Jindal offers budget cut

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.

Comments

1) Comment by 8.3 - 01/05/2012

Just a big shell game, as P.T. Barnum said " There is a sucker born every minute".

2) Comment by janiea - 01/05/2012

3) Comment by CaptainHaddock - 01/05/2012

Marchiafava? He's taken his vaudeville act over to WAFB now, and posts exactly the same 5 cut and paste statements he did when he was here.

4) Comment by Tea_Slayer - 01/05/2012

CH, never type HIS name on these boards. It may summon HIM...

5) Comment by CaptainHaddock - 01/05/2012

Its almost marchiafava-esque in its comedy. I myself countered his 'state employees make 10% more than private' allegation some time back, with specific salary data across a multitude of professional and non-professional categories, comparing public employees with other state public sectors, and private as well, even citing sources. Turns out, his 10% figure was complete hogwash, and in fact state employees are on average 5% to 25% below across all work categories (and he himself is paid less than half his private counterparts it seems). Response? None at all. He's allowed himself to become a professional Jindal toady, at the cost of his own reputation. Perhaps that explains his low pay. I hope that job offer is forthcoming, as Jindal is into his second term and time is running short.

6) Comment by JL70710 - 01/05/2012

If this proposal was such a winner, it would have been on the boards at the start of the session, not jimmied up out of thin air as soon as that retirement money slipped away (in such a way, ironically, that to criticize the amendment would be tantamount to admitting that the 3% proposal was really an attempt to free up 3% of an agency's operating budget, not honest concern regarding UAL). If there's enough financial room to decrease premiums, then that's admitting that the premiums were set artificially high in the first place, which everyone suspected in the first place. Well, bids are currently open for OGB, so any premium decrease would be short-lived anyway.

7) Comment by Tea_Slayer - 01/05/2012

What I love about jeff is that he throws these claims out there, is called on them, but never comes back to the boards to support his previous assertions. Like his claim that public school teachers do not have to pass subject specific testing and that if it were true, he would actually sign the Jindal recall petition. Well, a teacher posted the specific test that she must take (I can't recall the name of it, but it was a subject -specific test). Well, of course, jeff never returned and I am quite sure he never signed the recall petition.

8) Comment by CaptainHaddock - 01/05/2012

Glad you enjoyed it. I actually made it up (could you guess?), but anyone familiar with Mr Sadows less-than-honorable Jindal purse-holding and general sycophantic lap-doggieness would hopefully see a kernel of larger truth. Have some self respect, man!

9) Comment by Tea_Slayer - 01/05/2012

CaptainHaddock, thank you for that laugh..

10) Comment by jobo - 01/05/2012

http://recallbobbyjindal.com/home.html

11) Comment by DMJ - 01/05/2012

So Jindal actually admits that he wants to take money from retirees and give it to insurance companies? Wow. Nice job electing this right wing Napoleon. And to think, I thought a second Jindal term wouldn't be that bad. I actually admonished several friends for their doom and gloom rhetoric. I owe them an apology...and Jindal owes us all one. Several, actually. This is going too far.

12) Comment by CaptainHaddock - 01/05/2012

I actually visited the PoliSci department at LSU-S quite recently, and had the pleasure of meeting Mr Sadow (who, lets not forget, makes less than half the salary of a comparable private-sector employee). He seemed like a nice enough man. I noticed that his right arm was a good 4 - 6 inches longer than the left, which gave him a curious, off-kilter look. After a few minutes, I decided to ask why his right arm was so much longer than the other. Birth defect? accident of some kind? He was initially taken aback, but then leant forward and forlornly confided the secret of his malady: "Its the water. Jindal's water, you understand. I'm right handed, and been carrying it every day since 2007". I asked if he had yet recieved the much coveted phone call from the object of his affection, offering a plum administration appointment at some salary that better fit his talents. Not yet, he replied, but hope lingers ever on...

13) Comment by whodat70816 - 01/05/2012

OGB had a $530,000,000 surplus that Jindal got his hands on.....and now he wants to hand it all over to a private company. How long will we allow this man to rob the people of this state?

14) Comment by whodat70816 - 01/05/2012

“We obviously think we are going to save money,” Rainwater said. LMAO....HOW MANY TIMES HAVE WE HEARD THIS?

