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Kipper out, Goldman Sachs back, Rainwater breaks word, Chaffe Report says bad deal, & transparency now opaque

Posted in Contract, Contracts, Governor's Office, House, Senate, Legislature, Legislators, OGB, Office of Group Benefits, Politicians, Privatization, Public Records, Transparency on June 6, 2011| 22 Comments »

BATON ROUGE (CNS)—Paul Rainwater is welshing on a promise, Scott Kipper is out as the CEO of the Office of Group Benefits (OGB), Goldman Sachs is back in the mix, the Chaffe report on the privatization of OGB doesn’t say what the administration wanted to hear, and OGB employees have been placed under a gag order.

LouisianaVoice learned that, in a nutshell, is what has transpired only days after Rainwater promised the Senate and Governmental Affairs Committee on Tuesday that committee member Sen. Karen Carter Peterson (D-New Orleans) would be provided a copy of a report done by Chaffe & Associates of New Orleans.

The most bizarre of a series of bizarre developments in the ongoing saga of Jindal’s efforts to privatize the agency that provides health coverage for more than 250,000 state employees, retirees and dependents is the apparent decision to take Kipper out of the decision-making loop until after adjournment of the current legislative session whereupon he will resign.

Deputy Commissioner of Administration Mark Brady and Kipper became involved in a standoff on Thursday after Kipper defied instructions to go back on Rainwater’s promise to make the Chaffe report available to legislators, according to sources.

The latest developments have prompted immediate reaction from State Sen. D.A. “Butch” Gautreaux (D-Morgan City), chairman of the Senate Retirement Committee.

“I intend to submit a joint resolution in the Senate on Monday or Tuesday urging Gov. Jindal not to privatize the Office of Group Benefits,” Gautreaux said Sunday. He said if the Senate approves his resolution it would go to the House for concurrence.

A resolution, as opposed to an actual bill, has no effect of law. Instead, its purpose would be to display a united front on a particular issue. But Gautreaux said he is also working on other action that might be legally binding.

He said the Senate legal staff is looking into a possible course of legislative action to block efforts by Jindal to sale or privatize OGB. He did not specify what type of action he is planning to block the administration.

Chaffe was awarded a $49,999.99 contract to do its report, apparently in an effort to develop figures in time for Jindal’s proposed state budget that was submitted on March 19. The contract amount was one penny less than the amount that would have required approval by the Office of Contractual Review, giving the appearance that Jindal was attempting to circumvent contract regulations.

Rainwater also assured the committee that the Chaffe report merely “validated” information that the Division of Administration (DOA) already had, thanks to Goldman Sachs, the Wall Street banking firm that assisted in the drafting of the original Request for Proposals (RFP) for a financial analyst to conduct a financial assessment of OGB and to help market the agency to potential buyers.

Rainwater may have fudged a bit in telling the committee during that same hearing that the report contained no significant information. It was learned Friday that the Chaffe report indicated the only advantage to privatizing OGB would be if the buyer retained the entire agency surplus of $500 million.

Some might consider that significant, especially in light that Rainwater first said the surplus would be attractive to a buyer but then denied the agency was for sale. Instead, he said the administration was simply seeking a third party administrator for the agency’s Preferred Provider Operation. He later added that the agency’s HMO, presently administered by Blue Cross/Blue Shield, might be included in the RFP.

Sen. Ed Murray (D-New Orleans) had posed the very scenario contained in the report last Tuesday when he asked why Kipper had not been provided a copy of the report. “What if that report says privatizing Group Benefits is not a good idea?” he asked. Kipper was provided a copy of the report following the hearing.

Rainwater, through Deputy Commissioner of Administration Mark Brady, instructed Kipper two days after Tuesday’s committee meeting to give the Chaffe report to no one, “not even legislators,” according to DOA sources.

Rainwater may have had his change of heart as a result of persistence on the part of LouisianaVoice, which had been refused access to the report on four separate occasions prior to Tuesday. The first three times, Rainwater’s office simply said there was no report. When it became known that DOA received the report on May 25, DOA attorney Paul Holmes responded to a fourth request that the report was exempt from the public records law.

