Last Tuesday, as testimony wound down before the Senate Retirement Committee over the proposed sale of the Louisiana Office of Group Benefits, committee Chairman A.D. “Butch” Gautreaux (D-Morgan City) commented that perhaps the Jindal administration should consider selling the State Capitol because “it would make a great waterslide.”
Besides Commissioner of Administration Paul Rainwater’s describing published accounts about the administration’s shenanigans as reading “like a John Grisham novel” and Rep. Rogers Pope, reacting to Rainwater’s annoying habit of consistently giving evasive answers to his questions, saying that Rainwater “should be on Dancing With the Stars,” the committee hearing produced precious little levity.
But some comparisons of what was said earlier and what was said later might shed some light on the inconsistencies of statements by Gov. Bobby Jindal and Rainwater. Comparisons between Louisiana’s Preferred Provider Organization (PPO) and that of the state of Utah also are somewhat revealing. The state’s PPO plan is that part of the Office of Group Benefits (OGB) that contracts with doctors and hospitals for services to members and which Jindal is so desperate to privatize over the objections of plan members and legislators.
Jindal at first was pragmatic about his proposed auction of OGB, saying that it just made good financial sense for the state to rid itself of the burden of serving as a health insurance agency. Besides giving him a couple of hundred million dollars to plow into the $1.6 billion budget abyss, it would eliminate 149 state jobs, something he seems determined to do.
But in Friday’s Baton Rouge Business Report, Jindal shifted gears oh so subtly when he said his reasons for wanting to divest the state of OGB was rooted as much in his philosophical opposition to government-run health care–he equated it to his opposition to President Barack Obama’s health care plan–as any other reason.
As Archie Bunker might have said, he switched from pragmatic to philosophical in the blink of a hat.
Likewise, consider the words of Rainwater. A week ago, he said the reason OGB would be attractive to buyers in the private sector was because the $500 million existing surplus would allow a new owner to pay claims out of that reserve without the buyer having to dip into its own reserves initially.
But on Friday, Rainwater sent out a two-page letter to OGB members in which he emphatically claimed that was not the case at all. These are his words, lifted directly from that letter:
“Strong restrictions remain in place governing the OGB surplus, and it will continue to be utilized just as it is now – solely for the purpose of providing health coverage for plan members.”
So, with Rainwater making such a strong promise (in boldface type, no less), why was it necessary to inject those four notorious lines into HB-32 which would have the effect of directing the state treasurer to divert any surplus funds from OGB to the state’s General Fund when current law strictly prohibits just such action by the administration?
That’s a question that only Jindal or Rainwater can answer but so far they have not addressed that provision of the bill.
Finally, there’s the comparison between Louisiana and Utah.
Why? Because no less than half-a-dozen times during last Tuesday’s Retirement Committee hearing Rainwater alluded to the fact that Louisiana is one of only two states in the U.S.—Utah being the other—that has a completely self-administered system. Put another way, the two states are the only ones that pay PPO claims exclusively in-house.
Each time Rainwater made the statement that Louisiana was one of only two such systems, he said it like it was a bad thing. And he said it so often that Gautreaux, apparently weary of hearing the line repeated as if by rote, finally interrupted Rainwater to say that after hearing it said repeatedly, everyone present was now aware the fact and there was no further need to dwell on that point.
But perhaps the point needs to be scrutinized more closely.
So, with that in mind, CNS contacted Jeff Jensen in Salt Lake City. He is Director of the “other” program in Utah.
Strangely enough, he said when asked the direct question that the Republican administration of that state had introduced HB-404 which seeks to privatize the Utah group benefits program. What a coincidence.
“Our program has worked well for 30 years,” he said in a telephone interview with CNS.
How well? Well, the Louisiana OGB has an administrative cost of roughly 3.5 percent compared to about 4 percent for Utah. Among private insurance companies, administrative costs run, on average, between 10 and 15 percent–some even higher.
“We don’t have quite the surplus, or escrow, that Louisiana does,” Jensen said. “When we accumulate a surplus at a certain level, we refund that to our members by reducing premiums.”
