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.
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.
Louisiana Voice 
State workers (active and retired) SCREWED again, not to mention the rest of the people of Louisiana (taxpayers)!!
http://theadvocate.com/home/9994731-123/state-faces-12b-budget-shortfall
Good thing we don’t have any budget problems for Ms. Nichols to deal with, or, as Gomer would say, “Surprise…Surprise…Surprise!”
Pi is relentless with his screwing the public. Our state was functioning pretty well, with a $1 billion surplus when he came into office. Now we are that plus in debt. What is wrong with “if it ain’t broke don’t fix it”?
Strange he can do all these things to all departments but has problems governing his own appointed BESE board. Something stinks to high heaven.
It’s another BOHICA thanks to Jitler, our fearless leader
OK. Legislators LISTEN UP! Stop sitting there looking dumbfounded and DO SOMETHING! Ask for an outside audit of the privatized healthcare costs vs. the costs when state-runOGB was running the program. Ask to see the # and cost of claims before and after. Ask to see the cost of admin. Before and after.
Because WE THE PEOPLE are no longer buying this load of crap.
If you can’t find it in your abilities to ask the right and important questions about this and request an audit or investigation by an outside party, then you are as guilty as the Jindalistas for screwing up this state. And, I can only hope the voters remember that at the next election.
Two years ago they said nothing is wrong with OGB, leave it alone. Our insurance was fine and the cost managble. Now our premiums are going up again and the cost of our co-pays and deductibles. Remember that the majority of us do not work for the administration, that means we do not make $100k or more a year like they do. It is easy to try and sell this BS when it really dosent hurt your pocket. Up my salary to $100k and I will stop bitching. I am so ready for Jindal and that entire organization to exit BR.
Does Nichols really expect us to believe that the OGB Surplus was excessive and bad for the state? And further that it was stuffed in a mattress earning no returns which benefitted both plan participants and the state? Her entire op-ed is insulting and disingenuous. Earlier Louisiana Voice columns have meticulously reported on the success by Administrator Teague in establishing the adequate reserve balance by applying sound actuarial practices and making prudent investment decisions.
Now John, you have to trust Kristy. Having a spare half billion sitting around is never good. I mean, someone had to go in and dust the pile of money which was just sitting there doing nothing. 🙄
Damn that Obamacare and those old sick people!!!
I really had to wonder if Nichols had perhaps made a trip to Colorado and brought back some samples of their latest cash crop for she surely had to be smokin’ somethin’ to be able to pen that piece of tripe. 😯
And remember us old folks that also have Medicare and pay for it, means that the State only pays 20% of our insurance coverage because the Federal Govnt pays 80%. Therefore we are not draining the State’s pocketbook as Nichols said who must be smoking or eating those brownies. 20% and yet we pay the same amount as a younger person with 4 kids. And believe me you will either get old and go threw what we are going threw or your spouse will enjoy playing with your money Honey. What goes around comes around so be prepared it’s gonna get you one way or another Ms. Nichols.
Good point no name. Your coverage, I believe, acts similar to the “medigap” policies that are out there.
Yet K-12 and higher ed folks, who are a large number of OGB contributors/users, have endured years of pay freezes. Cost-of-living raises (3-6%) might be returning, but they are insufficient to offset these increases in insurance costs. Moreover, since the privatization, OGB users, their doctors, and their pharmacists have encountered a dramatic increase in prescription denials, procedure denials, and procedure/prescription justification paperwork. All that might help Gov. Jindal’s book-cooking and his insurance buddies’ bottom lines; however, it does nothing to improve the health of state workers and their families.
Bravo, Ben! And you can bet they, Jindal and execs at BCBSLA, ARE all buddies!
I see in the LFO report that one of the A&M savings is the use of eEnrollment so that the HR dept at individual agencies actually enrolls members & dependents, instead of the information going to OGB first and being verified, then entered and sent to BCBSLA. I work at BCBSLA and will tell you that eEnrollment is a pile of crap. The information entered by the HR people at the agencies is often just plain wrong. When we get it at BCBSLA, we often have to turn around and call/email OGB to have them verify the correct information. OGB in turn has to contact the agency’s HR dept or look up the scanned documents. I think eEnrollment is a big waste of time. (To me) it appears the HR people in agencies aren’t really paying attention to what they’re entering because the mistakes are sometimes just mind-boggling. This creates major issues for members, especially when it (frequently) involves issues with their eligibility.