When Rainwater promised the report would be made available to Peterson, however, LouisianaVoice immediately fired off a fifth request for the report under the state’s Public Records Statute.

When Brady instructed Kipper to hold the report back, Kipper balked, saying that Rainwater had made a promise in an open committee meeting. Kipper even offered to resign.

At that, Brady made a brief telephone call, and then informed Kipper that his nomination for confirmation as OGB CEO would be withdrawn and that Kipper would remain on the job until June 24, the day after the current legislative session adjourns at which time he would tender his resignation.

Kipper was appointed to the OGB position on April 15, the same day his predecessor, Tommy Teague, was fired for a “lack of leadership,” according to Rainwater. Teague, in five years at the helm of OGB, had taken the agency from a $60 million deficit to a $500 million surplus.

Rainwater now apparently has found Kipper lacking in leadership, or more accurately perhaps, followship. Kipper previously had worked for the Louisiana Department of Insurance and prior to that, worked for insurance regulatory agencies in several other states.

Kipper will be out of the office Wednesday, Thursday, and Friday on vacation, a fact that further irritated Gautreaux, who said he does not like the timing of Kipper’s trip. “I am concerned and upset about the lack of answers from the administration and I particularly don’t like the idea of Mr. Kipper leaving the state at such a critical time,” he said. The deadline for proposals from financial advisors to conduct a financial assessment of OGB is Monday with selection of the contractor scheduled for June 15.

“I will instruct my staff to attempt to contact Mr. Kipper and have him call me. I want him to answer questions and I will keep attempting to reach him every day,” Gautreaux said.

LouisianaVoice also has learned that Goldman Sachs is back in the picture and is one of four companies which have indicated an interest in submitting proposals on the financial assessment project. The deadline for proposals is Monday with selection and notification of a contract award scheduled for June 15.

When Goldman Sachs, which assisted in drafting the original RFP was subsequently the only one to submit a proposal, Goldman Sachs withdrew after an impasse was reached over the company’s insistence on indemnification against any future litigation.

The proposed privatization has met with opposition from several different fronts. The most significant objection came from the Louisiana District Judges Association which adopted a unanimous resolution in opposition to the privatization at its annual spring judges’ conference in Lafayette on April 7.

Legislators also have received hundreds of phone calls, emails and letters as well, virtually all in opposition to the OGB privatization.

All this comes at a time when the Senate and Governmental Affairs Committee still must make its recommendation on confirmation of Rainwater, Brady, and ostensibly, Kipper to the full Senate. The Senate would then have to approve each of the Jindal appointees by simple majority votes.

Anyone who watched the debacle unfold at the Senate and Governmental Affairs Committee confirmation hearings On May 31 saw the callous manner in which Rainwater allowed Kipper to be hammered by committee members for his evasive answers, most likely at the behest of Rainwater himself. Friday’s action by Rainwater was merely the crowning display of arrogance that seems to have permeated the Jindal administration from the top down.

As bad as that performance was, the beginning of the end for Kipper most probably occurred on May 10. Kipper, testifying before the Senate Insurance Committee, was asked by Sen. Eric LaFleur (D-Ville Platte) how many OGB employees he would cut if OGB was not privatized.

“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 responded, visibly upsetting Rainwater seated next to him. “There’s not a lot of excess now,” Kipper said. Rainwater has insisted that the agency needs to cut at least 149 positions.

Now the question must be whether or not Kipper will have the courage to step up to the plate on behalf of his OGB employees, half of whom could lose their jobs if the agency is privatized, and make the contents of the Chaffe report public.

Or will he choose instead to protect his career and sacrifice his integrity by going quietly into the night?

He could refuse to resign and force the administration’s hand. In that event, whatever course of action Rainwater would take almost certainly would prove embarrassing and leave Jindal with egg on his face. In the event Rainwater and Brady end up firing Kipper, what would that say about the administration’s vetting of its choices to run OGB?

Firing two CEOs of OGB within six weeks, all in the middle of attempts to privatize such a large agency would not look good under any circumstances.

It’s a call only Kipper can make.

