3 firms seek privatization job

Jindal to choose adviser on health plan management

Three firms are vying to advise the Jindal administration on the possible privatization of a state employee health plan.

Michael DiResto, spokesman for the state Division of Administration, said Wednesday that the firms are: Barclays Capital, Goldman Sachs and Morgan Keegan.

The governor said earlier in the day that the administration is a couple of weeks away from choosing a firm.

The possibility of a private company running an insurance plan that covers thousands of state workers, retirees and dependents is spurring fears of increased premiums and decreased benefits.

The Jindal administration contends the private takeover could save the state money without negative repercussions for health plan enrollees.

The Division of Administration advertised May 6 for a financial advisor to determine the market value of the Office of Group Benefits’ book of business and to possibly help with hiring a private company to manage one of the agency’s plans. Replies were due June 6.

A previous advertisement for a financial adviser resulted in only Goldman Sachs responding.

DiResto said the administration and the firm could not reach agreement on a contract.

Lesia H. Batiste, general counsel for the division, declined Wednesday to release how much money the firms want the state to pay them. Batiste wrote in an e-mail that state law prohibits her from releasing the information prior to the selection of a financial adviser.

“At this time, the evaluation of the proposals has not been completed,” she added.

Gov. Bobby Jindal said Wednesday that the adviser will help determine whether privatization makes sense. “It’s worth at least doing the analysis,” Jindal said during a Wednesday morning news conference at the State Capitol.

The Office of Group Benefits provides health and life insurance to about a quarter-million current and retired state workers and their dependents.

Some of the office’s health plans already are outsourced to the private sector. The preferred provider organization is not and insures more than 60,000 people.

A PPO is a group of doctors, hospitals and others providing health care to subscribers at reduced rates.

The Jindal administration wants to possibly privatize the PPO.

The privatization efforts have coincided with the firing of the Office of Group Benefits’ CEO and the resignation of his successor.

Legislators held hearings during the recent session on the pros and cons of bringing in a private company to manage the PPO.

The Division of Administration previously hired New Orleans-based Chaffe and Associates to determine the “fair market value” of the Office of Group Benefits.

The report — which the Jindal administration refused to release until a legislative subpoena forced them to — concluded that premiums would increase under privatization.

Jindal said Wednesday that Louisiana is an anomaly in using state workers to manage a state employee health plan. “We’ll only move forward if it makes sense,” Jindal said.

The Office of Group Benefits’ board recently passed a resolution opposing privatization of the PPO.

“Basically, we’ve been kept in the dark,” said James H. Lee, the board’s chairman.

Lee said the Jindal administration’s exploration of hiring a private company to run the plan is raising fears of benefits diminishing and premiums increasing. “People are on a fixed income when they retire,” Lee said.

Lee said the board voted unanimously to adopt the resolution.

Among other things, the resolution asks for “a clear and concise explanation of the reasons for the proposed privatization and why such action would be in the best interests of the State of Louisiana.”

Retired state worker Jean Armstrong is encouraging other retirees to contact members of the Joint Legislative Committee on the Budget. The committee ultimately would vote on a contract with a private company to manage the health plan.

“I’m getting feedback from all over the state. People are promising to write letters,” Armstrong said.