage: ‘We’ve Got The Contract Written Up’ - Work-Bites

 A good comprehensive article on the overall situation. Note the comment from the guy from New Jersey, where teachers have been moved from Medicare to MedAdv -- my friend called about one of his friends who was not aware of the change. Her husband has cancer and has paid very little for treatment and then suddenly started getting enormous bills from the hospital where they said she is now on MedAdv and they don't take that insurance. So claims by these officials should be taken with a big grain of salt. Another issue I read about is that our fearless negotiators are trying to get the insurers to cut down on the number or prior authorizations - which means there is resistance.

 

 

 https://www.work-bites.com/view-all/mlc-leader-on-medicare-advantage-weve-got-the-contract-written-up

MLC Leader On Medicare Advantage: ‘We’ve Got The Contract Written Up’

LatestTri-State News

Feb 4

Mayor Eric Adams’ administration and the heads of the MLC continue to push Medicare Advantage against the objections of many retired and active municipal workers. Photo By Joe Maniscalco

By Bob Hennelly

The deadline for the City Council to change its Administrative code that covers how the city provides healthcare insurance for its active-duty workforce and retirees came and went last month without the Council opting to act after a marathon Jan. 9 public hearing where scores of city retirees blasted the proposal.  

Meanwhile, the Adams administration and the Municipal Labor Committee are closing in on a deal with Aetna to provide a Medicare Advantage plan for the city’s 250,000 retirees, according to Harry Nespoli, chairman of the Municipal Labor Committee, and president of Teamsters Local 831, which represents the Department of Sanitation’s rank and file workforce.

“We are still working on it,” Nespoli told Work-Bites. “We got the contract written up and our official people are all looking it over right now — we are just going to continue moving towards it.” Nespoli added that the MLC had made progress on getting Aetna to further reduce the number of procedures that would require a pre-authorization.

“We have eliminated a lot of the pre-authorizations already and we want to continue doing that because that is the biggest gripe with Emblem [the current provider], and from what we are hearing these pre-authorizations take too much time to get the o.k. for something,” Nespoli said. “If you look throughout the country, Medicare Advantage is the way it’s going for a large group of people. It’s just that you have to make sure that you have the right contract, and you justify the needs of your members---who have had good medical coverage and which we don ‘t want see cheapened now.”

An Adams administration source described the negotiations as ongoing, and a United Federation of Teachers source confirmed an earlier Crain’s New York report that UFT was “requesting an independent entity to conduct pre-authorization reviews for medical procedures in addition to Aetna’s reviews.”

The MLC’s controversial embrace of Medicare Advantage is the outgrowth of deals it cut with the de Blasio administration to find billions of dollars in healthcare costs savings as unions settled well over 100 labor contracts that Mayor Bloomberg had left unsettled for years. And multiple union sources confirm Mayor Adams finds himself in a similar fix with union contracts lapsed and the understanding that no progress can be made on any of them without a resolution of the healthcare question.

FRAUD FOR PROFIT?

Billions Wasted on Useless War ships - Lobbying to save ships cost us billions

Here is a perfect example of the hypocrisy over cutting budgets. $500 million a boat that doesn't work right.

 https://www.nytimes.com/2023/02/04/us/politics/littoral-combat-ships-lobbying.html

The Pentagon Saw a Warship Boondoggle. Congress Saw Jobs.

1 day ago — After years of crippling problems and a changing mission, the Navy pushed to retire nine of its newest ships. Then the lobbying started

.

Published Feb. 4, 2023Updated Feb. 5, 2023, 12:08 p.m. ET

10 min read

By Eric Lipton

JACKSONVILLE, Fla. — The 387-foot-long warships tied up at the Jacksonville Navy base were acclaimed as some of the most modern in the United States fleet: nimble, superfast vessels designed to operate in coastal waters and hunt down enemy submarines, destroy anti-ship mines and repel attacks from small boats, like those often operated by Iran.

But the Pentagon last year made a startling announcement: Eight of the 10 Freedom-class littoral combat ships now based in Jacksonville and another based in San Diego would be retired, even though they averaged only four years old and had been built to last 25 years.

The decision came after the ships, built in Wisconsin by Fincantieri Marinette Marine in partnership with Lockheed Martin, suffered a series of humiliating breakdowns, including repeated engine failures and technical shortcomings in an anti-submarine system intended to counter China’s growing naval capacity.

