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Archive for the ‘OGB, Office of Group Benefits’ Category

Back in the spring of 2011, LouisianaVoice predicted that higher premiums and reduced benefits would by the immediate by-product of privatization of the Office of Group Benefits Preferred Provider Organization (PPO).

The administration initially—but only temporarily—proved us wrong by reducing premiums as the lead-in to contract with Blue Cross/Blue Shield of Louisiana as the third party administrator for the PPO.

If we wished to be vain about that move, we could have said that Gov. Bobby Jindal made that move just to prove us wrong. But it wasn’t nearly as simple as that; there was, in fact, a far more sinister reason for the premium reduction.

Because the state pays 75 percent of state employees’ premiums, cutting those premiums reduced the financial obligation to the state, thus allowing Jindal to divert money that normally would have gone to health care for some 230,000 state employees, retirees and dependents to instead be used to plug gaping holes in what has become an annual budget shortfall, thanks to slipshod management of state finances by the governor.

The recent developments pertaining to impending radical changes that will force eligible retirees onto Medicare and out of Group Benefits are not about who is right and who is wrong; it’s about people. It’s about people like you and me (yes, I’m a state retiree who is one of the lucky ones who is eligible for Medicare by virtue of my hire date after April 1, 1986 and by virtue of some 25 years of newspaper reporting work in the private sector).

In all the rhetoric coming out of the office of Kristy Nichols, the people she and her boss serve appear to be the forgotten element as Jindal has become a 100 percent absentee governor while he chases the impossible dream of becoming POTUS.

FAQs

Tragically, retirees with no private sector experience and who began with the state prior to April 1, 1986, are ineligible for Medicare and the steep premium increases looming on the near horizon—open enrollment is Oct. 1 through Oct. 31—can mean only one thing for them: financial devastation. A new premium increase to go with the one that took place on July 1 is scheduled to go into effect Jan. 1, placing an additional financial burden on enrollees.

Of course, if you look back, you will see how the administration fed us a string of outright lies in 2011. Thanks to loyal reader Kay Prince of Ruston, we have a copy of a letter written by then-Commissioner of Administration and who later served as Jindal’s Chief of Staff until his unexpected resignation last March which can only be described as a laundry list of lies to state employees and retirees.

Read the text of Rainwater’s letter here: https://www.groupbenefits.org/portal/pls/portal30/ogbweb.get_latest_news_file?p_doc_name=4F444D324D5441344C6C4245526A51344E7A413D

If one has to wonder where this latest political assault on state employees originates, one has only to Google “ALEC Health Care Agenda” for the answer.

HHS_2013_SNPS_35_Day

ALEC, of course, is the acronym for the American Legislative Exchange Council, the non-profit political arm of the Koch brothers and the Walton Family of Wal-Mart fame. ALEC, which drafts “model bills” for its member legislators to take back home for passage, includes sweeping changes to health care benefits for public employees as one of its primary objectives.

While we don’t normally advocate political boycotts, perhaps state employees should give serious consideration to a complete boycott of Wal-Mart and Sam’s Club as a response to the ALEC-inspired medical benefit cuts you are about to experience. A word or two to friends and relatives might not be a bad idea either.

For a comprehensive look at the ALEC agenda as it pertains to medical benefits, go here:

http://www.alecexposed.org/wiki/Health,_Pharmaceuticals,_and_Safety_Net_Programs

Here is a list of Louisiana legislators, both present and past, who are now or once were members of ALEC. http://www.sourcewatch.org/index.php/Louisiana_ALEC_Politicians

Girod Jackson (D-Marrero), who was charged with fraud and failure to file taxes, resigned and is no longer in the legislator and it is our understanding that Sen. Bob Kostelka (R-Monroe) is no longer a member of ALEC.

And certainly, let’s not forget that until recently, BCBS was a member in good standing of ALEC and BCBS was listed as a member of ALEC’s Health and Human Services Task Force and ponied up $10,000 for a “Director” level sponsorship of ALEC’s annual conference held in New Orleans at which Jindal received the organization’s Thomas Jefferson Award. BCBS of Louisiana paid an additional $5,000 and served as a “Trustee” level sponsor of that 2011 conference.

And ALEC continues to have its logo prominently displayed on the Louisiana Legislature’s web page. http://www.legis.la.gov/legis/OtherGovSites.aspx

Despite all the spin from Kristy Nichols, the Aug. 11 report to the Joint Legislative Committee on the Budget by the Legislative Fiscal Office paints a much truer picture of what’s in store for members.

