Civil Service OKs state employee health insurance privatization plan

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.


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Comments (12)


1) Comment by bettergovt - 02/08/2012

People really dont understand. This administration does not cut expenditures. They cut revenue but not expenditures. The only reason there has been a reduction in the budget is the loss of Katrina recovery money. Whenever they act like they are cutting money they are actually spending more. Whenever they talk about privatization, they are not reducing what they spend, they are paying more. The only difference is that it is going to private contractors. When they say they cut positions, they mean the cut low paying classified positions and replaced them with high paying political appointees. Please check it out. The Legislative Auditor has published reports that state all of this. Every financial number that is put out by this administration is suspect. Please wake up. John Kennedy was saying the same thing and look what happened to him. Jay Dardene too. Everyone that speaks the truth gets slammed. Please wake up.

2) Comment by getrealpeople - 02/08/2012

It is amazing to read the comments of the largely uninformed here. Clearly alot of workers who may lose a job. If you were there or watched it it was clear there is a legal standard for contracts that was met. It saves $14M dollars a year. We are one of only two states (think Utah was other) that even do administration of benefits this way. Imagine that. Our neighbors run this program with 20 employess and we have over 350 by the numbersa they showed. And the political argument is not valid. Like many here im not a big Jindal fan, but the role of the Civil Service Commission to insure fair hiring and firing, set pay scales and advancement (now there is a better issue to attack them on) and make sure employees are not discriminated against based on race, sex, religion or politicial views. They are not there to protect employess from politics of conservatives verses big governemnt. If a savings can be shown they all but have to approve the contract or they lose in court. If you hate Jindal then hate Jindal. The work of public servants in the system is the system. The collective "we" elected him not once but twice and now we have to reap the results of those bads votes. It is not good or perhaps even fair but sadly it is legal and that is the only standard a Commission can go on. Sad but true. And with the exception of Griffin from Baton Rouge, who clearly aligns wiht the Gov, I cannot see where the other six can be called Jindal people. They were nominated by private colleges and approved by the Senate and I cannot find any links or contributions to Jindal. One is a state employee elected by the empoyees.

3) Comment by LeapinLizzie12001 - 02/08/2012

Why does Civil Service exist? They don't seem to do anything but hurt state employees.

4) Comment by Mygulfbleedsforu - 02/08/2012

"Most of the people affected by this voted for Piyush because he was a Republican not realizing he's all for big business now they are getting a crumby insurance carrier and facing the layoffs." ~ Get Real. The same gig is playing out nationally. It is like the scene in "Poseidon Adventure" where the people walk by like zombies, going the wrong way and listening to no one.

5) Comment by NewsReader - 02/08/2012

bettergovt, while I don't think this is a great idea, I do think you are missing some basic differences between how States have to run their budgets and the Federal Government. It's not just Louisiana that is in a world of hurt financially, the other 49 (or 56 if you're our President) are facing the same monetary issues. It all results from the requirement that states balance a budget whereas the Feds can and do borrow and overspend at their hearts' content.

6) Comment by Lannonmac - 02/08/2012

This change will not end well, but that is par for the course for most of the Gov.’s plans. Sometime in the next 5 years there will be a huge scandal about Blue Cross/Blue Shield's administration of the State employee health insurance, but of course the Gov. will have moved on and will take no flak from the debacle. One hundred and seventy seven of your neighbors just got laid off from good paying jobs, with benefits and are getting ready to troop down to the unemployment office. Wow, Gov. Jindal’s “jobs” plan is working wonderfully.

7) Comment by CountryBoysCanSurvive - 02/08/2012

I always say, if it ain't broke, don't fix it.

8) Comment by bettergovt - 02/08/2012

This WILL end up costing the state more. Just because the administration says it wont doesn't make it so. Look at all the misstatements this administration puts out relating to financing. Look at what was said during the session about cutting the $200 million one time money. It was going to be the end of the world. Then the $800 million Medicaid cut was no big deal. Look at the revenue estimates. Every year they have over estimated it. Now they say it will come in more than they estimated just because they dont want to expose how big the problem is before the election. You can trust nothing being put out because it is all designed to put one person in Washington. They talk about the national fiscal cliff, but it is nothing compared to our state's situation.

9) Comment by Get Real - 02/08/2012

I love it this. Most of the people affected by this voted for Piyush because he was a Republican not realizing he's all for big business now they are getting a crumby insurance carrier and facing the layoffs. Just proves how stupid people are.

10) Comment by Grannee - 01/08/2012

What are they good for? Absolutely nothing! Civil Service and its politically appointed Commission should be abolished and outsourced to India. They serve no useful purpose whatsoever. Further, it's our money too and we should have some say in who our provider should be. If Jindal wants to save the state some money, get rid of civil service and the employees over there with their bloated salaries. Their failure to do their jobs according to the c.s. rules is costing Louisiana taxpayers millions in attorney fees. Ask yourselves why do an overwhelming majority of employment law attorneys have contracts with civil service? Cash cow....

11) Comment by Warp7 - 01/08/2012

Little Hitler Jindal and his Brown Shirts strike again. The GOP loves to outsource jobs. Too bad the current commission no longer operate to protect State Employees, instead they are there to do the bidding of Little Hittler Jindal. I guess this will score him some points with the Right.

12) Comment by qwerty - 01/08/2012

here is the joke...."Further approval will be needed from the Civil Service Commission before layoffs are final."...and the punch line is that Uncle Bobby appoints most of the board members. Why would they vote against what he wants?