“We refused to put an additional dollar against that system that wouldn’t match the Chinese undersea threat,” Adm. Michael M. Gilday, the chief of naval operations, told Senate lawmakers.

The Navy estimated that the move would save $4.3 billion over the next five years, money that Admiral Gilday said he would rather spend on missiles and other firepower needed to prepare for potential wars. Having ships capable of fulfilling the military mission, he argued, was much more important than the Navy’s total ship count.

Then the lobbying started.

A consortium of players with economic ties to the ships — led by a trade association whose members had just secured contracts worth up to $3 billion to do repairs and supply work on them — mobilized to pressure Congress to block the plan, with phone calls, emails and visits to Washington to press lawmakers to intervene.

“Early decommissioning of littoral combat ships at Mayport Naval Station would result in the loss of more than 2,000 direct jobs in Jacksonville,” a coalition of business leaders from the Florida city wrote last summer.

The effort targeted members of Congress who represent communities with large Navy stations and have collected hundreds of thousands of dollars in campaign contributions from the same military contractors that help maintain and operate these ships. They included Representative Rob Wittman, Republican of Virginia, who represents the Hampton Roads area, home to the world’s largest naval facility.

Within weeks, lawmakers offered amendments to the 2023 Pentagon spending authorization law that prohibited the Navy from retiring four of the eight ships in Jacksonville and the one in San Diego.

“These ships are not perfect — no new class of ship is,” said Representative John Rutherford, Republican of Florida, who represents the Jacksonville area and introduced one of the amendments after a meeting with a delegation of Florida officials who had flown to Washington to protest the Navy’s decision. “But they are fulfilling operational needs as we speak.”

 

In December, the amendments were adopted as part of the spending bill passed by Congress and signed into law by President Biden, stymieing the Pentagon’s wishes by allowing only four of the nine targeted ships to be retired.

“Lawmakers are acting like hoarders and forcing the services to keep stuff they don’t want and need,” said Steve Ellis, president of Taxpayers for Common Sense, a conservative group that seeks to limit government spending. “This is more about parochial concerns than defense priorities.”

The Navy and Lockheed are still negotiating how much the contractors should have to pay to resolve design flaws in the ships’ propulsion systems.

But having largely won the battle, at least for now, to keep the Freedom-class ships operational, the contractors who built them have already returned to promoting a new class of vessels with an even higher price tag.

Fincantieri has already started work on the first of 20 new ships that will be known as the Constellation-class frigate, a $1.1 billion vessel that will eventually replace the troubled Freedom-class ships.

“Now let’s deliver the frigates,” Robert Tullar, a sales executive at Fincantieri, said during a Navy conference last month.

A Failed Mission

Cmdr. Brad Long was on the bridge of the U.S.S. Little Rock on what was to be its maiden military mission. The Freedom-class ship and its crew of 110 were heading out to help Central and South American nations combat drug trafficking and other illicit activity.

It was a proud moment for him and his crew, a chance to show off the strengths of their new ship. It was designed to travel in shallow, near-shore (littoral) waters, and to go as fast as about 50 miles an hour, an extraordinary speed for a warship.

The vessel was also equipped with an armed MH-60S Seahawk helicopter and an autonomous helicopter, known as a MQ-8 Fire Scout, which could provide surveillance of any drug traffickers in nearby waters.

“You are sitting up there and it was kind of amazing,” said Commander Long, now retired, recalling the moment they set out on the deployment in early 2020, after more than two years of training and preparation. “Just how fast you were going and how smooth.”

But the dream began to crumble as the ship approached the Panama Canal, Commander Long said in an interview, detailing the sequence of events publicly for the first time since he left the Navy in late 2021.

First, the ship’s diesel generators started to malfunction, and the ship briefly lost electric power. The littoral combat ships were built to be operated by a relatively small crew, and did not carry sailors to fix complicated mechanical issues. So Commander Long decided to head back to the Navy base in Guantánamo Bay, Cuba, where the ship sat for about a month waiting for repairs.

An even more complicated issue had emerged with the ship’s radar system — meaning it could not target its guns or look for incoming air threats. A contractor repair team was flown from Germany to Cuba, but the necessary fix was so complex that the Navy decided to send the U.S.S. Little Rock back to Mayport.

And that is when an even bigger problem surfaced.