Read the LFO report here: LFO_OGBReport_August_2014

Apparently, the working media also do not buy into the Kristy Kreme version of “it’s all good,” as the proposed changes are attracting the attention of Capitol reporters like Melinda Deslatte, a very capable reporter for Associated Press: http://www.shreveporttimes.com/story/news/local/louisiana/2014/08/26/health-benefit-changes-planned-state-workers/14651363/

As a barometer of just how serious the proposed changes are and the impact they will have on members, House Speaker Chuck Kleckley, apparently in response to the request of State Rep. John Bel Edwards (D-Amite) is apparently willing to buck Boss Jindal and call a special meeting of the House as a Committee of the Whole as reported here by the Baton Rouge Advocate’s Marsha Shuler: http://theadvocate.com/home/10100116-123/house-group-benefits-meeting-possible

Undaunted, Nichols trudges on like a good soldier. Today, state employees arrived at work to find emails, mass distributed via the state’s “Bulletin Board,” attempting to address the “incorrect” information “distributed over the last few weeks” regarding the anticipated health insurance changes.

Basically, she denied all negative information, threw up administration smoke screens, made lame excuses and (ho-hum, yawn) blaming the Affordable Care Act (Obamacare), which has absolutely nothing to do with the Office of Group Benefits.

While Kristy rants that premium increases will be negligible (if one can consider a 47 percent bump negligible), we would remind her it’s not about the premiums; it’s about the benefits. It’s about the co-pays. It’s about the deductibles. Kristy, you can’t ignore the elephant in the room indefinitely.

As state workers peruse Kristy’s latest missive, it is important to refer back to the aforementioned Paul Rainwater letter of April 29, 2011, to get a quick refresher as to just how capable the administration is of clouding an issue with misinformation and outright lies.

They lied then so what’s to keep them from lying now?

The fact is the Jindal administration, what’s left of it, does not nor has it ever cared about the welfare of state employees.

Jindal is joined at each hip by his former—and only—private sector employer McKinsey & Co. on one side and ALEC on the other and both have the same agenda: the destruction of working Americans in favor of ever increasing corporate profits. Together, they guide each and every step Jindal takes.

McKinsey & Co., it should be noted, is also a member of ALEC and is the same company that once consulted General Motors into bankruptcy, advised AT&T there was no future in the cell phone market and which structured the corporate plan for Enron.

These are the ones who are maneuvering to control the health care future of 230,000 state employees, retirees and dependents.

Only last November, the state flirted with McKinsey & Co. for the purposes of retaining the firm to put together a Business Reengineering/Efficiencies Planning and Management Support Services proposal.

Apparently Jindal opted to go with the less expensive Alvarez & Marcel (A&M) for that contract that has grown from $4.2 million to $7.5 million for A&M to find $500 million in savings over a 10-year period.

But McKinsey did submit a 406-page proposal and a two-page cover letter to Ruth Johnson of the Division of Administration (DOA) which LouisianaVoice has obtained.

Much of McKinsey & Co.’s proposal was redacted by DOA before its release to us—including every word in the proposal dealing with health benefits.

That’s correct. Not a single word about health benefits as proposed by McKinsey was readable. Skip down to page 37 for the redacted health benefits section to see what we mean.

Read the McKinsey report here: McKinsey – State of LA Cost Proposal – Final

In case you don’t have a lot of time, here is a shorter proposal from McKinsey: McKinsey – State of LA Cost Proposal – Final

Are you sufficiently comfortable with that to sit back and trust this administration to do what’s best for you?

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“Like all of the governor’s self-created crises, the solution always seems to be to ask more of the people of our state: more money, more patience, more suspended disbelief.”

—State Rep. John Bel Edwards, commenting on the failure of Gov. Jindal’s promise of a $20 million a year savings with the privatization of the Office of Group Benefits.

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Gubernatorial candidate and Louisiana House Democratic Caucus Chairman John Bel Edwards (D-Amite) has sent a request to House Speaker Chuck Kleckley (R-Lake Charles) to convene a meeting of the House of Representatives in order to review controversial changes coming to the Office of Group Benefits (OGB).

Meanwhile, OGB has issued its own “fact sheet” in advance of the annual enrollment that begins Oct. 1 and closes Oct. 31 designed to defuse information released by the Legislative Fiscal Office that reflect dramatically higher premiums and slashed benefits.

FAQs

OGB’s FAQ data sheet, however, did not include developments reported by LouisianaVoice late Monday which revealed revamped coverage plans designed to force retirees out of OGB and into Medicare coverage. The problem with that strategy, of course, is anyone hired before April 1, 1986, who never worked in the private sector are not eligible for Medicare coverage.