15) Comment by Crawdaddy - 01/05/2012

Speaking of deserving to be corrected -- PPO premiums have always been higher than other plans even when the other plans (namely EPO and HMO) were administered by OGB -- it had nothing to do with third-party administration. The higher premiums reflect the nature of the plan, which is contractually adjusted for each Preferred Provider and on the back end can save the member and the state much money when claims are processed and certain charges are disallowed. It is at best misleading to compare plans solely on the basis of premiums. For example, the cheaper (premium-wise) HMO's work great as long as you stay in-network and your needs fit the system; if you go out of network, you get a separate deductible ($1000) which the PPO plan does not require. So it is important, even for professors of political science, to try to tell the whole story and not just cherry-pick to make one's point. BTW, I am not a Jindal-hater; I actually pity the guy -- so much intellect wasted by blind ambition.

16) Comment by jeffsadow - 01/05/2012

Another comment slipped in that deserves to be corrected ... the report mentioned said one of the outcomes may be an increase, or a decrease, but it couldn't tell, but did note that the experiences of other states almost always was a decrease in premiums. And the subsequent Legislative Auditor's report indicated a decrease was likely, and that privatization would trigger a decrease in overall net spending as well in this area.

17) Comment by jeffsadow - 01/05/2012

The pathology of Jindal-hating provides us high comedy here, as well as provides a window into ignorance. The PPO premiums have consistently been priced about 5 percent higher than the other third-party-administered plans (part of that has gone to building up the reserve, in the case of PPO payers), so it makes all the sense in the world to expect lower premiums when adopting the same management form as has been producing the lower premiums under the other plans. Further, the rate increases of the past several years have originated from the OGB Board. On all but two occasions DOA has scaled back or eliminated the Board's recommendation for increases. So who's really been trying to inflate premiums? The experience of other states in switching from state run to TPA plans has been decreases in most cases in premiums in the immediate term, so why should we expect anything differently here? Note also with the $500+ million in the fund, it may be used only to pay out PPO claims by law -- not for the other plans, where the TPA handles that, or to be used elsewhere in state government. Many short memories here -- the supposedly well-run OGB was found earlier this year to have made administrative errors that will cost the state millions. Finally, the governor has exactly 1/4 of the input into forecasting on which the state's budget is built, with the chambers of the Legislature and a private economist having the rest. In fact, in the most recent estimates, the governor's office wanted to declare even fewer revenues than the forecast that was adopted for the remainder of FY 2012. Premium increases also are slowing nationwide, partly due to the Obama recession, partly due to Obamacare that backloads cost increases beginning in a couple of years. Or also contributing to the decrease may be the one-time sale of the book of business which may bring the state around $200 million.

18) Comment by Crawdaddy - 01/05/2012

The numbers don't add up. Not surprising for a governor who fabricates budgets based on contingencies which don't happen and then require midyear and end-of-year budget "adjustments". Also, spending freezes for the last two years in Spring. OGB PPO works and it works well (~3% administrative overhead). Jindal's own commissioned report last year stated that it would cost more to privatize. Obviously he must truly believe that most Louisianians (and I am a native) are just plain stupid or at least too illiterate to understand the ramifications of what he is trying to do. Can't really blame revenue declines on the Great Recession --- every economist's report I have seen states that LA largely escaped the recession, with actual increases in real GDP for the eight major metropolitan areas and unemployment around 2%. What a wonderful environment for Jindal to further his political agenda....

19) Comment by Ubetcha - 01/05/2012

Go away Jindal. Lies, Lies, Lies.

20) Comment by SuzanneMS - 01/05/2012

A premium cut coming after two consecutive premium increases? Someone needs to follow that money. Would benefits remain the same, after this "decrease," which is less than the recent increases? And I hope that everyone realizes that when Jindal contends that privatization would "save money," he doesn't mean that it would save money for the state employees paying the premiums. The OGB is one of the things the Louisiana has been doing right -- it has a $500 million surplus -- so why is he trying to get rid of it? Oh, right, because he wants to steal that money to plug the holes in his budget. He paid Goldman Sachs $6 million for a study to back his proposal; he's got to find the money to cover that, as well.

21) Comment by JL70710 - 01/05/2012

So, he artificially inflates the rate increase in the PPO plan to soften the blow of the rate increase that would result from privatization and to make the plan more attractive to the highest bidder. Now that he's likely to lose that 3% in retirement money he was counting on to help cover state operating expenses, he's "leveraging" the $500 million dollar surplus in the OGB fund to underwrite his reckless corporate giveaway of state taxpayer money. Or he's like a monkey just throwing out excrement to see what sticks.

22) Comment by lovemykids - 01/05/2012

Sure lets trust the projections of Jindal and his minions. They have been right about how much money the state has all along. NOT!!!!