Health-care premiums would drop
Thousands of current and retired state workers would see their health-care premium rates decrease under a plan promoted Monday by the Jindal administration.
The move would save money for state workers, retirees, school systems and state government.
Commissioner of Administration Paul Rainwater said a 7 percent decrease in premium cost for plan members will go into effect Jan. 1.
Rainwater said there will be a decrease in state contributions, which will be included in the amendments proposed Tuesday for the governor’s $25.5 billion state spending plan for the fiscal year that starts July 1.
Rainwater, the governor’s top budget aide, said the decrease would save:
- $19.5 million for employees.
- $40.3 million for school systems.
- $10 million for the state’s general fund.
The decrease is part of the Jindal administration’s plan to balance the state operating budget amid sharp drops in revenue projections. If premium rates drop, both the state and plan members would have to contribute less money for health-care coverage.
The state needs to eliminate a $211 million shortfall in the current fiscal year as well as a $304 million revenue drop next fiscal year.
The Louisiana House Committee on Appropriations is scheduled to begin tackling the problem Tuesday. House Bill 1, the main budget legislation, is expected to advance to the full House after being stalled for weeks in the committee while legislators got a handle on the revenue problem.
Rainwater said the premium rate change also is being proposed in anticipation of the administration’s plans to hire a private company to manage the Office of Group Benefits’ Preferred Provider Organization, or PPO.
“We obviously think we are going to save money,” Rainwater said.
The Office of Group Benefits provides health and life insurance to about a quarter-million current and retired state employees and their dependents.
Members of the Office of Group Benefits’ board said they knew nothing about the Jindal administration’s plans to change premium rates.
“I guess I’ll just find out (Tuesday), said Nancy Dewitt, an Office of Group Benefits board member.
The board’s president, James Lee, said he was anticipating a rate increase, not a decrease.
Dewitt noted that the board opposed two rate increases last year that the Jindal administration embraced.
A 5 percent increase went into effect Dec. 2. It followed a 5.6 percent hike earlier in the year.
The rate changes involve the PPO, which is a group of doctors, hospitals and others providing health care at reduced rates.
Currently, the PPO is managed by state employees through the Office of Group Benefits. The Jindal administration plans to advertise soon for a private company to handle those duties.
The PPO insures 56,360 people.
The Jindal administration is considering hiring a single contractor to handle various state employee health plans, including the PPO. The administration estimates the move could save the state $29.4 million a year.
The privatization plans are sparking concerns that premiums eventually will increase to support a private company’s profit margins. The Jindal administration contends privatization would save money and put Louisiana in line with how state employee health plans are handled in most other states.