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Like Wal-Mart price roll back TV ads, legislative committee likely to force OGB to roll back co-pay, duductible increases

Posted in DOA, Ethics, Governor's Office, Health Care, Legislators, Legislature, Office of Group Benefits, OGB, Privatization, Public Records, State Agencies, Teague on November 6, 2014| 19 Comments »

Two legislative committees charged with oversight of the Office of Group Benefits (OGB) are expected to demand that OGB roll back dramatic increases in health care co-payments and deductibles the agency is attempting to impose on hundreds of thousands of state employees to make up for the Jindal administration’s mismanagement of the agency when they meet in tandem on Friday.

The Senate Finance Committee and the House Appropriations Committee will meet at 10 a.m. on Friday but will not take testimony from the public.

The two committees are expected to instruct Nichols and OGB CEO Susan West to slash the increases in deductibles—some couples’ deductibles increased from $300 to $3,000 under the new plan being proposed by OGB–and co-pays.

OGB has already announced a two-month delay in the implementation of steep increases in prescription drug costs and will refund about $4.5 million in overcharges to state employees.

The Jindal administration is attempting to impose the co-pay and deductible increases as a way to recover hundreds of millions of dollars the administration managed to squander as a cost-savings to the state’s own contributions to employees’ premiums as a means to cover huge gaps in Jindal’s state budget.

The entire scenario reads like the script from an old I Love Lucy sitcom as everything the administration had done with OGB has blown up in its face in an improbable comedy of errors. How more insulting to legislators could it get than for Commissioner of Administration Kristy Nichols to provide false testimony to the Joint Legislative Committee on the Budget on Sept. 25 shortly before abruptly leaving the JLCB meeting to take her daughter to a boy band concert in New Orleans?

When asked point blank by State Rep. John Bel Edwards at that Sept. 25 hearing–before heading out to the Smoothie King Arena to settle into the governor’s luxury box seats for the concert—which actuary recommended that OGB reduce premiums by nearly 9 percent, she testified that Buck Consultants made the recommendation.

But Buck reportedly responded by email within days that it never made any such recommendation and that Nichols’ testimony was in direct contradiction to its recommendations.

A July report from Buck reinforces its claim that it never made any such recommendation. “We did not recommend a decrease of 7% effective August 1, 2012, or an additional decrease of 1.77% effective August 1, 2013. Further, we were not asked to provide any recommended rate adjustments for any fiscal years beyond what we provided for Fiscal Year 2012/2013,” the report says.

When witnesses sign cards prior to speaking before a legislative committee, they are certifying that they understand that their testimony is considered as being given under oath.

Edwards also asked at the hearing that Nichols or West provide him with a copy of that recommendation but he said on Wednesday (Nov. 5) that he still had not received that information. “I still have not received any actuarial recommendations for the 2013 and 2014 premium reductions at OGB,” he told LouisianaVoice. “Nor have they told me that such recommendations do not exist. Clearly, they do not.”

If someone were to set out to demonstrate how incompetent an administration could be, he would be hard pressed to find a better example than the manner in which it has handled the Office of Group Benefits—from firing an effective CEO who built up a $500 million reserve fund in favor of a revolving door approach to subsequent CEOs, to firing experience claims handlers with whom OGB members were comfortable, to hiring a California firm with no knowledge of Louisiana’s medical coverage program to handle telephone inquiries because experienced OGB staff were also fired, to attempting to implement emergency rules to enact the cost increases in co-pays and deductibles without the legally required public hearings, to having to refund $4.5 million in prescription drug overcharges for the same violation of the emergency rules procedures, to first claiming that it was not necessary to invoke the emergency rule and then deciding to do just that, to lying to legislators about actuarial recommendations of premium reductions.

The FUBARs and SNAFUs of OGB are so many and so irreversible that they should give pause to anyone who would entertain even the fleeting notion that Gov. Bobby Jindal is capable of leading the free world when, through his inept surrogates, he has, in less than two years, destroyed a relatively small but viable, efficient state agency.

Jindal and Nichols, of course, have a ready explanation for the OGB financial woes: medical costs have risen and it’s all Obamacare’s fault—never Jindal’s.

It’s the same arrogance level as that was demonstrated by Nichols in another appearance before a legislative committee when, trying to explain budget figures, she said somewhat condescendingly, “Let me dumb it down for you.”

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Jindal’s latest accounting ploy bolsters disturbing perception that his administration is quickly mutating into ‘Enron East’

Posted in Book Review, Budget, Business, Contract, Contracts, Corruption, DOA, Ethics, Finances, Fraud, Governor's Office, Legislators, Legislature, Office of Group Benefits, OGB, Politicians, Privatization, Public Records, Revenue, State Agencies, Teague, Transparency on October 12, 2014| 33 Comments »

When Jeff Skilling took over as President and Chief Operating Officer of Enron in June of 1990, he did so only after insisting that the company convert from conventional accounting principles to a method preferred by his former employer, McKinsey & Co.