At the same time, the Legislative and Political Director for the Louisiana Federation of Teachers (LFT) has released a series of emails between her and OGB in which she experienced ongoing difficulty in obtaining answers to questions about pending changes in premiums and coverage.

Edwards’ request would allow the house to review the proposal in a forum where all members could ask questions of the Division of Administration, OGB administrators, the Legislative Fiscal Office, and offer suggestions and comments regarding plan changes that will bring an average 47% cost increase to 230,000 plan members and their families.

“The Governor has quietly used your tax dollars as a personal piggy bank, spending the $500 million fund balance of OGB to pay bills that have nothing to do with OGB or its members.” Edwards said. “But over $100million of that balance was paid in directly by the members of OGB. Now that he misspent their money, he dares to add insult to injury by asking more than a quarter million Louisiana working families to pay higher prices for less health insurance coverage.”

Commenting on the dramatic cost increases OGB member will face in the new year, Edwards said, “The likes of Bernie Madoff and Allen Stanford would be proud of the Jindal Ponzi scheme that, like theirs, preys largely on retirees living on fixed incomes.”

Edwards’ letter to Kleckley cited the recent hiring of two new OGB officials at more than six figures each as well as the Alvarez and Marsal contract to find “efficiencies” inside OGB that now totals $7.5million in costs to the state. In a written statement made in conjunction with the letter Edwards asked, “Bobby Jindal, and those who stood by and watched him dismantle healthcare in our state, hold themselves out as fiscal conservatives. Since when does fiscal conservatism define the role of government as an institution that cuts services in order to pay six figures to private consultants?”

“Like all of the governor’s self-created crises, the solution always seems to be to ask more of the people of our state: more money, more patience, more suspended disbelief.” Edwards said.

“New facts have come to light since the session ended. We owe it to our constituents to examine this issue together and to offer up some bipartisan solutions to our concerns. This impacts people in every single part of the state,” said Edwards.

Edwards told LouisianaVoice he has received telephone calls from retirees who were crying over joint efforts by OGB and Blue Cross/Blue Shield to revamp programs that could make coverage for retirees cost prohibitive.

Here is his letter to Kleckley: http://d3n8a8pro7vhmx.cloudfront.net/johnbelforlouisiana/mailings/120/attachments/original/JBEtoKleckley.pdf?1409081088

“This is going to destroy families,” he said, “and we owe it to our constituents to do what we can to keep them whole.”

Mary-Patricia Wray, legislative and political director for the LFT, said she had talked with OGB Executive Director Susan West “after much prodding about why I couldn’t get answers about the plans from anyone else” after a July 30 meeting of the Joint Legislative Committee on the Budget.

She said that while OGB has provided a preview of the agency’s plan booklet and dates for informational meetings to other groups, “they have provided LFT with none of this information.

“While we represent 21,000 teachers and school employees, many of whom are active members of OGB, the ones who will have no option on the exchange, but will only be able to pick from the new more costly plans, OGB has refused to assist us in directing our members to the appropriate resources to help them select a plan.

“This is even amidst the layoffs at OGB that have left them, in our opinion, unable to properly service the members of the plan.

“We have no problem with assisting our members,” she said. “However, we do have a problem with being denied the tools needed to do that well—for no apparent reason.”

She said West “asked me specifically to call with questions so that I can deliver accurate information to active members or OGB. If she has time to deal with our organizations questions and concerns personally, presumably as the busiest person on staff, I am left to believe the I willful rejection of our inclusion in important meetings about plan details and member communications is simply retribution for our testimony at Joint Budget, since up to that time there was no I indication whatsoever that our attempts to be a team player and deliver accurate info to teachers a school employees was in any way burdensome to the staff of OGB.

“This is an incredibly disappointing communication—one that unfortunately aligns largely with the direction in which policy makers have taken OGB—one that has cut so many staff people to occasion private contracts that it can ostensibly claim those very cuts as the self-created crisis that “requires” it to fail to do its job at all.”

 

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Remember less than two weeks ago (Aug. 14, to be precise) we wrote that members of the Louisiana Office of Group Benefits (OGB) should prepare themselves for health insurance premium sticker shock? http://louisianavoice.com/2014/08/14/nichols-pens-op-ed-on-soundness-of-ogb-even-as-legislative-fiscal-office-prepares-members-for-premium-sticker-shock/

Well, LouisianaVoice has obtained new information that indicates we weren’t entirely accurate in our portrayal of what’s in store for some 230,000 state employees, retirees and their dependents.