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Rainwater throws Kipper, Brady under the bus during confrontational Senate confirmation hearing

Posted in Governor's Office, House, Senate, Legislature, Legislators, OGB, Office of Group Benefits, Privatization, Public Records, Teague on June 1, 2011| 17 Comments »

Members of the Senate and Governmental Affairs Committee, led by Sen. Ed Murray (D-New Orleans), grilled three of Gov. Bobby Jindal’s appointees in 40 minutes of tense confirmation hearings on Tuesday.

The committee will make its recommendations on the confirmations of Commissioner of Administration Paul Rainwater, Deputy Commissioner Mark Brady, and Office of Group Benefits (OGB) CEO Scott Kipper to the full Senate which will then vote on those recommendations.

It didn’t take long for Rainwater’s survival instincts to kick in at the expense of Kipper who, it seemed, had been instructed to say as little as possible but soon found himself in trouble as members of the committee quickly smelled blood and moved in for the kill.

The thrust of the questioning of Rainwater and Kipper (Brady, who spent the first few minutes of questioning fidgeting in his chair, was all but ignored) centered around administration efforts to privatize OGB and the existence and availability of a report generated by a New Orleans firm.

Chaffe and Associates was hired in March by the administration to generate a rush financial analysis of OGB preparatory to the receipt of proposals from financial analysts with experience in negotiating sales of insurance companies.

Committee staff members had received an email from Paul Holmes, an attorney with DOA, that was identical to one he sent LouisianaVoice on Friday (see May 31 posting) that denied access to the Chaffe report, a denial not well received by committee members.

During the questioning process, Rainwater threw his two subordinates under the bus by denying knowledge of conversations between Brady and Kipper relative to keeping the Chaffe report from the public. Rainwater seemed content to leave Kipper twisting in the wind while he busied himself with texting.

Requests by LouisianaVoice for a copy of the Chaffe report were sent directly to Rainwater which would seem to weaken his deniability of any knowledge of efforts by Brady and Kipper to keep the report confidential.

That comment came after Kipper, appearing to be taking directions from higher ups to reveal as little as possible to the committee, first said he had no knowledge that the Chaffe report existed and that he wouldn’t have wanted to see it at any rate because of an existing request for proposals (RFP) on the OGB privatization. He said he feared the Chaffe report might jade his decisions on the RFP if he knew its contents.

Rainwater spent much of the time Kipper was testifying taking notes and openly texting at the witness table, never once coming to the aid of his subordinate to clarify an answer or to assist Kipper when he faltered. Instead, he appeared perfectly willing to let Kipper suffer the wrath of the committee for actions perpetrated by his (Rainwater’s) office.

Murray was incredulous that Kipper, as CEO of OGB had not seen a report that potentially “could affect thousands of people.”

But that was not the most damaging part of Kipper’s testimony. Earlier, he bantered with Murray over the very existence of the report and quickly lost credibility with the committee.

When he asked Kipper if a third party had been brought in to conduct a financial analysis of OGB, Kipper replied, “Not that I’m aware of.” That answer set off a firestorm of questioning from several senators.

Murray later came back to say, “I’m told a report was done but the Legislative Auditor was denied access to that document because it was part of the ‘deliberative process.’ Now we have another report (Chaffe) that was requested by members of the Senate staff and you won’t turn it over. Are you telling this is not true?” he asked.

“I’ve not seen the report,” Kipper said.

“So it does not exist?”

“I have no knowledge that it exists.”

“You’re the CEO of OGB and you’re telling me you have not seen a report that would impact OGB? Other people have seen it. When will you see it?” Murray asked. “Have you asked for it?”

“I have not.”

“This is really disturbing to me that you, as CEO of OGB, have not seen a report that is out there that is so important to so many people,” Murray said. “The report might tell you there is no need to privatize OGB. Don’t you think you need the benefit of that information? Who suggested that Chaffe do the report?”

“I don’t know,” Kipper said.

“You don’t know that either? Who’s running OGB?”

In fairness to Kipper, the Chaffe contract was issued prior to the firing of Kipper’s predecessor, Tommy Teague, on April 15.

