BY MICHELLE MILLHOLLON
Capitol news bureau
August 03, 2012
In a 3-2 vote, the state Civil Service Commission on Wednesday backed the Jindal administration’s plan to hire Blue Cross and Blue Shield of Louisiana to manage state employee health insurance plans.
The decision means a new health insurance provider for thousands of current and retired state workers. For dozens of state workers, the decision likely means a pink slip.
The hiring is part of Gov. Bobby Jindal’s shift toward paying private industry to handle more state government duties. The Jindal administration contends state dollars are saved through privatization and outsourcing.
At the Office of Group Benefits, which provides health and life insurance to about a quarter-million current and retired state employees and dependents, 177 positions will be eliminated from the office’s 327-member workforce.
Charles Calvi Jr., chief executive officer of the Office of Group Benefits, said 121 of the affected 177 positions currently are filled. Of the 121, he said 62 employees are eligible for retirement.
Further approval will be needed from the Civil Service Commission before layoffs are final.
At issue Wednesday was approval for Blue Cross and Blue Shield to take over disease management, substance abuse treatment and claims processing for thousands of state workers, retirees and dependents.
Jindal administration officials told the commission that the hiring will save the state government, state workers, school boards and other entities at least $20 million a year.
Most of the savings stem from the job eliminations.
State workers have several options on health insurance.
The Office of Group Benefits offers a PPO, or preferred provider organization, and an HMO, or health maintenance organization.
The PPO is managed by state workers at the Office of Group Benefits and covers 62,010 insured lives. A PPO is a group of doctors, hospitals and others providing health care at reduced rates.
Blue Cross and Blue Shield of Louisiana administers the HMO, which places patients under the care of a primary care physician. The HMO covers nearly 165,000 insured lives.
Under the reorganization, Blue Cross and Blue Shield will administer a package of programs, including the PPO.
Blue Cross and Blue Shield stands to receive $37.8 million a year to serve as administrator of health plans covering more than 200,000 people.
Humana and United Healthcare also sought the job.
In its pitch for the contract, Blue Cross and Blue Shield offered to provide a video library of educational videos, recipes from Louisiana chef John Folse and discounts on gym membership, sneakers, diet programs, hearing aids, vitamins, aromatherapy and organic products.
Discussion at the meeting Wednesday centered on the workers who will be out of a job and the commission’s legal options. Jindal administration officials touted the savings and efficiency they said will be achieved by hiring Blue Cross and Blue Shield.
Frank L. Jobert Jr., executive director of the Retired State Employees’ Association of Louisiana and a 40-year member of the PPO, said the office already functions well.
He said outsourcing would result in a dismantling of the office and could lead to cost increases for plan members.
Jobert urged commission members to do more research than reading the Jindal administration’s eight-page report on the reorganization.
“The plan is operating effectively. The plan is operating efficiently,” Jobert said. “Take more time to evaluate this so-called presentation.”
Baton Rouge attorney J. Arthur Smith III, who said he represents roughly 100 Office of Group Benefits employees, said outsourcing would be a leap of faith at great human cost. He said there is no proof that financial savings will be achieved.
“This is a mumbo-jumbo of figures,” Smith said.
Jindal administration budget adviser Ray Stockstill countered that the goal is efficiency and effectiveness. For example, he said, the state will be able to save money by closing satellite offices because Blue Cross and Blue Shield has offices in the same regions.
“As long as there are efficiencies and savings, the wisdom is left to the political arena,” Civil Service Commission member John McLure said.
McLure said it would be nice if some sort of accommodation was considered for employees who are near retirement.
Calvi told the commission that employees can avail themselves of training assistance from the state or pursue jobs with Blue Cross and Blue Shield.
“It is our hope that they find work,” he said.
Another commission member, D. Scott Hughes, said the Jindal administration made the necessary argument that the outsourcing is being done to save money.
Commission members Curtis “Pete” Fremin and Sidney J. Tobias Jr. voted against the outsourcing.
“I couldn’t really see the true cost effectiveness of it and I’m really worried about my state employees,” Fremin said afterward.