OGB privatization plan approved
On his second try in two weeks, Gov. Bobby Jindal received legislators’ approval Friday to change the management of state employee health plans.
The House Appropriations and Senate Finance committees gave the green light to the hiring of Blue Cross and Blue Shield of Louisiana after a reorganization removed two legislators opposed to the proposal.
Also aiding the Jindal administration Friday: A handful of House members who aligned themselves with opponents to the proposal last week either skipped the vote or voted with the governor this time.
The House committee voted 16-10 in favor of the hiring while the vote among Senate members was 10-3.
Blue Cross stands to receive $37.8 million a year to serve as administrator.
State Rep. Ted James, D-Baton Rouge, complained afterward that the governor controls the legislative branch.
Another legislator, state Rep. Tony Ligi, R-Metairie, summed up the vote differently, calling the inclusion of favorable votes by four Democrats a bipartisan decision that will protect state employees’ health while saving dollars.
The approval means the Office of Group Benefits no longer will handle the health plans of thousands of current and retired state employees. Instead, Blue Cross will step into that role, displacing state workers.
The Office of Group Benefits will continue to make decisions on premiums.
The Jindal administration contends the change will save money and streamline the office’s operations.
Instead of state workers overseeing one health plan and private companies overseeing others, Blue Cross now will manage the preferred provider organization, the health maintenance organization and the Consumer Driven Health Plan-Health Savings Account.
“We think this is a very good way to simply save money for the taxpayer,” said Commissioner of Administration Kristy Nichols, the governor’s chief budget adviser.
Critics raised concerns about changing operations at a state agency that accumulated a sizable fund balance. They also questioned whether savings will materialize.
“While some savings may be realized, nothing has been guaranteed to you,” said Julie Cherry, of the Louisiana AFL-CIO.
The Legislative Fiscal Office, which analyzes state government revenue proposals, handed legislators a revised report questioning the purported savings and a recent budget request by the Office of Group Benefits.
The Office of Group Benefits provides health and life insurance to about a quarter-million current and retired state employees and their dependents.
The fiscal office’s report raised two issues:
- Analysts estimated the annual savings will range from $11 million to $18.3 million, not the $20 million claimed by the Jindal administration.
- OGB’s budget request for the fiscal year that starts July 1 includes a $169 million increase in claims payments that could erase any savings.
State Rep. Katrina Jackson, D-Monroe, asked the Jindal administration to explain the claims payment increase. She said the increase previously never topped $28 million.
Charles D. Calvi Jr., OGB’s chief executive officer, said he couldn’t address previous budget requests because he is relatively new to the job. He said the pending request is based on actuarial assumptions.
“What you see here today is not outside the norm,” Nichols told Jackson.
Senate Finance Chairman Jack Donahue, R-Mandeville, jumped in when Jackson continued to press the issue.
“Why don’t we move on,” Donahue suggested.
State Sen. Fred Mills, R-St. Martinville, said the fiscal office’s three-page report troubled him.
He pointed to the last line of the report, which stated that school boards, state agencies and employees will see savings only through premium decreases, which can be implemented regardless of whether Blue Cross is hired.
Travis McIlwain, general government section director for the fiscal office, said there will be administrative savings.
“Are you clear now?” Donahue asked Mills.
“As mud,” Mills replied.
Michael Delesdernier, finance chairman of the Jefferson Parish School Board, told the committees that his organization is supportive of the proposal.
Ligi thanked Delesdernier for recognizing common sense over politics.
The Jindal administration tried to gain approval last week for the proposal. Nichols asked to withdraw the contract after an hours-long meeting revealed apparent rifts among legislators on changing OGB’s operations.
Two members who opposed the proposal — Appropriations Vice Chairman Cameron Henry, R-New Orleans, and state Rep. Joe Harrison, R-Napoleonville — lost their committee seats the following day.
Their replacements voted in favor of the proposal Friday.