Sen. Karen Carter Peterson (D-New Orleans), vice chairman of the committee, raised the issue of transparency with Rainwater.

“Did you commission the Chaffe report?” she asked.

“Yes,” said Rainwater.

“Wouldn’t it be helpful for Mr. Kipper to have the report?”

“He will get the information, obviously,” Rainwater said.

“No, it’s not obvious,” she said. “Why would the CEO of the agency not have the information before making a major decision on the agency’s fate?”

“It (the Chaffe report) was more of a validation of what we already had,” Rainwater responded, not saying that the data validated had been compiled with the aid of Goldman Sachs which helped draft the original RFP on which Goldman Sachs was the lone bidder. “The numbers came back as we thought they would,” he said.

“We’re looking in this hearing at character and judgment. How can I have confidence in confirming anyone if I don’t have confidence in their character, judgment and integrity?” Peterson asked.

“Transparency is something touted by the administration but to withhold information from key department officials is significant.”

Sen. Jack Donahue (R-Mandeville), directing his remarks to Rainwater, noted that Kipper had testified that he did not want to review the Chaffe report.

“That was a conversation between Mr. Kipper and my deputy commissioner (Brady). I was not aware of those discussions.”

“If you spent money on this report, it would seem that everything should be on the table,” Donahue said. “I’m surprised by your answers to tell you the truth.”

“I’m surprised by the conversations my staff has had,” Rainwater countered, again revealing his willingness to deflect criticism onto his lieutenants for actions that, ultimately, were his responsibility.

Peterson returned to Kipper’s testimony about his lack of knowledge about the existence of the Chaffe report. “You testified you didn’t know if the report existed,” she said. “You raised your right hand and took an oath. Are you sure you don’t want to try again?

“The first element in these jobs is integrity. I don’t think that of you, Mr. Kipper. I think you’re fudging. I think you’re teetering and for someone in your position, there is a fundamental element of trust necessary. I don’t have that today. Do you want to try again on that report?”

“Senator, I’ve not seen the report,” Kipper said.

“Do you know the report exists?” she asked.

When Kipper hesitated, she again asked, “Do you know the report exists?”

“I think the report exists,” he responded.

At that point Murray said, “Even after the commissioner (Rainwater) told you the report exists, you still don’t know it exists?”

“I believe it exists,” Kipper said again.

“This is absolutely amazing to me that you can sit there and give answers like that,” Murray said.

“It disturbs me that the CEO of OGB sat there and I had to pull it out of him that the report even existed and even as I was asking Mr. Kipper those questions, his bosses (Rainwater and Brady) sat right next to him and said nothing,” he said.

“I hope you change your attitude,” he said to Kipper. “If you are confirmed, I hope you will take your job more seriously and treat us with more candor.”

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Ruminations on taxes, sales, public records, and blivets

Posted in Governor's Office, House, Senate, Legislature, Legislators, OGB, Office of Group Benefits, Public Records, Retirement, Taxes, Transparency on May 31, 2011| Leave a Comment »

BATON ROUGE (CNS)—When is a tax not a tax?

When is the old bait and switch scam not a scam?

When is a sale not a sale?

When are public records not public?

The answer to all of the above: when Gov. Bobby Jindal or Commissioner of Administration Paul Rainwater says they’re not.
Got it?

Good. Discussion over. Let’s go home.

Hold up a minute, Guv, it ain’t quite that cut and dried. Sure you can rattle off statistics that tell us just how good your medicine is going to make us feel—after the nausea it induces passes. We’ve heard you do it in that non-stop staccato delivery of yours. But you know what they say: there’re lies, there’re damned lies, and there’re statistics.

Your statistics, figures, and projections amount to little more than what we called a blivet back in the day. We know you’re Ivy League-educated, so it’s pretty much a sure bet you don’t know what a blivet is, so we’ll tell you: a blivet is five pounds of excrement in a one-pound bag.

Let’s take the questions one at a time and examine them more closely.

When is a tax not a tax?

Jindal has repeated his “no tax” mantra so often that we hear it in our sleep. He killed the Stelly Plan and he has vowed to kill a renewal of the state’s tobacco tax, currently the second-lowest rate in the nation.