In Louisiana, members are happy with OGB because it averages no more than 48 hours on claims payments. In Utah, Jensen, said, the average is about 14 days, “but improving.”
In Louisiana, privatization of OGB would cut the number of employees in that agency by half, Rainwater has been quoted as saying. Later, the number was given as 149, meaning that the agency now employs about 300 people to service the health insurance needs of approximately 220,000 active members, retirees, and dependents. That’s one OGB representative for every 733 members.
Jindal said that number is far too many and is wasteful.
Utah currently employs 230 people to service the health needs of 140,000 members, or one representative for every 609 employees.
The comparisons, however, end there. Utah’s State Capitol is not conducive to use as a water slide.
Below is the blurb from the Business Report followed by Rainwater’s letter in its entirety:
Jindal says La. shouldn’t run health insurance program
Gov. Bobby Jindal is pitching his bid to privatize a health insurance program for state workers as a fight against government-run health care, equating it to his opposition to President Barack Obama’s health overhaul. Jindal says that he doesn’t think Louisiana should be in the business of running a health insurance program, as he tries to gain support for his plan to hire an outside company to run the program currently run by the Office of Group Benefits. The idea faces significant opposition from some lawmakers and current and retired state employees. Jindal says privatization would cut in half the 300-employee group benefits office workforce and generate $10 million in annual savings for the state, in addition to an up-front, lump-sum payment that could top $150 million. “In a time of serious fiscal challenges, these funds, in future years, could go a long way toward protecting critical taxpayer-supported services that benefit all our citizens,” says Paul Rainwater, commissioner of administration and Jindal’s budget chief. Rainwater made the statement in a letter to Office of Group Benefits plan members. He assured members that potential privatization would not affect service, coverage, benefits or premium rates.
Rainwater’s letter:
April 29, 2011
Dear Plan Member,
I write to you regarding the possible further privatization of the Office of Group Benefits (OGB). In the past few weeks, numerous rumors about this proposal have caused concern, among government employees and retirees alike, over what it might mean for their future health coverage. I certainly sympathize with those concerns, and I would share them too, if the rumors were true – but they are not.
As Commissioner of Administration, with responsibility for overseeing OGB, I believe strongly in the need to provide you with the facts, to separate rumors from reality, and hopefully alleviate any concerns you may have.
As you know, OGB has long used private companies to deliver various health plans, including the most popular plan, the HMO. These plans operate successfully and provide quality service, with administrative oversight by OGB. Only the PPO plan – which provides coverage for 61,469, or 27 percent, out of a total of 225,870 government employees, retirees, and dependents covered through OGB – is self-administered by state government, and it is only this plan, under the proposal, that would change in that regard.
My pledge to all plan members is this:
• You will continue to receive quality service and coverage regardless of the potential further privatization of OGB.
• Premiums rates, likewise, would be unaffected by this transition, and increases, when they occur, will continue to be reflective of medical market rates, as they are now.
• Benefits for all plan members, including retirees, will NOT change. We will continue to provide an HMO, PPO, and other plans with a benefit structure that is the same or better than the health plans OGB now offers.
• Current eligibility rules for coverage will not change for all plan members, active and retired alike.
• And OGB’s administrative oversight will continue, securing the continued success of all the plans.
As for the allegation that OGB’s surplus will somehow be “stolen” and diverted for other budgetary purposes, let me be absolutely clear: This claim is categorically untrue. Strong restrictions remain in place governing the OGB surplus, and it will continue to be utilized just as it is now – solely for the purpose of providing health coverage for plan members.
So why, then, explore such a proposal? Well, the simple fact of the matter is that taxpayers, who pay 75 percent toward plan member premiums and the cost of providing coverage, also have a stake in this discussion. A preliminary estimate suggests that a financial transaction with a commercial health provider involving the HMO and PPO plans could generate for the state at least $150 million. In a time of serious fiscal challenges, these funds, in future years, could go a long way toward protecting critical taxpayer-supported services that benefit all our citizens.