In 2001, hedge fund manager Richard Grubman said to Skilling, “You are the only financial institution that can’t produce a balance sheet or cash flow statement with their earnings.” By October of that same year, Enron had begun its death spiral in a historic collapse that would pull the giant accounting firm Arthur Andersen down with it.

The key to Enron’s failure was the mark-to-market accounting method, where anticipated revenues and profits are entered into the company’s books before they are ever received. The system allowed Enron to conceal losses and to inflate profits for nearly 11 years before its house of cards came crashing down.

On Thursday (Oct. 8), nearly seven years into his administration, Gov. Bobby Jindal (R-Iowa, R-New Hampshire, R-Anywhere but Louisiana) rolled out a new accounting formula with an alarmingly familiar ring to it.

Jindal, like Skilling, is a McKinsey alumnus.

Commissioner of Administration/Surrogate Gov. Kristy Kreme Nichols announced that the state, instead of having a deficit of $141 million as claimed by State Treasurer John Kennedy, will suddenly have a surplus of $178.5 million, a gaping difference of $319.5 million.

Nichols did not reveal how the $178.5 million was arrived at but Kennedy said the administration is switching to a cash balance form of accounting instead of the modified accrual basis employed by state governments. “If we use the methodology we have always used,” he said, “we don’t have a surplus. We have a $141 million deficit.

“The commissioner says the calculation has been inaccurate for years and it needs to be changed,” he said. “They have to explain why we have been doing it wrong all these years and why the Revenue Estimating Conference is doing it wrong.”

Nichols, an appointed state employee, was less than deferential to Kennedy, a statewide elected official when she sniped back at Kennedy, saying, “I’m surprised the treasurer is not reporting this.” She added that Kennedy is obligated to report available revenue. “He should probably do a review of the accounts to ensure there are no more outstanding revenues he is not reporting.”

Kennedy and Jindal have been at odds for years over fiscal policy, so it was no surprise to see Kristy Kreme, with her super-sized ego, get a little mouthy with the state treasurer. After all, she bolted from a House Appropriations Committee hearing on the Office of Group Benefits on Sept. 25 to take her daughter to a One Direction boy band concert at the New Orleans Smoothie King Arena where she watched from the comfort of Jindal’s executive suite.

Just as Enron misrepresented its finances for years, it now appears that the Jindal administration may be attempting the same tactic, prompting one political observer to say, “If cooking the books isn’t malfeasance, what is? The bond rating agencies and others rely on the CAFR (Comprehensive Annual Financial Report), where the year-end position is officially reported in decision making and they are not going to like this.”

Another Jindal critic asked rhetorically, “What happens when a state ends a fiscal year with a deficit of $141 million but the administration of the day pretends that there is actually a surplus of $178 million? I don’t think there is any precedent for such a thing ever happening anywhere. This is starting to sound like Enron!”

Odd as it may seem to make that comparison, the similarities between Jindal and Enron run much deeper than the latest developments surrounding the new accounting methods. Here are some points about Enron lifted from The Smartest Guys in the Room: the Amazing Rise and Scandalous Fall of Enron (Penguin Books, 2003), a probing book by Bethany McLean and Peter Elkind about the failed energy company: http://www.goodreads.com/book/show/113576.The_Smartest_Guys_in_the_Room