(Yes although I am employed at BCBSLA I do not like Jindal, the privatization of OGB and all that is coming down on state employees and retirees.)
We must VOTE ANYONE OUT OF OFFICE WHO IS WITH JINDAL, and sure as hell not vote in David Vitter.
@ BCBS Insider – we also hear through the grapevine that ALL enrollment will be electronic, done through agency HR staff. Once entered, no changes will be possible. Inevitable mistakes will not be fixed. So the employees will be really screwed.
Interestingly, thanks to Jitler’s consolidation, some agencies have NO human resources staff, only untrained admin assistants being forced to take on duties formerly done by professionals – HR, purchasing, contract administration, etc. The positions were moved to consolidated agencies but were supposed to continue handling those functions for their previous agencies. In truth, agencies whose staffs were ripped away have been left with no professionals doing their work, leaving only a reduced number of admin support staff (after past layoffs) to pick up those tasks. So let’s watch the open enrollment trainwreck.
Not to mention that there will be no printed enrollment information or OGB staff meeting with employees to explain plan changes. All state employees will have to individually get the information online, A significant number of state employees have no computer access and are not computer (or otherwise) literate. This year we will see massive changes to all plans that will be incomprehensible to many people, even the better educated. Woo-wooooo – the trainwreck is coming round the bend.
Rumor has it the A&M consultants are making jokes about the upcoming open enrollment starting Oct. 1. Nothing is near ready for posting on the OGB website – information is not finalized, much less written and programmed. They call it “war games.” I think we can call it an unmitigated disaster. Sounds like deliberate sabotage. Going to make the ACA rollout look like a walk in the park.
This is very interesting information to me, especially about the no-changes made after the info is entered. But I’m especially interested to know about the lack of HR depts at state agencies, I didn’t know this. I imagine this probably explains the increase in enrollment information errors we’ve been getting lately, which is really time-consuming to correct. The process that sends enrollment info from OGB to BCBSLA goes through a third party, Benefitfocus, which processes the enrollment file each day. This in itself is problematic. I just think it would all work better if enrollment was handled by one group, ie just OGB or just BCBSLA. I foresee a difficult open enrollment and run-up to Jan 1.
I have family and friends that are state employees and I always try to keep up with the info that they get from OGB about open enrollment, coverage changes, etc. I like to know what it’s like from state employees/retirees end, and not just what I know from BCBSLA.
(Mr. Aswell, thanks for changing my username!)
BCBSLA Insider – news flash! Kristy has now decided that there will be a handful of open enrollment meetings and printed materials after all – each active employee and retiree will receive open enrollment information by mail. It has not been written yet much less sent for printing so Oct. 1 seems a little ambitious for distribution. Each individual will be responsible for returning their form by mail or filing online. EVERYONE will have to enroll because all the plans will be changed, The plans will have cutesy names to “rebrand” Blue Cross. The plans look nothing like the existing plans, so people will have a tough time understanding what is best for them. Privatization has saved so much money that all the proposed plans will be much more expensive than in the past. Premiums will increase, all copays will be doubled, and for the first time there will be sizable deductibles on the HMO plan. A major feature of an HMO is no deductible, so this is a huge expense. There will be no vision coverage. Many meds and procedures will not be covered. The list of physicians will be restricted in some plans and there will be no out-of-area coverage unless there is a life-threatening emergency.
On Oct. 1, employees in our agency will receive their first raise – 4 percent – since 2009, but that amount after deductions will barely cover the increased insurance costs. There is also confusion about whether the premiums will be before or after tax.
Pathetic Piyush loves to tell us to do more with less. In the case of our insurance coverage we will be paying more for less.
Thanks once again Pi! Keep giving all your political contributers more and more tax deductions because you can balance the budget stealing money from the poor state workers. Huey P. Long’s got nothing on this SOB!
The DOA keeps having to assign new folks to “manage” what is left of OGB. Once they get a sense of what is coming down the road, they bail. No one wants to be blamed for Bobby and Kristy’s fiasco. This one hurts the employees and retirees, but I’m afraid it will pale in comparison to the privatization of the Charity Hospital system. The cost of healthcare in Louisiana is going to go through the roof because of stupid directives from this administration. Wait until you see the deficit they leave behind.