Our research of best practices shows that every other state besides Louisiana that offers a PPO plan does so through private companies, so we know it can be done with positive results. In the coming weeks we will engage an expert financial advisor to assist us in a thorough evaluation of this proposal, and to help us make a careful determination to proceed on a course of action that’s in best interest of both plan members and taxpayers.
This lengthy evaluation will also prepare us to present a detailed presentation of the proposal to you, as well as to the Legislature’s appropriation and finance committees, whose members have jurisdiction over OGB and whose approval would be needed for any contract involved.
In closing, I hope that expressing to you the reality of the situation, which runs so counter to the rumors you have may have heard, has helped to dispel concerns these rumors have caused. As we gather more information, I will see to it that you are given updates as they develop. More importantly, I will make sure that you continue to receive the quality service and coverage from your health plan that you expect and deserve.
Sincerely,
Paul Rainwater
Commissioner of Administration
Louisiana Voice 
Why is Bobby Jindal so desperate to get rid of the Office of Group Benefits and its employees when clearly it is the wrong thing to do? Clear to everyone except him and his administration. What a sorry way to treat an agency that has done an outstanding job. There is no justification for this. What’s in it for you Bobby? It must be something really big because you are waging an all out war, truth be damned. I have never seen someone who represented the Republican party engaging in such an unjustified abuse of power.
So where does the $150 million or so come from that we have heard for months will help to fill a portion of the fiscal 2011 – 2012 budget deficit?
In this age of upward spiraling medical costs, a $500 million reserve equates to only $2,200 for each of the 226,000 plan participants. That’s not much and surely should stay in a medical reserve fund rather than any part being used to cover a portion of the general fund shortfall. In fact, I doubt that $2,200 will cover the cost of the proctologist visit that each OGB plan participant will incur as a result of this Jindal/Rainwater shenanigan.
“As for the allegation that OGB’s surplus will somehow be “stolen” and diverted for other budgetary purposes, let me be absolutely clear: This claim is categorically untrue.”
i take it he would join the rest of us then in lobbying against HB 32, which (in case you weren’t paying attention) would do exactly the opposite – that bill would effectively nullify the legislative protection of ogb’s surplus
and when he writes “And OGB’s administrative oversight will continue, securing the continued success of all the plans..” how exactly would that work? if ogb does not exist, how can it provide “administrative oversight?”
I really wish someone would ask him how it is humanly possible for the following to be true, given the absolute *fact* that admin costs would be higher for a private plan… this is quite apart from other facts, such as an inherent profit motive… “Premiums rates, likewise, would be unaffected by this transition, and increases, when they occur, will continue to be reflective of medical market rates, as they are now.”
it’s true that state taxpayers have something to say about this, but what he leaves unsaid is this: when, not if, the premium increases, the state’s share will rise proportionately… if x is more than y, then 75% of x is more than 75% of y
1. the salaries of OGB employees are paid from PREMIUMS not from state budget. It’s part of the 3.5% administrative costs, so the $10 million projected savings will NOT improve state budget.
2. of the 48 privately-run state plans, how many are running a deficit? Why would we want to follow that model?
3. Why do we need to fix something not broken?
Seems a lot of time, energy and money is being spent on addressing a non-problem. There has to be another reason for all the hoop-la. OGB isn’t the problem.
The election year is the problem. As a member of the plan as a retired disabled person; OGB has been my insurance and has been excellent. The agency is ran with compassion, honesty and caring personnel. WHY DOES THE GOVERNOR’s keep trying to get the plan; wouldn’t you want to control a $500 million surplus and millions in premium money every year. AND QUIT SAYING THE HMOs ARE PRIVATE. The idiots don’t know that the current law requires the HMO’s to give equal or better benefits than the OGB PPO. So if you take the OGB PPO out of the equation then every plan has a SERIOUS problem. Also under the current law which makes Group Benefits, it adds a retiree will never pay more than an active employee. So EVERYONE better stop this by contacting their legislature cause Jindal and his administration don’t care if they ruin what we have and give us a major problem; heck they will b gone soon. The administration is even trying to address the highest cost of the plan, the retirees. I can promise retirees you will not be able to afford the premium under private sector. GOD HELP US!!! GET OFF THE COUCH AND CONTACT YOUR LEGISLATURE PLEASE!!!!!!!!