  • The Deutsche Bank once described Enron as “the industry standard for excellence.” Jindal boasted of instituting the “gold standard for ethics” in Louisiana.
  • When the chief accounting officer of Enron Wholesale expressed concern about wholesale electricity sales, she was reassigned. When another employee questioned Skilling on his claim that Enron was going to make $500 million, she was laid off that same day. When state employees or legislators complain or do not vote with the administration, they are teagued.
  • Pollster Frank Luntz said instability and chaos were defining features at Enron and the six company reorganizations in just 18 months were a “running joke” and that Enron’s lack of discipline was “destructive and demoralizing.” Jindal’s penchant for reorganization and reform has created a similar atmosphere within state government.
  • Enron sold assets and booked the one-time proceeds as recurring earnings. Nearly 40 percent of Enron’s 1998 and 1999 earnings came from sales of assets rather than from ongoing operations. Jindal over the past several years has sold state property, buildings, and entire agencies and turned state hospitals over to private entities.
  • Both Skilling and Jindal are alumni of the blue-chip consulting firm, McKinsey & Co., which wrote the Enron business plan and as far back as 1986, advised AT&T there was no future in the market for cell phones. McKinsey also was an advocate of mark-to-market accounting practices.
  • Both Skilling and Jindal thought—and think—like a consultant. Skilling felt that a business should be able to declare profits at the moment of the signing of an agreement that would earn those profits. But just because traders were reporting earnings under mark-to-market accounting, it did not necessarily follow that the money was in hand. See this link: http://theadvocate.com/news/10494146-123/jindal-budget-surplus-questioned
  • A Wall Street banker said of Skilling: “He’s either compulsively lying or he’s refusing to recognize the truth.” Another banker worried that Enron executives were not carrying out their fiduciary duties and questioned “sweetheart deals” negotiated by them.
  • Skilling believed that social policies designed to temper the markets were “wrongheaded” and counterproductive. “Wrongheaded” has been a favorite term invoked by Jindal whenever he has suffered setbacks at the hands of the courts on issues ranging from education reform to a revamp of state retirement plans.
  • When asked a question he didn’t like, Skilling, in a tactic learned from his days at McKinsey, responded by dumping “a ton of data on you.” Jindal’s one outstanding skill is to spew statistics and factoids in rapid-fire fashion that can overwhelm and confuse challengers.
  • Skilling, like Jindal, was considered brilliant and extremely articulate. He, like Jindal, always seemed to have the right answer and whenever he was asked about problems it was always someone else’s fault.
  • Skilling displayed no remorse for his own actions, nor did he have any sense that he hired the wrong people or emphasized the wrong values. (See above.)
  • Enron founder Ken Lay saw himself as a business visionary, much as Jindal portrays himself as a policy guru. Lay traveled the world to offer his wisdom on everything from energy deregulation to corporate ethics to the future of business. (Ditto)
  • At the end, Enron employees’ accounts were frozen even as top executives were walking away with fortunes.
  • Efforts by Enron and Arthur Andersen to avoid reporting $500 million in losses “only pushed the problem further off and added another tangle to the fragile web of accounting deceptions.” Do we really need to elaborate here?
  • Enron executives accepted the argument that wealth and power demanded no sense of broader responsibility which in turn led them to embrace the notion that ethical behavior requires nothing more than avoiding the explicitly illegal, that refusing to see the bad things happening in front of you makes you innocent and that telling the truth is the same thing as making sure no one can prove you lied.
  • Enron’s mission was nothing more than a cover story for massive fraud, much as Jindal’s administration is being exposed almost daily as a sham. The story of Enron, like that of Jindal, was a story of human weakness, of hubris and greed and rampant self-delusion, of ambition run amok, of a business model that didn’t work and of smart people who believed their next gamble would cover their last disaster—and most of all, of people who couldn’t—or wouldn’t—admit they were wrong.
  • Enron once aspired to be “the world’s greatest company” but rather became a symbol for all that was wrong with corporate America, exposing Lay’s flaws as a businessman that could no longer be hidden behind Enron’s impressive but misleading façade and Skilling’s glib rhetoric.
  • Despite Enron’s efforts to camouflage the truth, there was more than enough in the public record to raise the hackles of any self-respecting analyst (read: reporter). Analysts (read: reporters) are supposed to dive into a company’s financial records, examine footnotes and even elbow their way past accounting obfuscations. Their job, in short, is to analyze (re: report).

In the end, of course, Enron crumpled under the weight of its own corruption and mismanagement, destroying thousands of lives and even taking down one of the big five accounting firms in the process.

The Jindal administration with each passing day, with every revelation of some new scandal (the Edmonson Amendment, CNSI, the Murphy Painter fiasco, et al) and with each new flawed policy (the Office of Group Benefits debacle), is looking more and more like a train wreck that will adversely affect Louisiana citizens for years to come.

Just call it Enron East.

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Watching Kristy Kreme Nichols responding to legislators like watching Jerry Lewis movie: mixture of exasperation, humor

Posted in Contracts, DOA, Governor's Office, House, Legislature, Legislators, Office of Group Benefits, OGB, OGB, Office of Group Benefits, Privatization, Revenue on October 1, 2014| 23 Comments »

Listening to Commissioner of Administration Kristy Kreme Nichols’ responses to questions during last Thursday’s House Appropriations Committee hearing over changes to the state Office of Group Benefits (OGB) health plans, one word kept coming to mine: bromides.

Bromide is defined by Merriam-Webster as “a statement that is intended to make people feel happier or calmer but (which) is not original or effective,” and by Wikipedia as “a phrase or platitude that, having been employed excessively, suggests insincerity or a lack of originality in the speaker.”

No matter which definition one might choose, that is precisely what legislators and members of the audience were treated to during the seven-hour hearing at the State Capitol.

Keep in mind as you read this that subsequent to the hearing last Thursday, the administration of Gov. Bobby Jindal (R-Iowa, R-New Hampshire, R-Anywhere but Louisiana) retreated from its plans of the gang rape of 230,000 state employees, retirees and dependents so that the administration can follow the law for a change and proceed through the legal process of obtaining approval of the proposed benefit changes for OGB members. https://louisianavoice.com/2014/09/30/in-need-of-aloe-vera-after-being-burned-by-appropriations-committee-last-week-ogb-announces-enrollment-extension/

Katrina Jackson (D-Monroe), for example, sparred with Nichols on the issue of the $1.3 million contract with Ansafone, Inc. of San Diego and Ocala, Florida to field phone calls from OGB members. “Where is the project work plan?” Jackson asked. “No one at OGB knew what it was when I called. No one on the committee has received any project work plan. We have a $1.3 million contract for phone service. Is this something that Blue Cross/Blue Shield (BCBS) should be doing?”

