Thursday’s scheduled joint meeting of the House Appropriations Committee and the Senate Finance Committee to consider the approval for Blue Cross/Blue Shield of Louisiana to take over the Office of Group Benefits (OGB) Preferred Provider Organization health coverage has been scrubbed.
The reasons for cancelling Thursday’s meeting vary, depending upon who is doing the explaining.
Appropriations Committee Chairman Rep. Jim Fannin (D-Jonesboro) said that he and Senate Finance Committee Chairman Jack Donahue (R-Mandeville) agreed late Wednesday morning to remove the OGB item from the agendas of the joint meeting.
“We just got the contract (with BCBS) yesterday and we need to give people an opportunity to look at it,” said Fannin, who added that the contract was nearly 80 pages.
Fannin, who supports the privatization, admitted the vote count was close but insisted that wasn’t the reason for postponing action.
State Rep. Katrina Jackson, a member of the Appropriations Committee who opposes the contract, however, interpreted the cancellation differently.
“I believe that the cancellation of this meeting indicates the legislature’s willingness to exert independence as a separate and equal branch of government,” she said, adding that she was certain that the administration would continue to apply pressure on members of both committees to come up with the needed votes.
Fanning should have gotten with the governor’s office and gotten their stories together. The two versions don’t mesh.
The word out of the governor’s office was that it has the votes already but that certain key members were scheduled to be out of town Thursday so the meeting needed to be re-scheduled.
That claim can probably be taken with a grain of salt. This is the same administration that insisted it took no active part in the day to day operations of LSU but yet insisted on reviewing any public records relative to the LSU Health Services prior to their release to Capitol News Service.
A more likely scenario is that Gov. Piyush Jindal’s staff members can count.
They saw that the votes (a simple majority is needed to approve the privatization) were not there and like NASA, aborted the mission.
Members of both committees were being lobbied heavily by both sides late Wednesday in the final hours before the meeting was finally cancelled. It’s a certainty that the pressure on the committee members will not abate—especially from the governor’s office. This is a must-win for him.
The original number of OGB personnel expected to lose their jobs with the BCBS takeover was 177 but some have already retired or found other jobs. That number is now about 150.
An important twist to the story involves the proposed layoffs. The Division of Administration is scheduled to submit a layoff plan to the Civil Service Commission in next few days but no layoff plan may be considered by the commission without an approved contract with Blue Cross/Blue Shield (BCBS).
Without the concurrence of the two committees, however, there can be no approved contract and thus, no layoff plan.
The privatization plan (but not the layoff plan) was approved by the Civil Service Commission in August but State Rep. Katrina Jackson (D-Monroe) requested and got an attorney general’s opinion that said the administration must obtain the concurrence of the legislature to finalize the transfer.
BCBS already serves as the third party administrator (TPA) for OGB’s HMO program.
OGB has accrued a fund balance in excess of $500 million over the past six years since Tommy Teague took over as director of OGB. But he was fired on April 15, 2011 when he did not get on board the Jindal privatization plan quickly enough. His successor lasted only six weeks before he, too, was gone.
Jindal has claimed that a private TPA would be able to run the various health and life insurance plans of about 225,000 state employees, retirees and their dependents.
A Legislative Auditor’s report, however, said that privatization could lead to increased health insurance premiums because of a private insurer’s higher administrative and marketing costs, its requirement to pay taxes on income and its need to realize an operating profit. The state does not pay taxes nor is it required to turn a profit.
The Jindal administration has employed tactics bordering on the clandestine in efforts to shore up its position. At one point it even refused to release a report by New Orleans-based Chaffe & Associates with which it contracted to determine the “fair market value” of OGB’s business.
When a copy of the report was released, however, questions arose immediately because of conflicting dates given by the Division of Administration (DOA) as to its receipt date and by the fact that none of the pages of the report was date-stamped.
DOA routinely date stamps every page of documents it receives to indicate the date and time the documents were received.
This led to speculation that there may have been two Chaffe reports. Even so, the one that was leaked to the Baton Rouge Advocate said that a private insurer would be required to build in the extra costs of taxes and profits when setting premiums.
Much of the reason for the closer-than-expected vote may have to do with growing resentment on the part of legislators who have seen hospitals and/or prisons closed in their districts, actions they say were taken by the administration without the benefit of giving lawmakers a heads-up.
Jindal, in closing prisons and hospitals, has done so while leaving it up to area legislators to try and explain to constituents why they will be out of work or why health care will be either cut back or unavailable.
Only this week, notices went out to 41 employees at E.A. Conway Hospital in Monroe that they would no longer be employed after Nov. 30—just in time for the Christmas holidays. Twenty-five of those were nurses.
Similar cutbacks have taken place at health care facilities all over the state and in August, Jindal abruptly announced the closure of Southeast Louisiana Hospital in Mandeville, effective this month, throwing some 300 employees out of work.
Moreover, with the earlier closure of a mental health facility in New Orleans, the entire area of Orleans, Jefferson, Plaquemines, St. Bernard, Tangipahoa, Washington and St. Tammany will be without access to mental health treatment at a state facility.
“The Office of Group Benefits does not cost the state any money,” Jackson said. “It is a healthy plan that has always remained viable while offering …excellent health care benefits.
“Our research has revealed that more than $70 million of the existing OGB surplus (more than $500 million) would be used to effectuate this privatization,” she said.
“The governor’s office claims that the state will realize $20 million in savings. However, this claim came without any supporting documentation even after numerous requests for that documentation.
“OGB’s administrative costs are 2 percent while the industry standard for private insurers is 6 percent. It seems that, at some point, it (the privatization) would actually cost the state additional money,” Jackson said.