Commander Long was in his cabin near the bridge when a crew member brought him a sample of the ship’s engine oil. Instead of the caramel-colored, slippery stuff that lubricates the gears, the oil looked like it had been mixed with silvery glitter. The oil was polluted, it turned out, with specks of metal from high-speed clutch bearings of the gears that had broken into tiny bits.

The ship had lost half its engine power — and it had to limp back home.

The Navy soon confirmed that the gear system failure was a design flaw in the Freedom class, meaning all of the vessels then based at Mayport. (A second version of the littoral ships, known as the Independence class, is also in service but has fewer problems.) Engine failure reports were filed on 10 of the 11 deployments these ships were sent on, according to a report last year by the Government Accountability Office examining both classes of the ships.

The final insult came early last year, when the Navy concluded that a towed sonar system developed for the littoral combat ships by Raytheon Technologies, another major military contractor, was not up to the job.

Raytheon had already produced a promotional video featuring this sonar system, nicknamed DART, as it and a second device tracked down an enemy submarine. “Target acquired, launching torpedo,” the video’s narrator says, before the enemy submarine is shown as it is blowing up and sinking.

But in real life, the Pentagon found that engines on the Freedom-class ships were so loud that they handicapped the ability to detect enemy submarines. The Raytheon sonar system itself also swerved erratically as it was dragged from the ship at high speeds.

As a result, the Pentagon said last year, the ship’s most vital mission — hunting submarines — would be abandoned.

Since the ship had been conceived in the aftermath of the 2001 attacks as a “street fighter” to confront less sophisticated enemies from rogue states, according to an official Pentagon history of the vessel, it was built with less extensive protective armor than typical warships. As a result, it is more vulnerable to anti-ship missiles or mines of the sort that it might confront in a conflict with enemies like China. It also is a “gas hog” at its top speed, limiting its range.

As the threat from China rose, doubts intensified within the Pentagon about the value of the littoral combat ships, with some even giving them a new nickname: little crappy ship.

“We need a capable, lethal-ready Navy more than we need a larger Navy that’s less capable, less lethal, and less ready,” Admiral Gilday told a Senate committee. “Those ships, relative to others, just didn’t bring the war-fighting value to the fight.”

Asked about the ships’ troubles, Mark Vandroff, the chief executive of Fincantieri Marinette Marine and a retired Navy captain who served in the Trump White House, referred questions to Lockheed, the primary contractor on the project.

Patrick W. McNally, a spokesman for Lockheed — when also asked what went wrong — said that the company was “proud of our longstanding partnership with the United States Navy,” and was working with the Navy to “deliver affordable capability improvements.”

Pushing Back

The lobbying campaign to block the retirement of the ships started with a burst of phone calls to Capitol Hill, local officials in Jacksonville, and the Navy’s ship-maintenance division. Orchestrating the appeals was Tim Spratto, the general manager at the sprawling Jacksonville shipyard for BAE Systems, which in 2021 had won part of a Navy contract worth as much as $1.3 billion to do repairs on the troubled Freedom-class vessels.

Mr. Spratto, who joined BAE after a nearly two-decade Navy career, also serves as the president of a local trade group representing the Jacksonville yards. He started his pitch with a call to the office of Mr. Rutherford, Republican of Florida, who serves on the House Appropriations Committee.

“He is a great friend of the shipyard,” Mr. Spratto said in an interview. “He carries the water for us.”

A delegation of business leaders from Jacksonville headed to the airport for a “fly-in” to Capitol Hill for a series of meetings with lawmakers including Senator Rick Scott, Republican of Florida, and Representative Jack Bergman, Republican of Michigan, a member of the House Armed Services Committee. Those gatherings were set up by the lobbying firm run by Brian Ballard, a top Republican fund-raiser with close ties to former President Donald J. Trump.

Other industry players joined in, targeting key House lawmakers in Virginia where work on the littoral combat ships is also performed. Letters, emails and other appeals, including opinion pieces in trade magazines, began to pour in.

“Don’t give up the ship,” Tony Parisi, the retired Navy captain, wrote in an opinion piece for Real Clear Defense, a trade publication, citing the War of 1812 warning from a Navy captain, James Lawrence, as his ship was sinking.

Mr. Parisi did not mention that he was part of the team at General Dynamics that trains the crews that operate the littoral combat ships at Naval Station Mayport.

One Fincantieri executive, who was not authorized to speak on the record, said he was instructed to be careful not to be too public about the campaign, given that they were also trying to convince the Navy to buy its new class of ships as replacements.