“We had no other choice but to ramp up our customer service for open enrollment,” Nichols said.

Jackson again asked if fielding questions from members should be something BCBS should be doing to which Nichols responded, “OGB has always retained a customer service component.”

Jackson said legislators were told three years ago that privatization of OGB “would be helpful to members, not harmful. We fixed something that was not broken and now it’s broken. We were doing pretty good but then for some reason we offered the business to BCBS, everyone shifts to that and our utilization costs go up.”

Jackson finally got Nichols to concede that utilization is a major issue. “Vendors have to 100 percent accountable for managing utilization with us. To the extent that the request for proposals (RFP) and current contract did not explicitly mandate that, we need to in the future.”

We’re glad we could clear that up for you.

Kenny Havard (R-Jackson) asked Nichols why the Administrative Procedures Act, which lays out a step by step procedure for the adoption of rule changes. For a complete list of APA requirements, click here: apa

“We are,” Nichols said.

“You’re doing that now,” Havard countered. “But you didn’t before. If you’d done it before, we wouldn’t be here now. Who decides what laws we have to follow and which ones we do not have to follow in this?”

“The legislature sets laws and we try to follow,” Nichols replied.

“Everything we do lately ends up in court and that’s exactly where this is heading,” Havard shot back. “We’ve created a problem that we’ve put on the backs of state workers. We have people making $500 a month and you’re about to raise their insurance (costs) and somebody needs to answer for it because we’ve created a problem and blaming it on somebody else. I don’t support Obamacare but I also don’t support Jindalcare.

“We lowered premiums so the state would not have to put up its share and now the fund balance is dwindling,” he said. “I just want to know who made the decision that we didn’t have to follow the APA.”

“We are following the APA,” Nichols continued to insist. In our opinion, the plan of benefits does not have to be promulgated because it’s in the OGB authority.”

State Sen. Ed Murray (D-New Orleans) attempted to question Nichols but soon grew frustrated at her evasiveness and gave way to Rep. Greg Cormer (R-Slidell) who asked but did not receive a definitive answer: Did an actuary give the opinion on the rate decrease of 7 percent? Cormer told OGB CEO Susan West, “If you were a private insurer, the Department of Insurance would have already taken you over” because of the agency’s mismanagement.

Jack Montoucet (D-Crowley) asked Nichols, “Where would OGB be today had we not made all the changes, if we’d left them alone and let them do their job? To me, it wasn’t broken. I never got a call in six years (prior to privatization) complaining about OGB. Today, I gotta tell you, Jesus Christ, I’m getting phone calls every day and this (new plan) hasn’t even been implemented. That’s scary.”

Nichols, as she did most of the day, stammered and fumbled for an answer. “All public employee health plans are experiencing the same thing,” she finally said, but then said that the cost increases “could have been prevented if we’d structured the HMO correctly in the beginning.”

Joe Harrison (R-Gray) went further than the others in calling for a special legislative session to deal with the OGB crisis and noted that there were no problems with the agency during the tenure of Tommy Teague, who was fired as CEO on April 15, 2011.

“Mr. Teague had a solvent plan and I’ve yet to hear any in the administration tell me why we moved away from that plan,” Harrison said.

“I would ask that we have a special session on this,” he said. We have more than 200,000 lives we are adversely affecting. There are other options to this. Many in the insurance and health care industry have looked at this and (have) said there are better ways to go.”

The hardest questions, however, came from Rep. John Bel Edwards (D-Amite). Following up on a question asked earlier by Rep. Greg Cromer (R-Slidell), Edwards asked if the recommendations for premium decreases three consecutive years were made by an actuary.

“I was not with OGB then,” West said. “I don’t have that information with me…”

“It’s been three hours since that question first came up,” Edwards said.

“I don’t have that information with me,” West repeated.

“It’s been three hours since that was asked,” Edwards said again. “That’s three hours in which those reports could have been brought over here. Who made the decision to reduce premiums by 9 percent total in fiscal years 2013 and 2014?”

“Ultimately, the administration,” Nichols said.

“The OGB director?”

“I wasn’t at DOA in fiscal year ’13,” Nichols said. “I don’t know where the recommendation came from.

When Edwards elicited testimony from Nichols and West that the OGB policy board had not met in more than a year even as the OGB fund balance was dwindling by $16 million per month, he asked, “Was there a lack of a quorum because there weren’t enough members appointed to the board (by the governor) or that they weren’t showing up for meetings?”

“A combination of both,” West said.

“So we have a situation where (the decision was made) to reduce premiums by 2.25 percent in 2012 which drained the fund balance by 3 percent knowing costs were going up 6 percent, and an additional reduction of over 7 percent the next year and an additional reduction of almost 2 percent the following year all the while with costs of health care going up and we were surprised that the fund balance went down?