Does Utah only have a PPO? If so, using Mr. Rainwater’s numbers for our PPO, the implication would be that there are about 410 PPO plan members per OGB staff member responsible for the PPO (61,469/150) in Louisiana and 609 in Utah (140,000/230). That would go a long way toward explaining why it takes OGB 48 hours to process a claim opposed to 14 days in Utah. Put another way, it would be interesting to know how long it would take OGB to process claims if they only had 100 employees rather than 150 running the PPO (a 1/3 decrease to make the ratio like that of Utah).
As this whole thing gets more complicated, the truth is becoming more difficult to discern. Was it Mr. Rainwater’s intent to inform or confuse with his letter? I frankly don’t know, but I don’t think I’m alone in my confusion.
What is clear is that the entire focus of this effort is to get $150 million toward TEMPORARILY plugging the budget gap. This proposal, like others of its kind, presumes and plays upon the public perception that there is nothing government can do better than the private sector. It ignores the fact that OGB is/was clearly doing something right and that we pay for every abuse and extravagant expense in the private sector of which there have been plenty in the insurance business.
This is pure evil at work. How dare they lie and say it would be better under private sector. God, I hope people see this is something the administration REALLY wants its hands on. How can they lie and say a private sector plan will cost less. It doesn’t take a smart person to know when the current administrative cost is 3.5% and per their own words, a private plan is 10 to 20% administrative cost; yeah, right; the private sector will save us tax payers dollars. If they really believe this it’s because they don’t care about the retirees in the plan; the majority of the ones currently using the plan. How dare they; it’s an election year and now I am even more confident they want control of the surplus. ANYONE SAYING A PRIVATE PLAN WILL GIVE THE SAME EXCELLENT BENEFITS AS OGB IS FEEDING US BULLS**T!! THEY, LIKE HMOs DONT WANT THE SICK AND FRAIL; EVERYONE CALL YOUR LEGISLATURES AND STOP THIS ATTACK FROM SUCCEEDING.
Mr. RAINWATER why don’t you mention in your letter the reason why the Administration did not tell anyone about this before when you and your administration were trying to sneak and take our benefits. You have no clue about OGB do you. You probably are covered as the rest of the administration by private sector; or you would not be trying to ruin the best medical plan in America.
In your letter you are hypocritical and even bordering on being a puppet. I worry about you running the administration when you are going to tell me, a disabled state employee, that the administrative cost of a private plan at 10 to 15% AS YOU SAY, isn’t going to raise my premiums or reduce my benefits when I am paying into a program that is at 3.5% currently. And you don’t tell us what the general fund does. Oh, I have an idea because isn’t the general fund under you and the Governor’s Dept. God that scares me. You are like a poison, you come in and don’t even ask or TELL plan members what you are doing, then you send out a letter that is pathetic. We are not robots and because you got caught sneaking; now you want to TELL US what to believe. Your administration should have told plan members from the beginning which can only lead us to believe their is a extra motive for your office trying to cram this down the throat of plan members. NO THANKS!!!
By the way Mr. Rainwater, you have nothing to do with the quality service we get from Group Benefits. The employees automatically give great service. The plan is in excellent working order and does not need to be fixed. Why are you looking at what you want instead of ASKING us plan members what we want the way OGB and its board members have always done for us. LEAVE THE PLAN ALONE!!!
