Louisiana Voice

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? https://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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