“This is a self-manufactured crisis that you are now saying is an emergency because we had a fund balance that was healthy,” Edwards said. “We had OGB members who were relatively happy with the plan and today we have an unhealthy fund balance and OGB members who are very unhappy. In fact, I would not that not a single OGB member came to testify today who support any of those plans—not a single one of them.”

Edwards if there was to be discussion of stability for OGB, “we can’t leave it in the hands of whoever’s been running it for the last two years…”

He then asked Nichols when the decision was made to follow the rule of promulgation as mandated in the APA.

“The general counsel advice to OGB,” Nichols said, “was a plan of benefit changes should not be required to be promulgated…”

DOA general counsel Liz Murrill stopped texting long enough to interject, “We had the conversation at the beginning of September.”

“When was the decision made?” Edwards repeated.

“At the beginning of September,” Murrill said.

“The (OGB policy) board looked at what you wanted to do in July so you knew what you wanted to do by July 30. If you had started the rule promulgation process by August 30, you could get through the entire process before January 1. You didn’t do that.”

Nichols, in a weak attempt to defend the emergency rule procedure in lieu of promulgation, asked, “Why was OGB allowed to implement 41 emergency rules in the past?”

“I suspect because nobody challenged it,” Edwards shot back. “Typically, you don’t follow the law unless you get challenged and that’s the real precedence that you’re following.”

Saying a Pew Survey shows that Louisiana is the third stingiest state in the nation in providing health coverage for public employees, Edwards said there is a “tremendous disconnect between saying we had an inflated reserve fund that it needs to be right-sized and today saying we have an emergency because the fund balance is not enough and it’s on its way (from a high of $520 million) to $8 million.”

He then again asked the question that no one had answered to that point. “In fiscal year 2012 there was a 3 percent erosion of the fund balance. Yet, in fiscal 2013, there was a 7.11 percent reduction in premiums followed by 1.8 percent even though health care costs were going up by 6 percent. What actuary told you those reductions were sound?”

“Buck Consulting recommended a 2.25 decrease for calendar 2012,” Nichols said.

“If you don’t have an emergency, then what you’re going to start on January 1 is invalid and you’re causing a bigger problem than if you simply go through the ordinary rule making process,” Edwards said. “Anyone who’s adversely impacted by having to pay a higher deductible or higher co-pays by an invalid emergency rule has a right to have that money returned to them.

“The safest thing to do if you are really worried about the taxpayers of the state of Louisiana is to give very serious thought to stopping the emergency rule making process, go forward with the ordinary rule making process and have whatever plans survive that process implemented in a year that doesn’t start until they (the rules) become final.

“Public meeting notices, meeting requirements, and oversight by the legislature are all very, very important. We had people today saying this was the first opportunity that they had to come and voice their objections. That’s an important part of this whole process.”

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House member may ask that OGB members be allowed to join legislators in exclusive LSU health plan membership

Posted in Contract, DOA, Governor's Office, Health Care, House, House, Senate, Legislators, Legislature, Legislature, Legislators, Office of Group Benefits, OGB, OGB, Office of Group Benefits, Privatization, Public Records, State Agencies on September 8, 2014| 27 Comments »

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(CLICK ON IMAGE TO ENLARGE)

My grandfather had a favorite expression he was fond of saying: “The stuck pig squeals the loudest.”

That may well explain the sudden onslaught of reassurances emanating from the Jindal administration in the form of press releases and op-eds, all telling us that our benevolent governor, expert that he is on health care, is taking care of and we shouldn’t worry about all those looming increased costs and reduced benefits.

But as it turns out, we may be about to see a new development to the controversy swirling around the proposed premium increases and benefit cuts for members of the Office of Group Benefits.

And just in case you might be wondering why your friendly legislator hasn’t been up in arms over the radical changes in health coverage being proposed for some 230,000 state employees, retirees and their dependents through the Office of Group Benefits (OGB) before now, there’s a reason.

If some similar action were taken to adversely affect their per diem, travel, and other perks, it would be quite another story. They’d have been squealing long before now.

But you see, 261 House members and staff and 151 senators and staff are not members of OGB and therefore, don’t have any skin in the game (my grandfather would have said they don’t have a dog in the hunt) being played by the administration and Blue Cross/Blue Shield of Louisiana.

So where do those 412 people get their health coverage?

LSU First.

And now two of those legislators who earlier fell out of favor with Gov. Bobby Jindal when they questioned the wisdom of privatizing OGB at the outset, Reps. Joe Harrison (R-Gray) and Cameron Henry (R-Metairie) are back and the governor can’t be happy about it.

And Henry is even putting out feelers about moving all 230,000 members of OGB to LSU First, saying it is something “we should explore for employees to get into since the Office of Group Benefits is fiscally unsound.”