In today’s article in the Advocate, Governor Jindal compared OGB Health to “Obamacare.” He can’t fight the national program if the Healthcare in his own back yard is working and profiting the State. Is There a Surplus in the other 48 States that are not providing Coverage to its State employees? Can the governor give and example of a state that is doing healthcare his way?
i think some people are missing the point that there are two separate issues here… first is the sale (privatization) of ogb… equally important and equally less logical is the outsourcing of the ppo… the ppo can be outsourced and ogb, as an entity, saved, but this would still result in a net loss for the taxpayer (and a *huge* loss for the 149 souls whose jobs and lives are affected)… i hope the legislature, starting in sen. gautreaux’s weekly committee meetings, can put the quietus on both of those… the only kind of sense either makes is ideological – and as was mentioned last week, ideology alone is a horrible reason for making moves that change so many lives
in response to Holly: Turns out several of the states with privatized health care for its employees are running deficits. Utah & Louisiana have a surplus. Another state currently with a surplus is expecting it to dwindle into a deficit. The governor has revealed his true agenda. It’s NOT ABOUT BETTER ANYTHING — not better health care, better financial responsibility or better governance. It’s a political agenda, which appears to be the most important thing to the Jindal administration.
People of Louisiana: “Pay no attention to that man behind the curtain” (from the Wizard of Oz).
Earl Long once said, “Give the folks in Louisiana good government and they might not like it”; but Earl would have been dead wrong about OGB – it was working. Tom is right on target –this is about not facts, but a misguided philosophy that government should be dissolved and replaced with CEOs. This insidious philosophy hides in the shadows. It will take a Toto (Wizard of Oz) to pull back the curtain and put it in the light. http://www.youtube.com/watch?v=YWyCCJ6B2WE
What would be the worst fear of Bobby Jindal and company? For starters, how about undisputed prima facie evidence that OGB was run efficiently, and this fact quickly grasped by the public? Tommy Teague understood the fine art of cultivating a balance and sustainable department that resulted in GOOD GOVERNMENT. He understood the meaning of Public Service. These attributes are foreign to this Administration. The OGB story is a story they want to kill. It carries a message different from their twisted ideology, and therefore OGB must be cannibalized. They cannot afford to give the opposition a factual rebuttal that government can have a highly efficient health care system that blows the Corps out of the water.
What’s next: Blackwater replaces the State Police and Halliburton grabs DOTD? At what point does malfeasance in office kick in, or have we already privatized that office?
Tom , thanks for looking behind the curtain.
that’s why they got rid of MR. TEAGUE. We are all praying for you Mr. Teague, you ran OGB with all your heart and soul. No one can ever replace you and please fight to get reinstated so we can throw out the Aholes!!! before they mismanage our monies in OGB.
Since Mr. Teague was thrown out of OGB for doing an excellent job, now the program is in the hands of these evil people, and God only knows what will happen to the monies that Mr. Teague so greatly got in a surplus with a plan of retirees and active employees.
I read the letter Rainwater wrote for OGB employees, telling them what to say to plan members and state entities, when we call OGB about our benefits. The man doesn’t know we are in America with freedom of speech??? So now Jindal’s Administration is trying to force the sale of OGB, telling employees of OGB what they can and can’t say (are they robots?) and telling me the plan member selling the PPO won’t hurt me. Kipper and Rainwater are in charge of OGB now, (may God help us) they couldn’t be more wrong, more ignorant and clueless as to what will happen to just retirees without Medicare if the PPO is “SOLD”. What gives him the right, Gov. Jindal???
Rainwater states in a letter, he is demanding OGB give to state agencies, stating that people are lying about privatizing OGB as his letter states that privatizing is false. Does this man even know what that means. That means SELLING OGB PPO PLAN TO PRIVATE SECTOR, they sure are not going to give it to them. DIDN’T HE PAY GOLDMAN SACHS NEARLY $100,000 to look into privatizing the plan. And now it seems that Goldman Sachs did not do what Jindal’s administration wanted, so now they are discussing hiring someone else to do the same thing. Please correct me if I am wrong.
With all the mistakes this administration is making with the sale of OGB PPO, (at times it seems they are covering up what they are doing, or changing their words or minds as they have done this last month, and even the things they don’t want us to know)
I pray our Legislature sees this as how bad the governor’s administration wants this (surplus) plan under their control. I hope our legislature sees the administration for what it is.