Yet he supports HB 479 that would require some 52,000 state employees to increase their contribution to the state pension system by an additional 3 percent, from 8 percent to 11 percent, beginning July 1.

It’s not a tax, it’s a fee increase. Any fool should be able to see that.

When is bait and switch not a scam?

Notwithstanding the fact that it wasn’t state employees who created the current fiscal crisis, that might make sense for employees to chip in a little more—if raises weren’t frozen and the money was to be used to put the retirement system on sounder financial footing—but it isn’t.

The 3 percent increase would mean employees would be paying an additional $70 million per year in premiums, which will result in roughly $25 million of state general fund savings. That $25 million, however, would not mean additional benefits or in a paydown of the pension’s unfunded liability. Instead, it would be used toward reducing the current $1.6 billion state budget shortfall. A classic example of robbing Peter to pay Paul.

That’s the same shell game that was used when $393.5 million was subtracted from the $3.3 billion Minimum Foundation Program for public education before the combined $393.5 million in 8(g) funds, state lottery proceeds and EduJobs funding were added back in. The net gain to education? Zero.

Both look an awful lot like looting and pillaging to us, but they’re not. They’re sound fiscal policy because Jindal, in amongst all his statistics, says so.

When is a sale not a sale?

Apparently when it involves the Office of Group Benefits (OGB).

Rainwater has testified before the Senate Retirement Committee that he does, doesn’t, does, doesn’t want to sell OGB, that he will, won’t will, won’t put the agency up for public auction.

Meanwhile, despite hostile hearings by the Senate Retirement Committee—three of which Rainwater simply boycotted—and ample evidence that OGB is a well-run agency that state employees would rather just leave alone, Jindal and Rainwater blithely plunge ahead hell-bent with their plans to privatize the agency despite a total lack of solid evidence that said privatization would result in any savings.

At stake in the meantime are the futures of about 150 OGB employees that Rainwater says must be cut. One of those employees, former OGB CEO Tommy Teague, who brought the agency from a $60 million deficit to its present-day $500 million surplus, was fired on April 15. No reason was given for his firing other than his “lack of leadership.”

What part of $60 million deficit to $500 million surplus in five years don’t you understand, Mr. Rainwater? Mark Brady? Bueller? Gov. Jindal? Anyone?

His latest pronouncement was that the state was seeking a third party administrator (TPA) for the state’s Preferred Provider Organization (PPO) and possibly for the state HMO, now administered by Blue Cross/Blue Shield (BCBS). Of course the state’s contract with BCBS is presently in litigation with Humana claiming it was outmaneuvered when the state allowed BCBS to submit a proposal that was not within the parameters set forth by the state’s request for proposals (RFP).

Thrown into the mix was the decision by the Division of Administration (DOA) to do a quickie financial assessment of OGB by issuing a contract to a New Orleans company even as the state was soliciting proposals through an RFP for a financial analyst with experience in negotiating sales of insurance companies. (There’s that word “sale” again; it just won’t go away like Rainwater now wishes it would.)

That contract, for $49,999.99, which just happens to be one penny less than the $50,000 that would require approval of the Office of Contractual Review, was issued to Chaffe and Associates of New Orleans back in March.

Repeated requests for a copy of Chaffe’s report have met with denials that any report had been received. Those denials were reminiscent of the lawyer who, when confronted by a man who said he’d been bitten by the barrister’s dog, responded in typically lawyer fashion, “My dog doesn’t bite. I keep my dog inside my house. Besides which, I don’t own a dog.” But then, at a recent Senate Retirement Committee hearing, a DOA spokesman let slip a mention of a preliminary report.

Aha! Time for LouisianaVoice to make its fourth request for the report.

When are public records not public?

A former request for the document was made to Rainwater under the State Public Records Law which stipulates that the custodian of a public record has three days in which to respond to any such request. Our request was made on May 24. On May 27, a gentle reminder was sent, along with a copy of the statute which laid out civil and criminal penalties for non-compliance. Those penalties include fines, payment of the requestor’s legal fees and court costs, and jail time.