Meanwhile, House Speaker Chuck Kleckley (R-Lake Charles), normally a wad of putty in Jindal’s hands, has suddenly grown something akin to a spine and called for a special hearing on Sept. 24 to take up the OGB changes. Other legislators also beginning make demands of the administration to have someone present to answer questions about the radical changes.

State Rep. John Bel Edwards (D-Amite), a candidate for governor, said he wanted administration representatives questioned under oath.

It was Edwards who originally requested that Kleckley call a meeting of legislators to discuss OGB. “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.”

“I feel vindicated,” Harrison was quoted as saying by the New Orleans Times Picayune in reference to the depletion of the OGB trust fund which has shrunk from $540 million to less than half that since Jindal’s privatization plan went into effect. http://www.nola.com/politics/index.ssf/2014/09/louisiana_legislators_have_a_h.html#incart_river “Exactly what I said was going to happen is now happening,” Harrison said.

And Henry is even putting out feelers about moving all 230,000 members of OGB to LSU First, saying it is something “we should explore for employees to get into since the Office of Group Benefits is fiscally unsound.”

Jindal had Henry and Harrison removed from their respective committee assignments when the two refused to go along with Jindal’s legislative agenda during the 2013 legislative session.

Administration officials, in an attempt to discourage a mass exodus from OGB said state employees now in OGB may not find the LSU First plans to be a better option, invoking such terms as “better service,” “strike a balance,” “right sizing of benefits,” “wider range of options,” and “it’s all the fault of Obamacare.”

So, just what is LSU first, anyway?

LSU First is the health coverage offered employees throughout the LSU system and back near the end of the Mike Foster administration, a memorandum of understanding (MOU) was approved that allowed legislators and legislative staff members to opt out of OGB in favor of LSU First.

Senate 2003

House of Representatives 2003

The plan presently is not available to employees of Louisiana’s other institutions of higher learning or civil service employees other than those working for the Legislature.

So, why would anyone make the switch?

The answer to that is simple: Even before the pending revamp of OGB which will prove far more costly to members, LSU First was vastly superior in the benefits it offers. And now, with the increased premiums, higher deductibles and co-pays for OGB members (an overall cost increase of 47 percent), the contrast between the two plans is even more stark. http://www.lsufirst.org/wp-content/uploads/2012/01/2014_LSU_First_SPD.pdf

http://www.lsufirst.org/wp-content/uploads/2013/12/2014-SBC-Opt1.pdf

LSU established the plan for the fiscal year July 1, 2002 through June 30, 2003, adopting the “Definity Health Model Health Coverage Plan,” and the House and Senate climbed on board a year later, on July 1, 2003. The original MOU was signed in May of 2003 by then-LSU President William Jenkins, House Speaker Charles DeWitt, Jr. (D-Alexandria), and Senate President John Hainkel, Jr. (R-New Orleans).

No sooner said than done. The ink wasn’t even dry on the signatures on the MOU when legislators and staff members started a mass migration to the LSU plan. Additionally, civil service workers scattered throughout state government who were fortunate enough to have spouses working for LSU also switched.

The language in the MOU was such that any legislator who left the House or Senate and moved on to another state office or appointment was allowed to retain his or her coverage under LSU First. That would include, for example, people like former Gov. Mike Foster, Commissioner of Alcohol and Tobacco Control Troy Hebert, Lt. Gov. Jay Dardenne, and former House Speaker Jim Tucker.

LouisianaVoice made an inquiry of the LSU administrative types as to who pays the employer portion of the premiums and whether or not the governor, the commissioner of administration, and cabinet members were eligible for member in LSU First.

What we got back was less than satisfactory but entirely typical of the mindset of this administration. “We have fulfilled your public record request and any further questions can be directed to our University Relations office,” wrote Stephanie Tomlinson, coordinator, LSU Finance and Administration.

In other words, if one asks a simple question and does not specifically request documents or records, he is out of luck. This administration has no intention of helping someone seeking information and would prefer to toss obstacles in the path of transparency.

But we can play this game, too. We replied with the following email:

Okay, we’ll try it this way:

Please provide any and all documents and/or public records that identify all eligible members of LSU First medical coverage, including the governor’s office, Division of Administration and the various cabinet positions.

Please provide documentation and/or any and all public records that provides a breakdown of premium payments for LSU First, including employer/employee contributions and including which employer, i.e. the state, the House or Senate or LSU, pays the employer contributions.

Now that we have requested actual documents/records, we’ll see how they respond.

We did glean from the MOU, however, that the Legislature most likely is responsible for paying 70 percent of the premiums for legislators, legislative retirees, and staff members.

Meanwhile, Jindal communications officer Mike Reed, a native of Boston (Jindal apparently cannot find qualified Louisiana residents for these jobs), churned out a fact sheet that Commissioner of Administration Kristy Kreme Nichols proudly published verbatim as her own work as via an op-ed piece in today’s (Thursday’s) Baton Rouge Advocate under the heading Changes Good for Insurance Users, Taxpayers. (A hint, Kristy: U.S. Democratic Sen. John Walsh of Montana recently dropped out of his race for re-election after allegations of plagiarism.)