But mainly I pray the Legislature realizes this a an awesome self-insured plan that is doing what private sector can NEVER do, be true, loyal and caring to its plan members and gives them the insurance they worked so hard for as a STATE EMPLOYEE. There is no greater benefit than going to sleep at night knowing my illnesses are covered and my claims paid. That makes my life threatening illness a lot easier to live with. PLEASE LEAVE MY BENEFITS ALONE!!!!! DON’T LET MY BENEFITS BECOME THE ADMINISTRATIONS MONEY!!! Tommy Teague could tell you where every dollar was in this plan. I’d like to see Kipper or Rainwater do that, oh wait they don’t want us to know what they are doing. STOP THEM!!!
The Jindal administration is desperate to dismantle OGB before states are required to have health care exchanges in 2014. Privatizing the PPO would be the first, not the final step. OGB demonstrates government-run health insurance can work and work well. Can’t allow that…
When one becomes an employee of the State of Louisiana, he/she signs on to become a part of a retirement system with defined benefits. In other words, when you accept the job, you know the formula for/or what your benefits will be when you retire.
As a retiree who had a legitimate personal and financial plan for my life when I elected to become a teacher in the Teachers Retirement Plan of Louisiana, I am terrified at how my life is about to be turned upside down! Had I never had a plan nor done my part to fulfill that plan, perhaps I would not be so angry and upset; as is, I know that I deserve better fiscal management at the state level!
I am sorry for the policemen to also signed on to a defined benefit plan for their retirement, but the financial crisis with their retirement system is the result of faulty management. I did not join a “rescue mission” when I became a part of the Teachers Retirement System of Louisiana in 1973; I contributed 8% of my salary for 37 years to a defined benefit plan, and I expect those obligations to be fulfilled by the Teachers Retirement System and the State of Louisiana. I did not and do not want whatever Bobby Jindal happens to have Paul Rainwater design for me! The very idea that any governor thinks he has the right to alter the plan for my retirement–and for the retirement of those who taught me and are now in their 80s and 90s–confirms that Bobby Jindal cares nothing for the people who have given their lives to educate the youth of Louisiana. Retired educators do not deserve this punishment and abuse!
How can this move by Jindal be stopped?
CONTACT YOUR LEGISLATURE AND DEMAND THEY NOT AGREE TO THIS HORROR!!!
By the way, governor Jindal raided the Louisiana Teachers Retirement Fund of $297 Million dollars in 2009. This money was set aside for a Cost Of Living Adjustment (COLA); because of Jindal’s 2009 raid, retired teachers did not get a cost of living adjustment in 2009 and they still have not gotten a cost of living adjustment and it is 2011.
Another fact is that Jindal has made no effort to follow the payment plan which was established to repay the stolen funds from the TRSL. This should NOT be an option!
Where are our Senators and Representatives who have an obligation to their constituents to protect state retirement plans and their not-for-profit self-insured medical insurance known as OGB?
It doesn’t take a Rhodes Scholar to see that those in Louisiana’s state government are unethical and self-serving!
BCBS the has the HMO contract also bid on PPO. direct numbers compared. OGB won out. no financial benefit for
private PPO. Can someone look into that. The result would be one insurer with all the marbles.
the ppo is no benefit for BCBS because they cannot manage the PPO the way they can an HMO. A PPO allows your doctor to practice medicine; an HMO has the insurance plan make all medical decisions. ALSO OGB’s administration cost is far lower than BCBS. If I am wrong someone can correct me. GO ON THE STATE EMPLOYEES MARCH IN BR ON May 10th. I believe; not really sure of the date; read the comments on Waterslides article or the Joke title “State Employee Recognition Day” it tells where the rally will be. God Bless all State Employees cause each one deserves to be treated with gratitude.
Butch Gautreaux for Governor!!!
[…] The practice of Bobby Jindal’s selling off everything in sight to raise money is reminiscent of a 2011 comment by former State Sen. Butch Gautreaux (D-Morgan City) who suggested that perhaps the administration should consider selling the 24-story State Capitol building because “it would make a great waterslide.” https://louisianavoice.com/2011/04/29/of-water-slides-and-comparisons-between-2-state-health-plans/ […]