The reality is much worse.

Much worse indeed, particularly for state retirees.

To recap briefly, we told you in that Aug. 14 posting about the report of the Legislative Fiscal Office on pending major changes in medical coverage for state employees and retirees. Some of those anticipated changes provided in the Legislative Fiscal Officer Report, authored by Legislative Fiscal Officer John Carpenter and Legislative Fiscal Office Section Director J. Travis McIlwain, include:

  • An increase in premiums state employees and retirees pay for health coverage;
  • Significantly increase the out-of-pocket maximum for all health plan options;
  • Increasing deductibles for all health plan options;
  • Increasing co-pays 100 percent for those proposed health plans with co-pays;
  • Increasing the out-of-pocket maximum for the prescription drug benefit by $300 from $1,200 to $1,500 per year, a 20 percent increase;
  • Requiring prior authorizations for certain medical procedures;
  • Eliminating the out-of-network benefit for some health plan options;
  • Removing all vision coverage from the health plan options.

OGB Report_July 2014 FOR JLCB

The latest premium increase of 6 percent will go into effect on Jan. 1 is on top of a 5 percent increase implemented on July 1 of this year.

State Treasurer John Kennedy, on the heels of the Legislative Fiscal Office Report, penned an op-piece in the Baton Rouge Advocate in which he advised state employees to be careful to not break a leg as the increased premiums and co-payments “could cost you a month’s pay. http://theadvocate.com/home/10028534-123/gues-column-changes-mean-problems

The changes mentioned thus far are, of course, mostly the result of that $7.2 million—and growing—consulting contract awarded to Alvarez & Marsal which was charged with sniffing out $500 million in state savings over the next five years—something Gov. Bobby Jindal apparently felt his highly-paid cabinet appointees were incapable of accomplishing.

Of course Jindal’s plan for saving $20 million a year through the privatization of OGB has been less than a smashing success as the agency has hemorrhaged red ink to the tune of $16 million more per month than it receives in premiums since the Blue Cross Blue Shield of Louisiana takeover on Jan. 1, 2013.

BCBS is paid by the state on the basis of enrollees. The initial rate beginning in January of 2013 was $23.50 per OGB member per month. Today, that rate is $24.50 and in January, it will go to $25.50 per member per month.

But now LouisianaVoice has obtained information from deep within the inner sanctum of BCBS that OGB is planning even more drastic changes. So, in effect, OGB members are about to be hit with a double whammy, or in more chic vernacular, the perform storm, designed to force retirees out of OGB coverage and into Medicare.

And OGB is completely complicit in this portentous plan.

The sweeping changes are scheduled to be mailed to employees and retirees on Sept. 15 but we have the gist of the plan now.

First of all, all current plans are going to disappear, especially the one that are geared toward retirees. The PPO, or Preferred Provider Organization plan, currently has four levels: Active, Retiree No Medicare, Retiree with Medicare and Retiree 100 (a supplemental program designed for retirees with high medical costs. This program requires a separate premium and currently is only available through the PPO plan).

Now, though, there will be only four plans and none will have levels geared toward retirees, meaning that retirees will be paying more out of pocket. This is the method by which Jindal, through OGB, plans to push retirees to drop their OGB coverage and switch to only having Medicare.

Such a move, of course, would drastically reduce the amount the state would be required to pay BCBS, thus reducing the monthly deficit currently being experienced by OGB. The premium increase next January, along with the reduced benefits would cut that deficit more as the administration grapples with the can of worms it opened by turning over the third party administrative duties to BCBS.

But even worse, state employees who never worked in the private sector prior to April 1, 1986, do not qualify for Medicare. State employees hired after that date began paying into Medicare. Moreover, state employees who never worked in the private sector do not qualify for Social Security benefits. http://www.treasury.louisiana.gov/Lists/SiteArticlesByCat/DispForm_Single.aspx?List=c023d63e%2Dac65%2D439d%2Daf97%2Dda71d8688dff&ID=101

Commissioner of Administration Kristy Nichols, try as she might, was unable to put much positive spin on OGB’s status in her recent op-ed column. http://lapolitics.com/2014/08/nichols-ogb-prepared-for-changing-world-of-health-care/

Nor was the self-serving op-ed piece by OGB board member Scott McKnight in Tuesday’s Advocate particularly reassuring. http://theadvocate.com/home/10088672-123/guest-commentary-ogb-changes-helping

(Is it just us, or do the administration and BCBS suddenly seem terribly eager to launch a media blitz to convince us against overwhelming evidence to the contrary that what they’re planning to roll out at the approaching  open enrollment is in the best interest of state employees and retirees? An even better question is do they really believe we’re stupid enough to buy into their empty promises?)