As for Reed, we can only hope that if he returns to Boston he doesn’t offer his services to the Red Sox. Mired in last place in the American League East, the Sox have enough problems without taking on another pitch man who can’t seem to find the strike zone.

Reed’s press release was directed at a recent well-researched column by political writer Jeremy Alford: For Health Care Woes, Jindal Prescribes Confusion. http://lapolitics.com/2014/09/for-health-care-woes-jindal-prescribes-confusion/

Reed sent the “fact sheet,” entitled Setting the Record Straight: LaPolitics Column on Healthcare reform in Louisiana, to state legislators on Wednesday. The four page letter was peppered with what Reed smugly, if inaccurately, described as “myth” followed by “Facts.”

Of course, being from Boston, it goes without saying that Reed is intimately familiar with all the nuances of Louisiana politics, including the sordid history of the administration’s recent health care issues. These include Jindal’s sticking his nose into the OGB operations and firing Director Tommy Teague who had taken the agency from a $60 million deficit to a $500 million fund balance, closing down or giving away state hospitals, the governor’s refusal of Medicaid expansion which led directly to problems at Baton Rouge General which last week announced it was closing its emergency room, forcing the administration to pump $18 million into the private hospital to keep its ER open to indigent patients forced to travel to the mid-city facility after closure of state-run Earl K. Long Hospital.

Undaunted, Reed waded into the fray, dutifully blaming everything on Obamacare just as his absentee boss would have him do. And Kristy Kreme eagerly published the tome under her byline.

https://webmail.east.cox.net/do/mail/message/view?msgId=INBOXDELIM16848

The whole thing evokes images to go with one of our favorite Sinatra songs: http://www.youtube.com/watch?v=K1fVQGESUTo

Bobby Jindal (Gov. R-L)

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A&M jokes about ‘War Games’ OGB open enrollment; cash strapped state can’t pay Bridge City Juvenile Center utility bills but somehow locates $18 million for private hospital

Posted in ALEC, American Legislative Exchange Council, Budget, Contracts, Governor's Office, Health Care, House, Jobs, Legislators, Legislature, Office of Group Benefits, OGB, Senate, State Agencies on September 1, 2014| 23 Comments »

Remember the angst over the temporary shutdown of the Louisiana Department of Education’s (LDOE) web page a little over a week ago because the Division of Administration (D)A) had neglected to pay the $280 bill for the domain subscription?

It was a “technical glitch,” we were assured by DOA Director of Communications Meghan Parrish. “This was not purposeful,” she said, and not part of the ongoing Common Core catfight between those two behemoths of machoism, Gov. Bobby Jindal and Superintendent of Education—“Dude, you are my recharger”—John White.

Well, we were prepared to give the administration the benefit of the doubt that it was simply an oversight and not, as White claimed, because of the state’s refusal to make payments. We are, after all, reasonable and we understand that sometimes things slip through the cracks—even as Jindal was careful to take the necessary steps to strip LDOE and the Board of Elementary and Secondary Education from employing legal counsel to sue the governor.

Never mind that the governor has now moved forward with his own lawsuit against the federal government over Common Core. Apparently, while he doesn’t want to be a defendant over Common Core, he has no problem being a plaintiff and thereby further enriching his own legal counsel Jimmy Faircloth with at least $300,000 more of your taxpayer dollars in addition to more than a $1 million he has already been paid in other lost causes as, in the words of Bob Mann on last Friday’s Jim Engster Show, “the most successful loser” in Louisiana legal circles. http://wrkf.org/post/friday-bob-mann-carley-mccord (move your curser to the 19:40 minute of the show for the quote.)

But now LouisianaVoice has learned of a much more serious situation involving non-payment of electric and natural gas utilities at the Bridge City Youth Center a couple of months back.

Also surfacing are reports that despite assurances of Commissioner of Administration Kristy Kreme Nichols to the contrary, the administration and its $7.5 million hired gun Alvarez & Marsal (A&M) aren’t nearly as concerned about the welfare of 230,000 enrollees in the state’s Group Benefits program as they would have you believe.

A&M was initially hired for $4.2 million but the contract has been illegally amended—does this administration give a damn about the State Constitution?—at least twice in violation of the 10 percent maximum over which legislative concurrence is required (though neither Senate President John Alario, R-Westwego, nor House Speaker Chuck Kleckley, R-Lake Charles, seems to possess sufficient spinal makeup to hold the governor accountable on that little technicality).

A&M, probably best described as McKinsey Lite, is charged with trying to find $500 million—an updated number by the Baton Rouge Advocate puts the amount at $1 billion—in savings over five years. Its consultants have swooped into state agencies with their iPads and Smartphones and their instant expertise.