At 4:52 p.m. on May 27 (last Friday), Paul Holmes, Attorney 4, Division of Administration, Office of the General Counsel, responded thusly:

“A report generated by Chaffe & Associates was received on May 25, 2011. The report is privileged as part of the deliberative process and is exempt from disclosure under R.S. 44:4.1 as well as pursuant to Kyle v. Public Service Commission, 878 So.2d 650 (La. App. 1st Cir. 2004) and Donelon v. Theriot, 2011 WL 1733548, (La. App. 1st Cir. 5/3/11).”

Now we don’t pretend to know the law the way Mr. Holmes Esq. must (he’s an attorney 4, after all), but we do know the Public Records Law from more than a quarter-century of having to deal with unenthusiastic, recalcitrant bureaucrats.

Nowhere in the statute is a financial document on a taxpayer-supported agency exempted from compliance with the state public records statute.

Stand by. After all, a wise old sage named Yogi Berra once said, “It ain’t over ‘til it’s over.”

Jindal’s efforts to privatize OGB, cut OGB personnel by half, sell state prisons, increase employees’ pension contributions (while continuing to freeze state employee salaries), and to resist efforts to renew taxes that make sense (like tobacco taxes) while at the same time, protecting ludicrous and financially crippling tax breaks for the rich will continue unabated.

Moreover, remember last year when legislation was introduced to abolish Civil Service? That met with quite a bit of resistance and the effort sputtered. It wasn’t renewed this year. Want to know why? It’s an election year.

If Jindal is re-elected, and at this point, there’s no one on the horizon to take him on, you can expect those bills to pop up again and to be pushed by the administration with an intensity that will dwarf his privatization efforts.

Remember when that happens that you read it here first.

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Letter to LouisianaVoice provides interesting data

Posted in Governor's Office, Health Care, OGB, Office of Group Benefits, Privatization on May 24, 2011| 3 Comments »

The following is a letter to LouisianaVoice by Ms. Patricia Labarde of Luling:

Louisiana Voice:

Subj: Potential consequences Privatizing OGB’s PPO.

1. Deteriorating health and bankruptcy for a vast amount of people.

2. 2010, $15 Billion Profits for Five largest insurance companies.

3. 2011, 7.3%, Insurance increase for people insured through their job.

4. 60% of bankruptcy due to medical expense.

Louisiana Voice,

I am requesting consideration for this letter to be used on your Louisiana Voice internet site.

Potential consequences from Mr. Jindal privatizing OGB’s PPO include, but not limited to: bankruptcy and deteriorating health due to less medical care caused by higher cost of insurance, less benefits or total loss of insurance for the vast amount of people insured with the PPO plan and OGB’s 149 terminated employees.

Last year, OGB was forced to bid on the PPO plan and, by far, was the lowest bidder, proving OGB provides the best insurance coverage at the lowest cost.

The enclosed researched information on insurance companies’ profits, (an unimaginably amount), what they spend their money on and cost increase, prove OGB is the best choice to manage the PPO plan. Insurance companies are in the business to make money! Due to time constraints, only five examples of research are listed in the sub-bullets as follows:

· Insurance companies spend on medical care, (their ‘medical loss ratio‘) is about 80 percent of total revenue and profits consume 20 cents out of every dollar. By contrast, the federally run Medicare…spends 97 cents of every dollar on patient care. The insurance companies are wasting 17 cents out of every dollar. There are 47 million (U.S.) people uninsured. [1]

· Five largest insurers: WellPoint, Cigna, UnitedHealth Group, Aetna and Humana; a 250% return over the past decade earned over $15 billion in 2010. That’s 22% growth over their combined $12.2 billion earnings in 2009. [2]

· Health care costs for a family of four have doubled in less than a decade from $9,235 in 2002 to over $19,000 in 2011. American families who are insured through their jobs average health care costs of $19,393 this year, up 7.3%, or $1,319 from last year. [3]

· 82.5% of Americans in families that spend more than 10% of income on health care have health insurance. [4]

· More than 60% of people who go bankrupt are actually capsized by medical expense. [5]

Thank you for your time. I would like a response at your earliest convenience.