Second, and probably the most inane change is the renaming of all the plans from HMO (Health Maintenance Organization), PPO and CDHP (Consumer Directed Health Plan, formerly High Deductible Plan, changed to CDHP to make it sound more appealing) to confusing names like Magnolia Local, Pelican HRA, etc.

That tactic would appear to simply create confusion for elderly members.

But even more duplicitous is the provision that all OGB members must choose a new plan for the 2015 year during the upcoming open enrollment. If not, then they will automatically be placed in the HRA plan which is the worst of the four plans OGB will offer next year. It is a high deductible plan with have no coordination of benefits with any other coverage.

The big concern here is for members who have moved but never updated their addresses with their Human Resources departments or with OGB. If they don’t get the notices mailed out on Sept. 15 and fail to choose a plan or if they are incapacitated in nursing homes and have no family watching out for them, they will automatically be dispatched to the HRA plan.

HR officers will become responsible for retiree maintenance. Accordingly, retiree records definitely need to be updated in employees’ and retirees’ respective HR offices. But with all the closures and privatizations, many retirees and/or HR offices do not know who will have the retiree maintenance. Several other changes include dependent verification and late applications. All these changes will have to be made with an antiquated electronic enrollment system designed and maintained by the same OGB IT staff that was recently consolidated under DOA and which no longer belongs to OGB.

Further complicating matters is Jindal’s gutting of OGB staff to the point that the office now has only a handful of employees taking phone calls from members. So the administration has suggested that BCBS get its employees to handle the spillover calls.

But while OGB representatives are authorized to offer advice to members on what plans they should choose, BCBS employees are not. So, BCBS is hiring about 20 temps to take phone calls from members regarding the plan changes for 2015. These temps will, in all probability, simply refer callers back to OGB, which would appear to be a poor way to communicate with members about such important changes.

How bad is the HRA plan? Well, for openers, and deductibles will increase from modest amounts to thousands of dollars, the economic effect of which could be devastating to employees and retirees alike.

Lest anyone forget, it was Jindal who pushed the privatization of OGB, even jettisoning Tommy Teague as executive director of the agency when he didn’t jump on board the privatization train. It wasn’t enough that Teague had taken OGB from a $60 million deficit to a $520 million surplus, Jindal insisted the move, which included putting more than 150 OGB employees out of work, would save the state $20 million per year. The plan thus far has proved a complete fiscal disaster.

State Rep. John Bel Edwards (D-Amite), who is an announced candidate for governor in the 2015 election, agrees.

“The OGB fiasco is proof positive that privatization for the sake of privatization is foolish,” he said. “A reserve balance that recently exceeded $500 million is half that now and bleeding $16 million per month due to mismanagement and budget chicanery, and the ultimate price will be paid by state retirees and employees through higher premiums, higher co-pays, higher deductibles, and higher co-insurance in exchange for fewer benefits, more forced generic drugs, and more preclearance of needed treatments and other changes that make crystal clear that the OGB beneficiaries will pay more for less.”

In an effort to prevent unwanted surprises in health care coverage following the upcoming enrollment period, it is important to remember three important things:

  • All members should immediately update their addresses with their HR departments or with OGB;
  • Make certain that elderly retirees, retirees in nursing homes, etc., have updated addresses;
  • Make certain that all retirees on Medicare have sent an updated copy of their Medicare cards into OGB.

These are three things that are critical to state employees and retirees as the 2015 plans changes approach.

 

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Tomorrow (Aug. 15) is the last day for 24 employees of the Office of Group Benefits (OGB) but the bad news doesn’t end there, LouisianaVoice has learned.

Commissioner of Administration Kristy Nichols’ glowing guest column about the condition of OGB in Jeremy Alford’s Louisiana Politics notwithstanding, some 230,000 state employees, retirees and their dependents are in for some serious sticker shock.

http://lapolitics.com/2014/08/nichols-ogb-prepared-for-changing-world-of-health-care/

Even as Nichols babbled on about providing “better service and care to its members” while at the same time employing the by now tired and time-worn Jindal tactic of blaming everyone but Jindal for rising health care costs, the Legislative Fiscal Office was dropping a bombshell in announcing dramatic increases in health care insurance premiums for state employees coupled with benefits that will be undergoing deep cuts.