Soon enough, several lawmakers, including Mr. Rutherford and Mr. Wittman, were introducing amendments to block the retirement of all or at least some of the ships, even as other lawmakers, mostly Democrats, pushed to allow the Pentagon to retire all nine ships.

 

“If the LCS was a car sold in America today, they would be deemed lemons, and the automakers would be sued into oblivion,” Representative Jackie Speier, Democrat of California, told her House colleagues in June. (She has since retired.) “The only winners have been the contractors on which the Navy relies for sustaining these ships.”

.

There remains a great deal of pride in these ships among those who work on and around them, as was apparent during a visit last month to the Mayport base near Jacksonville.

The Little Rock and six other littoral combat ships were tied up there, with teams of Navy sailors working and in some cases living on the ships. The Little Rock — one of the ships now slated for retirement — still has not been out for its second deployment since the failed trip in 2020. During sea trials early last year that followed 19 months of repairs, the Little Rock’s engines broke down again.

But U.S.S. Sioux City, another of the Freedom-class ships that is slated for decommissioning, spent five months last year on a deployment that took it a total of 31,000 miles through waters around Europe and as far as the Gulf of Oman, while it did training exercises with foreign allies. It was proof, Navy officers and backers of the ships said, that the ships should be saved.

“I’d love to see us keep all the ships,” said Captain David Miller, the commander of the Florida-based littoral combat ship squadron, said in an interview. “We have stuff we can do with all the ships.”

There remains a great deal of pride in these ships among those who work on and around them, as was apparent during a visit last month to the Mayport base near Jacksonville.

The Little Rock and six other littoral combat ships were tied up there, with teams of Navy sailors working and in some cases living on the ships. The Little Rock — one of the ships now slated for retirement — still has not been out for its second deployment since the failed trip in 2020. During sea trials early last year that followed 19 months of repairs, the Little Rock’s engines broke down again.

But U.S.S. Sioux City, another of the Freedom-class ships that is slated for decommissioning, spent five months last year on a deployment that took it a total of 31,000 miles through waters around Europe and as far as the Gulf of Oman, while it did training exercises with foreign allies. It was proof, Navy officers and backers of the ships said, that the ships should be saved.

“I’d love to see us keep all the ships,” said Captain David Miller, the commander of the Florida-based littoral combat ship squadron, said in an interview. “We have stuff we can do with all the ships.”

Mr. Wittman, who helped lead the effort to save the ships, is one of the biggest recipients of campaign contributions from military contractors and their employees, including many from companies that help build, equip or maintain these ships, such as Lockheed, Raytheon and General Dynamics.

In an interview, Mr. Wittman said that the lobbying from the ship repair contractors had played a role in his efforts.

“I can’t tell you whether it’s a predominant factor,” he said in January, while at a conference sponsored by Fincantieri and other shipbuilding companies in Virginia. “But I can tell you it was a factor.”

Fincantieri, the builder of the Freedom-class ships, has not suffered from the squabble over the ships it built.

Its Wisconsin shipyard is still building the Navy’s last Freedom-class littoral combat ship while also starting work on the new $1.1 billion Constellation-class ship that will replace it.

“When you’re a ship builder, your goal is to build the ship that the Navy tells you to build,” Mr. Vandroff, Fincantieri’s chief executive, said in an interview as dozens of Navy commanders, midshipmen and others were assembled in front of him at the Surface Navy Association conference in Virginia to grab a glass of Prosecco and some Wisconsin cheese. “What the Navy chooses to do with it — that is their choice.”

John Ismay contributed reporting

A correction was made on 

Feb. 5, 2023

: 

An earlier version of this article misstated where an opinion piece by Tony Parisi appeared. It was in Real Clear Defense, not Breaking Defense.

 

Image

The U.S.S. Minneapolis-St. Paul docked at Fincantieri Marinette Marine’s shipbuilding facility in Marinette, Wis.Credit...Tannen Maury/EPA, via Shutterstock

In December, the amendments were adopted as part of the spending bill passed by Congress and signed into law by President Biden, stymieing the Pentagon’s wishes by allowing only four of the nine targeted ships to be retired“Lawmakers are acting like hoarders and forcing the services to keep stuff they don’t want and need,” said Steve Ellis, president of Taxpayers for Common Sense, a conservative group that seeks to limit government spending. “This is more about parochial concerns than defense priorities.”