Respectively submitted,

Ms Patricia Lagarde

RESOURCES:

[1] By: Eric Breit-Nicholson, Single Payer Health Care, Mary O’Brien and Martha Livingston, Consumer Reports, [5] by: Woolhandler Campbell, and Himmelstein.

http://www.richardboettner.com/a/health/SinglePayerHealthCare.pdf.

[2] By: MellyAlazraki, Posted 10:25AM 02/04/11, Health Insurers Post Healthy Profits.

http://www.dailyfinance.com/2011/02/04/health-insurers-post-healthy-quarterly-profits-cautious-2011-outlook/.

[3] By: Parja Kavilanz, May 11, 2011: 3:45 PM ET, Milliman Inc, CNN Money, money.cnn.com/2011/05/11/news/economy/healthcare_costs_family/index.htm

[4] By: Dr.David Himmelstein, Medical Bankruptcy on the Rise, Stand Up for Health Care, Posted June 12, 2009 at 2:35pm.

http://www.standupforhealthcare.org/blog/medical-bankruptcy-on-the-rise.

[5] By: Theresa Tamkins, Health Insurance, CNN Health, June 5, 2009.

http://www.articles.cnn.com/…/health/bankruptcy.medical.bills_1_medical-bills-bankruptcies-health-insurance?_…HEALTH.

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Appropriations Chairman Jim Fannin deflects administration effort to cut 149 OGB positions

Posted in Governor's Office, House, Senate, Legislature, Legislators, OGB, Office of Group Benefits, Privatization, Public Records, RFP, Request for Proposals, Transparency on May 23, 2011| 4 Comments »

The Jindal administration suffered a legislative setback in its efforts to privatize the Office of Group Benefits (OGB) Monday when the House Appropriations Committee voted unanimously to reinstate 149 positions the administration had cut from the OGB budget.

The move came as an amendment to HB 32 by bill author and Appropriations Committee Chairman Rep. Jim Fannin (D-Jonesboro).

At the same time the committee further amended the bill by deleting five lines that would have directed the state treasurer to transfer a portion of the OGB $500 million surplus into the general fund, thus guaranteeing that the administration may not use part of the surplus to help plug the $1.6 hole in the state budget.

In asking the committee to amend the bill to restore the jobs and to protect the agency surplus, Fannin said, “I have had no communication (from the administration) about any savings to be realized by eliminating these positions.”

Communication has become something of a problem lately as administration officials have refused to attend meetings of the Senate Retirement Committee. Retirement Committee Chairman Sen. Butch Gautreaux (D-Houma) has made no secret of his opposition to efforts to privatize OGB.

Gov. Bobby Jindal has run into considerable opposition to his efforts to privatize OGB although the administration has issued a request for proposals (RFP) for a financial adviser to evaluate the agency and to seek a third party administrator (TPA).

It is the second RFP issued by the administration after Wall Street banking firm Goldman Sachs was the lone bidder on the first and then only after taking part in drafting that RFP.

DOA representatives say that the current RFP was drafted completely in-house.

Former OGB CEO Tommy Teague, who was fired on April 15 after leading OGB from a $60 million deficit when he took over five years ago to its current $500 million surplus, testified before the Senate Retirement Committee that he could not understand the need for a financial adviser if the intent of the administration was only to obtain a TPA.

“It’s not necessary to know the financial situation of the agency just for a TPA,” he said. “The only rationale for a financial assessment would be that the administration plans to sell OGB.”

The original RFP did indeed make repeated references to the sale of the agency and Commissioner of Administration Paul Rainwater has consistently given conflicting testimony about whether the administration’s intent was to sell the agency or obtain a TPA for OGB’s Preferred Provider Organization (PPO).

Approval of Fannin’s amendment does not necessarily mean that Jindal has failed in his efforts toward privatization of the agency. It does mean, however, that he would have to come back before the legislature to obtain approval for cutting the positions, a move Rainwater claims would save the state $10 million a year.

Even that claim, however, is somewhat vague since the $10 million does not come from the state’s general fund. OGB is completely self-funded, deriving its revenue from premiums charged state employees for health care coverage.

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