OGB Report_July 2014 FOR JLCB

Blaming the Affordable Care Act (Obamacare) and an aging population for rising health care costs, Nichols said “financially responsible practices” are necessary to continue providing benefits. She conveniently neglected to mention that it was the Jindal administration’s decision a year ago to lower premiums as a means of lowering the state’s 75 percent match, thereby freeing up money to plug gaping holes in Jindal’s makeshift budget.

That move, of course, help decimate OGB’s reserve fund. What started out as a $540 million surplus a year ago now stands at less than half that.

“At first glance it may seem like having a fund that large is a great thing,” she wrote. “But in reality, keeping hundreds of millions unnecessarily locked up in a reserve fund was not the best use of taxpayer money.

“Considering that the state funds 75 percent of member premiums through taxpayer dollars, letting that large of a balance sit unused meant that those funds weren’t being used for other important projects,” she said.

Nichols, of course, overlooks the fact that successful insurance companies keep health reserve funds in cases of a natural disaster or major epidemic. Companies who only manage to pay claims out of premiums on the other hand, traditionally don’t survive.

Her entire 800-word piece never once mentioned that state employees and retirees would soon be asked to pay significantly higher premiums for equally significantly reduced benefits. Instead, she parsed words, saying, “Plan changes for fiscal year 2015 are estimated to lower expected claims costs by $131.8 million…”

That sounds pretty good until you read the first page of the nine-page report released Monday by Legislative Fiscal Officer John Carpenter and Legislative Fiscal Office Section Director J. Travis McIlwain.

State employee health plan changes, according to the report, include, among other things:

  • An increase in premiums state employees and retirees pay for health coverage;
  • Significantly increase the out-of-pocket maximum for all health plan options;
  • Increasing deductibles for all health plan options;
  • Increasing co-pays 100 percent for those proposed health plans with co-pays;
  • Increasing the out-of-pocket maximum for the prescription drug benefit by $300 from $1,200 to $1,500 per year, a 20 percent increase;
  • Requiring prior authorizations for certain medical procedures;
  • Eliminating the out-of-network benefit for some health plan options;
  • Removing all vision coverage from the health plan options.

The latest premium increase of 6 percent will go into effect on Jan. 1 is on top of a 5 percent increase implemented on July 1 of this year.

Of course, the revamp of OGB premiums and benefits was the result of the infamous Alvarez & Marsal (A&M) study.

The really amazing thing about that is Jindal rushed into the OGB privatization convinced he could do no wrong and that his was the only way and that the state was going to save millions. Yet, when things started going south, he calls in the big A&M guns.

Not only that, he forked over $199,752 to A&M to learn the best way to screw state employees.

Speaking of A&M, the contract with the firm was originally for a little more than $4.2 million but was promptly amended by $794,678, bumping the amount up to a cool $5 million. The problem with that is state law allows only a one-time contract amendment of no more than 10 percent without legislative concurrence. The amendment was for 18.9 percent.

As if that were not egregious enough, the Division of Administration subsequently amended the contract by yet another $2.4 million in May—again without bothering to obtain the legally mandated concurrence from the legislature.

Nothing, it seems, is beneath this administration.

Well, don’t say you weren’t warned. LouisianaVoice said before the OGB privatization ever took place that it would be necessary to raise premiums or lower benefits.

But Jindal, wunderkind that he is, insisted his privatization plan, ripped straight from the pages of the handbook of his only private sector employer, McKinsey & Co., would be more cost efficient than having those lazy state workers process claims and that the state would save money.

And lest you forget, McKinsey advised AT&T in 1980 there was no future in cell phones.

And of course, McKinsey developed the flawless business plan for Enron.

To a degree Jindal is correct; the state will now save money—on the backs of state employees.

State Rep. John Bel Edwards (D-Amite), who is an announced candidate for governor in the 2015 election agrees.

“The OGB fiasco is proof positive that privatization for the sake of privatization is foolish,” he said. “A reserve balance that recently exceeded $500 million is half that now and  bleeding $16M per month due to mismanagement and budget chicanery, and the ultimate price will be paid by state retirees and employees through higher premiums, higher co-pays, higher deductibles, and higher co-insurance in exchange for fewer benefits, more forced generic drugs, and more preclearance of needed treatments and other changes that make crystal clear that the OGB beneficiaries will pay more for less.”

Bingo! And right on cue, Carpenter’s report echoed Edwards:

“The health plan and prescription drug plan policy changes…will shift more of the costs from the state to the OGB plan member,” it said.

That shift will save the state a minimum of $44.7 million for health plan changes and at least $69 million for prescription drug plan changes in fiscal year 2015, the report said.

