When it comes to twisting his stories and changing direction in mid-testimony, Commissioner of Administration Paul Rainwater, it seems, has no peer.
In yet another legislative committee hearing on the proposed sale/privatization/contracting for a third party administrator (TPA)/hybrid of the Office of Group Benefits (OGB), this one by the Senate Insurance Committee, Rainwater again altered his version of the truth that just doesn’t quite square with public comments he has uttered in the recent past.
Rainwater also got a surprise when his appointee as GEO for OGB admitted that if things remained the same as they are now, he could not reduce his staff. Rainwater has testified before two different committees that the sale/privatization of ORM would reduce the number of employees at OGB by 149, or by about half.
On Tuesday, Rainwater told Insurance Committee Chairman Sen. Dan Morrish that there was no plan to use any portion of the OGB $520 million surplus for the state general fund, nor would any private company that takes over the operations of the agency have access to the fund balance. “That fund is there for the state to pay claims and that’s what it’s going to be used for,” he said.
Barely three weeks ago, Rainwater said that the OGB surplus would be “an attractive selling point” because the private company that ultimately purchases the agency would not have to dip into its own capital to pay claims initially.
And while he steadfastly maintains that OGB is not for sale, his own office’s press release of April 26 describing his appearance before the Senate Retirement Committee repeatedly alluded to his testimony on the “potential sale and privatization of the state’s Office of Group Benefits” and of the procurement of a financial advisor to help the state “evaluate the potential sale of OGB…”
The first paragraph of Rainwater’s press release said that he testified before the Retirement Committee “about the potential sale and privatization of the state’s Office of Group Benefits.”
The second paragraph quoted Rainwater as telling the committee, “The simple fact of the matter is that a sale and privatization of OGB will have no negative impact for those covered. Let me say that again: a sale and privatization of OGB will have no negative impact for those covered.”
If that is not enough, that same press release from his office quoted him as testifying before the Retirement Committee, “The procurement of a financial adviser to help the state evaluate a potential sale of OGB was undertaken in accordance with applicable law.”
Morrish on Tuesday asked, “Is this a sale or a privatization?”
“We’re attempting to bundle our HMO and PPO.”
“Is it a privatization or a management contract?” Morrish asked again.
“It’s a privatization with a five-year contract. We’re taking OGB out of the day to day business of running an insurance company,” Rainwater said.
“We’re not selling OGB,” he said. “We’re not giving up the right to negotiate a contract. This is something that’s never been done before. It is privatization, but we’re not selling OGB.”
A brief but puzzling exchange ensued when Morrish commented that he had not seen the RFP (request for proposal).
“The RFP is not written yet,” Rainwater responded.
The RFP for a financial adviser to conduct an assessment of OGB’s value was issued last Friday giving bidders a deadline of June 6 in which to submit proposals to “assess the market value of the book of business and services provided by OGB and assist in the formulation of alternative methods of benefit delivery.
An earlier RFP was abandoned when the only bidder, Goldman Sachs, who helped in the crafting of the document, was the only bidder but could not agree to a demand that DOA hold Goldman Sachs harmless in the event of litigation.
Throughout the latest RFP, there are references to those submitting proposals having experience in the sale of health insurance entities and of track records in past sale efforts.
Sen. J.P. Morrell (D-New Orleans) asked Insurance Commissioner Jim Donelon about the impact on the state insurance industry if the same company ended up as the third party administrator (TPA) for both the state’s HMO and PPO.
“After Hurricane Katrina visited us,” Donelon said, “Blue Cross/Blue Shield went from having 40 percent of the insurance business in Louisiana to 70 percent. I have tried every way I know how to stop that trend. Blue Cross already has the state’s HMO and PPO, that could be a problem. I spoke to Angel (former Commissioner of Administration Angele Davis) about that when DOA awarded the HMO to Blue Cross over Humana and of course, that’s being litigated right now in the court of appeal.”
Sen. Gerald Long (R-Winnfield) asked Rainwater how he arrived at a value of $150 million for OGB.
“OGB collects $1 billion a year in premiums and currently has a $520 million surplus and we took variables of those figures and arrived at a price of $150 that we expect a company might pay us to manage that volume,” Rainwater replied.
Sen. Eric LaFleur (D-Ville Platte) asked Rainwater if the $150 million was recurring or one-time revenue and Rainwater admitted it would be a one-time payment. “But there would be a $10 million-a-year savings in staff reduction savings,” he said.
“Doesn’t the $500 million surplus help the state?” LaFleur asked.
“It does, but we need some balance,” Rainwater said.
“Isn’t what he’s supposed to do,” LaFleur asked, referring to Scott Kipper,
newly-appointed CEO of OGB following the April 15 firing of Tommy Teague
“It is. That’s why we brought him in.”
LaFleur then asked Kipper, “Is that impossible for you to do, to streamline the agency and make it more effective?”
“It’s not impossible,” Kipper said. “The trick is to try and get an apple-to-apple comparison in order to get the reserve where it should be.”
“What is a good reserve?”
“That’s a good question.”
LaFleur then dropped a bombshell when he asked Kipper, “Let’s assume this RFP doesn’t go anywhere and we’re right back where we are right now, who…how many people would you cut from OGB?”
“If we continue to operate as we do now, there would be no significant cuts,” Kipper said. “There’s not a lot of excess now.”
Rainwater, visibly upset at Kipper’s answer, interrupted to say, “The only way to reduce the number of employees by 149 is to privatize.”
Louisiana Voice 
Once again, over 200,000 participants in the OGB plans have you, Louisiana Voice, to thank for stopping what was surely going to be a devastating blow to their health benefits. You are to be commended for your courageous reporting of this dastardly proposal by Jindal and Rainwater.
