The FOP, often at odds with the mayor publicly, quietly supported him on this issue - at least in part because union president John J. Shaw relies on the rival Police & Fire Medical Association (PFMA) for political support.
LEHB is a stronghold of Shaw's opposition, led by former union president Robert S. Hurst. The plan has grown increasingly popular in recent years and now represents more than half the city's active officers.
It came under the ax Thursday, when a health-care board created by the city and the FOP met for the first time - without fanfare or even an announcement - and approved a new health-care package for police.
The plan preserves city funding for PFMA, which operates an outpatient clinic and a managed-care network. But effective July 1, the board - made up of four union trustees and one city appointee - will purchase Blue Cross coverage directly from the insurer.
"I would think that's the end of LEHB," said David L. Cohen, the mayor's chief of staff.
If so, it was an execution that was months in the making.
During an arbitration proceeding that began last summer, the administration - trying to curb health-care spending to help balance the budget - argued that both police plans should submit to city oversight and return surpluses built up over the years.
The FOP discreetly signaled that it was willing to go along - so long as the new rules applied only to LEHB.
In January, the union's representative on an arbitration panel that was writing a new police contract proposed a new health care system that would have preserved PFMA while rendering LEHB superfluous - a system much like the one approved last week.
In a confidential draft contract, the union arbitrator, Richard H. Markowitz, said LEHB was merely "a conduit" for city payments to Blue Cross. In words that would not have sounded amiss coming from Rendell, Markowitz said the city was "morally and equitably" entitled to LEHB's reserves, estimated at $2 million to $5 million.
The proposal would have allowed PFMA to keep its reserves, which total $13.5 million.
In the end, the arbitration panel overruled Markowitz and ordered both health plans to surrender their surplus funds. It also sharply reduced the monthly payments they receive from the city.
But the arbitrators left the door open for the mayor and the union to set up a new joint health program and cut LEHB out. And that is precisely what they have done.
It is unclear what will happen to LEHB's bank accounts, its 11 employees and its three-story headquarters at 1237 Spring Garden St., a block from the FOP lodge. Thomas J. Lamb, the LEHB administrator, said Friday that he knew nothing about the action by the new health board.
Shaw, the union leader, said police officers would receive informational packets shortly explaining the new health package. Those choosing to remain under Blue Cross will be transferred administratively from LEHB to the new joint plan and will have no break in coverage, he said.
Shaw said LEHB was excluded from the new program not for political reasons, but because the board could get a more attractive Blue Cross package dealing directly with the insurer.
For years, PFMA and LEHB have vied aggressively for members and the accompanying city payments.
They have made pitches to new recruits, assailed each other with fliers and faxes, and tried to entice officers to switch plans during twice-a-year "open seasons." The rivalry has spilled over into union elections, in which major candidates are usually aligned with one plan or the other.
PFMA, which grew out of a police welfare fund established in 1927, offers primary care through an outpatient clinic in Northeast Philadelphia. Members must get referrals for inpatient and specialty care and use one of seven hospitals and 70 physicians in the PFMA network.
More than half the participating officers are retired. Since retirees are also the dominant voting bloc in the FOP, PFMA tends to command strong support
from union leaders. Its board endorsed Shaw in his successful re-election campaign last fall.
The Blue Cross plan was created in 1979 as an alternative to PFMA. It lets members choose their own doctors and caters to younger officers, offering health-club memberships and free childhood immunizations. The seven-member LEHB board is heavy with Hurst loyalists, and Hurst draws a $34,000-a-year salary as a consultant to the plan.
City officials have long complained that both programs charge too much, building up surpluses that pay for perks and patronage. The Rendell administration has been particularly critical of LEHB, saying it serves no purpose other than to generate jobs.
When the contract arbitration began last August, the mayor wanted to place officers in a proposed city-administered health plan that he said would be cheaper. At a minimum, he wanted some oversight over the police plans and control of their reserves.
The administration expected FOP leaders to resist its proposals. And they did, at first. But as time passed, said Cohen, the mayoral aide, "it was obvious to us that the elimination of LEHB was more than palatable to the FOP.
"Our proposals made clear that there was no merit to LEHB," he said. ''And I believe that tied in with the political interests of the FOP leadership. And over time, I think it's fair to say that it became a matter of agreement."
The convergence of interests was reflected in the draft contract award written by Markowitz, the FOP arbitrator. Markowitz has testified that he wrote the draft in December, got Shaw's approval and gave copies to the two other arbitrators - one appointed by the city and the other chosen by the two sides.
The 27-page proposal called for cost-of-living raises this year and next, a higher clothing allowance and other items off the FOP wish list. In the area of health care, it dovetailed with the city's desire to do away with LEHB.
"The City argues with some justification that it has no input in how the . . . (Blue Cross) plan is administered," Markowitz wrote. "We agree with the City's position."
The draft called for offering Blue Cross benefits through a new union- dominated health fund. It would have allowed PFMA to continue operating independently, with a separate flow of city funds.
In addition, the proposal directed city officials to "initiate such action as is necessary" to recover Blue Cross refunds collected by LEHB. According to testimony in the arbitration, the plan has received rebates of $2 million to $5 million since 1988 because its members' claims cost less than expected.
The draft said nothing about the $13.5 million surplus held by PFMA and two related corporations.
Markowitz did an about-face when the arbitration panel set aside his draft and issued a different award over his objections in March. In a fiery dissent, he described LEHB as "an excellent hospitalization and medical plan" and criticized the other arbitrators for trying to "eliminate" it.
He said their order that both health plans give up their reserves was ''inconceivable" and "goes far beyond this panel's jurisdiction."
Details of Markowitz's draft surfaced in Common Pleas Court last month, when he testified in a lawsuit filed by the FOP in an effort to overturn the new contract.
Lawyers for the city confronted Markowitz with a copy of the draft and forced him to read long sections aloud in court, to the stunned silence of police officers in the audience.
"I almost fell off my chair," said Lamb, the LEHB administrator.
In recent interviews, Markowitz and Shaw denied they were out to destroy LEHB. They said they were trying to show flexibility during the arbitration in the hope the city would reciprocate with concessions in other areas.
That hope proved unfounded. The final award, the most austere in recent memory, froze officers' wages for two years, cut starting salaries and eliminated four of 14 paid holidays.
In one respect, though, it gave Shaw and his allies what they wanted. The arbitrators wrote that they wished to "preserve the sanctity" of PFMA - an indication that it should be part of any new health program.
Not a word was said about LEHB.