“Along with premiums, the major costs incurred for medical services by an OGB plan member will be deductibles, co-payments and coinsurance,” it said. “The new health plan offerings will significantly reduce the cost to OGB, while the OGB members pay more for their medical services.”

Of the total OGB population, 75 percent are currently enrolled in the HMO plan which presently has no deductible for the employee but those members will, effective January 1, be subject to both a deductible and coinsurance whereas most are currently subject only to fixed co-pays.

 

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The Jindal administration has announced plans to jettison 24 more positions at the Office of Group Benefits (OGB) as a cost cutting measure for the cash-strapped agency but is retaining the top two positions and an administrator hired only a month ago.

The effective date of the layoffs is Aug. 15.

The latest cuts will leave only 47 employees when the agency is relocated to the Claiborne Building basement to share office space with the Office of Risk Management. The Claiborne Building also houses the Civil Service Department, the Board of Regents, the Department of Education, the State Land Office and the Division of Administration.

The layoff plan submitted to the Department of Civil Service on June 14, said there was insufficient work to justify all 71 positions.

Affected by layoffs are eight Benefits Analyst positions, three Group Benefits Supervisory spots, one Group Benefits Administrator, seven Administrative Coordinators, an Administrative Assist, two Administrative Supervisors, one IT Application Programmer/Analyst and one Training Development Specialist.

OBG Chief Executive Officer Susan West, one of those being retained, will be making a physical move back into her old offices. She previously worked for ORM before that agency was gutted by Jindal’s grand privatization scheme and she moved over to OGB.

West, who makes $170,000, and Interim Chief Operating Officer Charles Guerra ($107,000) are not affected by the layoff nor is Elis Williams Cazes ($106,000)) was appointed as Group Benefits Administrator on June 23.

Cazes was previously employed by Blue Cross/Blue Shield of Louisiana which serves as the third party administrator of the OGB Preferred Provider Operation at a cost to the state of $5.50 per month per enrollee, which computes to an amount a little north of $70 million per year.

Her position was created—and the requirements reportedly written especially to her qualifications—as the Medical/Pharmacy Administrator responsible for benefit plan management and vendor performance with the primary responsibility to “continuously monitor medical and pharmacy benefit plans to seek out modification of plans or implementation of new plans that reduce claims costs and provide efficiencies for the state and plan participants,” according to the justification given for retaining her position.

Well, we can certainly see where her position is as indispensable as West’s and Guerra’s.

All this takes place at a time whe OGB’s reserve fund has dwindled from $500 million at the time of the agency’s privatization in January 2013 to about half that amount today. Even more significant, the reserve fund is expected to dip as low as $5 million by 2016, just about the time Jindal leaves town for good.

Completing the trifecta of good news, we also have learned that health benefits for some 200,000 state employees, retirees and dependents will be slashed this year even as premiums increase.

In June, West broke the news to the OGB employees. She erroneously said the 47 remaining employees would be reassigned other duties and some might see pay reductions and that those with seniority could bump junior employees in desired positions. The Civil Service Department, however, said salaries could not be cut and bumping is no longer allowed.

Isn’t it nice to know your agency director knows the procedures?

Employees were told that letters would go out between July 1 and July 15 to those who were being laid off. On July 7, they were told the letters would be delivered by hand on Friday, July 11. None came. On the following Monday (July 14) confusion of the order of the day as Deputy Commissioner of Administration Ruth Johnson sent emails to those affected and instructed them to attend a noon meeting in the OGB board room. Upon entering the board room, each person was handed a packet that informed them that Civil Service had not approved the layoffs.

During the meeting, according to one who was there, West kept repeating, “I get this. I’ve been where you are. I get this. However, there are worse things. It’s not like losing a child. I get this.”

Way to soften the blow, Susan. You might have reminded them that the fighting between Israel and Palestine isn’t so bad because there’s also an Ebola outbreak in Africa or that while you’re losing your home to a hurricane storm surge, some people are having to endure heavy wind damage. Or better yet, take them all to a showing of The Fault in Our Stars. That’ll cheer them up.

“It was the ‘I get this’ and comparison of losing a job to losing a child that infuriated the OGB state employees,” the employee said. “This is the worst thing in their lives right  now, some are battling cancer and working; some have children and grandchildren to feed; some live paycheck to paycheck; some are taking care of the elderly and family; all have bills, rents/mortgages, school tuition, etc.”