Mr. Sachs are you part of the first bid the Administration had done? By Goldman Sachs? If so thank you so much for also caring about what happens to our benefits. I was a state employee for 27 1/2 yrs of my life. I was forced to retire under CS rule 12.2( i think) that says when you run out of sick leave they can fire you or force you to quit/retiree. I did not fight about how they screwed my retirement, they took my income away, they made me borrow $15,000 to pay back 3 years of retirement that my credit union took when I left state gov’t for 3 yrs., and at the time of my being forced out I had nearly 3000 plus hrs of annual leave left.
But I draw the line on my benefits. The OGB PPO is an excellent plan and one of the only plans left that allows me to go to any doctor, anywhere and still be covered with medical benefits. Its the best state agency where the employees work from their heart and soul and are very concerned about us members. Please leave my hard earned benefits ALONE BOBBY JINDAL AND MR RAINWATER!!!!!
Paul Rainwater was my student years ago. I am sorely disappointed in him. He has turned into the kind of careerist that his boss, Jindal, is. They lie to get their political agenda approved, deny and obscure the facts. This privatization has nothing to do with budget; it’s about dismantling government. Paul Rainwater, if you were still in my class, I would fail you for being dishonest.
Oh my God!!! What idiots. They’re trying to lie and say the OGB is a problem and needs to be fixed. This meeting CLEARLY shows how bad the Governor’s Administration wants their hands on the $510 million surplus. I guess Kipper better be careful because he will be thrown out like Tommy Teague. How embarassing for Rainwater to correct his CEO in front of all those people. But I guess Kipper wasn’t saying what the Administration wanted him to.
Now we have proof in the above of how pathetic their attempt is to take over OGB. Thanks so much Mr. Aswell as I am disabled and without your website a whole lot of us would have been blind sided as we lost our excellent benefits. Ms. Stella you make an excellent point, thanks.
ONE LAST THING RAINWATER!!! How much is it going to cost to privatize and pay the private companies employees??? You dare not say less than it cost to pay LA STATE EMPLOYEES!!! The public knows that would not be true. AND AGAIN HOW WILL THE 22,000 plus retirees b affected by privatizing. WE KNOW PRIVATE COMPANIES DON’T WANT THOSE RETIREES AS THEY ARE NOT COVERED BY MEDICARE OR SOCIAL SECURITY BECAUSE THEY DEDICATED THEIR LIFE TO STATE GOV’T. AND FOR PRIVATE INSURANCE ARE TOO MUCH A RISK. NOBODY WANTS US SO LEAVE OGB ALONE AS THEY ARE THE ONLY PLAN THAT TREATS ITS RETIREES AS AN ACTIVE EMPLOYEE!!!!!!
Will the Mississippi rising stop the protest Saturday?
No the protest will continue on as plannef
See ya Saturday at 0900.
This is one of the most blatant attempts imaginable to create a monopoly for some private insurance company. How on earth could Paul Rainwater or Bobby Jindal promise that subscribers to OGB would not have higher premiums and higher deductibles if the services were privatized? I suppose contractually a company might be limited in what percentage of increase it might charge, but PRIVATE corporations are NOT in business for anything other than to make money. How do they make money? Charging more, spending less.
Delma Porter
Thank you, Delma. We need more voices to protest, to wake up the citizens of this state so they do NOT re-elect Jindal.
Again, just like with prison privatization. This administration ignores cold hard facts and pushes to privatize organizations that are run extremely efficiently already. They don’t care if privatizing saves money for state taxpayers. They just want to decrease the number of state employees, even if it costs the same or more to privatize. As long as they ensure that their campaign contributors end up making money, ordinary louisianians get left out.
First let me say that I do honestly respect the Office Of The Governor. I must say however to the person that now holds that office, that I am disapointed with him to say the least. I did not vote for the genteleman because I sincerely thought that he was just going to use the Governor’s office as a platform for another job. I believe that is now happening. I sincerely believe that this entire matter of privatizing the Office Of Group Benefits should be investigated by the proper Federal and or State law enforcement agencies. From all I have watched on Legislative Committee TV and all I have read on this CNS something is wrong folks. They need to look into all those early October meetings in the Claiborne Bldg. with those wall street bankers. They held those meeings and participated in telephone conferences right up until an RFP was released sometime in mid feburary. All of that and the little $49,999.99 real quick contract with another company out of New Orleans definitely needs some scrunity from the proper officials. Also deserving some attention is one of the DOA officals responsible for all of this foolishness. They know this will never work but they also know that it will take a few years for it to blow up and then they will be long gone. The poor state workers and retirees will be left holding the bag. GOD BLESS THEM.
The name of the game, my friends, is smoke and mirrors. The Black Prince (a/k/a Jindal) will do exactly as he pleases, aided and abetted by a corrupt legislature. The proof of that is to watch a committee meeting, such as the HAC this past Tuesday, and see the chairman (Fannin) ask tough questions, receive answers that were less than satisfactory even to him, and then proceed to cave and do exactly what Jindal ordered.
We have no rights any more and nothing will improve until this governor is gone. This IS an election year.
Let’s say the PPO is sold/leased and then in 3-5 years when it is determined OGB will be given back the PPO, who will be at OGB to process the claims, etc.?
Let’s see, OGB is being sold/leased because they feel some other company can run it more efficiently, but can anyone explain what and where the deficiencies are in OGB? IT HAS A SURPLUS OF $510 MILLION AND by the words of the administration’s hand-picked yes man, if there ultimately should be no sell/lease, “there would be no significant cuts, there is not a lot of excess now.”
Call Jindal and his band of thugs/thieves what they really are….LIARS!