But you really can’t blame Susan. She previously worked for ORM and was among those present when ORM Director Bud Thompson broke the privatization news to his employees by standing before them, grinning, as he said, “I still have my job.”

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To probably no one’s surprise except a clueless Gov. Bobby Jindal, the takeover of the Louisiana Office of Group Benefits (OGB) by Blue Cross Blue Shield of Louisiana 18 months ago has failed to produce the $20 million per year in savings to the state.

Quite the contrary, in fact. The OGB fund balance, which was a robust $500 million when BCBS took over as third party administrators (TPA) of the Preferred Provider Organization (PPO) in January of 2013, only 18 months later stands at slightly less than half that amount and could plummet as low as an anemic $5 million a year from now, according to figures provided by the Legislative Fiscal Office.

OGB is one of the main topics to be taken up at today’s meeting of the Joint Legislative Committee on the Budget (JLCB) when it convenes at 9 a.m. at the State Capitol.

OGB is currently spending about $16 million per month more than it is collecting in revenue, said Legislative Fiscal Officer John Carpenter.

The drastic turnaround is predicated on two factors which LouisianaVoice warned about two years ago when the privatization plan was being considered by the administration:

  • Jindal lowered premiums for state employees and retirees. That move was nothing more than a smokescreen, we said at the time, to ease the state’s share of the premium burden as a method to help Jindal balance the state budget. Because the state pays a percentage of the employee/retiree premiums, a rate reduction would also reduce the amount owed by the state, thus freeing up the savings to patch gaping holes in the budget.
  • Because BCBS is a private company, it must return a profit whereas when OGB claims were processed by state employees, profits were not a factor. To realize that profit, premiums must increase or benefits decrease. Since Jindal had already decreased premiums, BCBS necessarily found it necessary to reduce benefits.

That, however, still was not enough and the negative income eroded the fund balance to its present level and now legislators are facing a severe fiscal crisis at OGB.

And make no mistake: this is a man-made crisis and the man is Bobby Jindal.

In a span of only 18 months we have watched his grandiose plans for OGB and the agency’s fund balance dissolve into a sea of red ink like those $250 million sand berms washing away in the Gulf of Mexico in the wake of the disastrous BP spill.

There is no tactful way to say it. This Jindal’s baby; he’s married to it. He was hell bent on privatizing OGB and putting 144 employees on the street for the sake of some hair-brained scheme that managed to go south before he could leave town for whatever future he has planned for himself that almost surely does not, thank goodness, include Louisiana.

So ill-advised and so uninformed was Jindal that he rushed into his privatization plan and now has found it necessary to have the consulting firm Alvarez and Marcel, as part of their $5 million contract to find state savings, to poke around OGB to try and pull the governor’s hand out of the fiscal fire. We can only speculate as to why that was necessary; Jindal, after all, had assured us up front that the privatization would save $20 million a year but now cannot make good on that promise.

In the real world, the elected officials are supposed to be the pros who know that they’re talking about while those of us on the sidelines are mere amateurs who can only complain and criticize. Well, we may be the political novices here, but the results at OGB pretty much speak for themselves and we can rightfully say, “We told you so.”

Are we happy or smug? Hell, no. We have to continue to live here and raise our children here while Jindal will be taking a job with some conservative think tank somewhere inside the D.C. Beltway (he certainly will not be the Republican candidate for president; he isn’t even a blip on the radar and one former state official now residing in Colorado recently said, “No one out here has ever even heard of him.”)

In a five-page letter to JLCB Chairman Rep. Jim Fannin (R-Jonesboro), Carpenter illustrated the rate history of OGB going back to Fiscal Year 2008 when premiums were increased by 6 percent. The increase the following year was 3.7 percent and the remained flat in FY-10. In FY-11, premiums increased 5.6 percent, then 8.1 percent in FY-12 when the system switched from a fiscal year to calendar year. but in FY-13, the year BCBS assumed administrative duties, premiums dropped 7 percent as Jindal attempted to save money from the state’s contributions to plug budget holes. For the current year, premiums decreased 1.8 percent and in FY-15 are scheduled to increase by 5 percent.

OGB Report_July 2014 FOR JLCB

Carpenter said that since FY 13, when BCBS took over the administration of OGB PPO claims, OGB’s administrative costs began to shift to more third party administrator (TPA) costs as the state began paying BCBS $23.50 per OGB member per month. That rate today is $24.50 and will increase to $25.50 in January of 2015, the last year of the BCBS contract.

That computes to more than $60 million per year that the state is paying BCBS to run the agency more efficiently than state employees who were largely responsible for the half-billion-dollar fund balance.

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