The problem is that neither A&M nor its army of consultants has ever run a business; they have never run a state agency; they have never interacted with the very people whose lives they are consulting to impact in a very adverse way. Yet incredibly, with all that proficiency and foolproof know-how gleaned from literally days and even a week or two of studying theoretical scenarios for each agency visited, the most consistent solution to cost cutting is: “Lay off personnel, reduce your workforce.”

A&M does have one thing that is critical to its mission: the full blessings of Bobby Jindal and that apparently is all that matters. The human element is not a factor in this pathetic exercise. That’s because Jindal himself is not human; he’s a droid, devoid of compassion or feelings and programmed to spew statistics and factoids at such a rapid pace as to trick the listener into mistaking rote recitation for intelligence.

And if he believes he can fool the national media the way he has the Louisiana media, we can assure him that task will keep him busier than a one-legged tap dancer. He will have greater success shoveling water with a pitchfork.

But we digress. Because A&M is banking on motion being interpreted as progress, it has come in and created a lot of dust, wind and noise, but little substance. Conflicts were inevitable and shouting matches have erupted in various agencies between professionals who know their jobs and pseudo-professionals who are deep on theory but short on practicality. Or who, in the words of former Texas Gov. Ann Richards in her characterization of George W. Bush, are “all hat and no cattle.”

Faced with protests by agency heads over the impossibility of meeting payroll after A&M imposed cuts, the A&M suits invariably offered the same adolescent solution of firing workers.

And for that we’re paying $7.5 million?

And now those 230,000 state employees, retirees and dependents covered by the Office of Group Benefits (OGB) are facing what Kristy Kreme Nichols calls the “right-sizing of benefits to costs.” http://theadvocate.com/home/10132562-171/state-employee-insurance-changing Translated, that simply means an average 47 percent increase, including higher premiums and out-of-pocket expenses, including 100 percent higher co-pays and new and higher deductibles. Let’s not forget, most state employees will get their first pay increase in 5-6 years – 4 percent – just in time to meet those higher insurance expenses. Interesting timing.

One of our readers correctly pointed out that Naomi Kline, in her book The Shock Doctrine, lays out the game plan now being followed to the letter by Jindal and his $7.5 million consulting firm. It should come as no surprise that the A&M suits are smugly referring to the upcoming Oct. 1-Oct. 31 open enrollment as “War Games.”

War Games? Yes, War Games. To them, it’s just a way of keeping score with the fate of state employees, retirees and dependents as only an asterisk, an afterthought.

That is, after all, what this administration is all about: Jindal and his boot lickers against state workers; Republicans against the middle class. And if you don’t believe it is true class warfare, we invite you to read another book by Hedrick Smith, Who Stole the American Dream?

Smith includes in the appendix of his book the August 1971 Lewis Powell memo to the chairman of the U.S. Chamber of Commerce that set in motion the creation of the American Legislative Exchange Council (ALEC), the Cato Institute, and Americans for Prosperity and the eventual steamrolling of the American middle class by Corporate America. Barely three months after writing that blueprint for the consolidation of corporate America’s power over our government, Richard Nixon appointed Powell to the U.S. Supreme Court. http://reclaimdemocracy.org/powell_memo_lewis/

Meanwhile, there’s the matter of that unpaid utility bill at the Bridge City Youth Center.

The Bridge City Youth Center houses about 150 troubled youth, down from about 300 in 2002.

Since 2008 when Jindal took office, the Office of Juvenile Justice (OJJ) has had its budget slashed by over 50 percent, and a couple of months ago, representatives from electric and natural gas utility companies showed up at the door of the Bridge City Youth Center with an order to cut services because of unpaid bills.

The amount owed? $50,000. A small partial payment was made to prevent the utilities cutoff—for now.

Granted, these 150 kids may not be up for their Merit Badges but the state in its wisdom has taken over responsibility for their housing, feeding, clothing, education and hopefully, some degree of rehabilitation.

So if the state is going to accept those responsibilities, it’s only fair to ask that the state meet those same responsibilities and pay the bills.

OJJ’s business functions were “consolidated” with DPS some time ago, and now those responsibilities have been transferred to DOA, DOA is responsible for those non-payments.

That’s the same DOA that forgot to pay LDOE’s web page subscription.

And that’s the same DOA that is an extension of the governor’s office. That’s why it’s called the Division of Administration.

Why did DOA not pay the bill? For that answer, we would have to go back to that huge budget cut imposed by one Bobby Jindal. The money simply is not there.

And it almost wasn’t there for OJJ and other agencies to meet payroll recently but A&M had a ready answer for that knotty little problem: impose layoffs.

And thrown into the mix, doesn’t is somehow seem a bit curious how this administration, which can’t lay its hands on sufficient cash to pay a $50,000 utility bill, can somehow find $18 million for a private hospital in Baton Rouge to keep its emergency room open to handle the indigent patients coming over from the state-run Earl K. Long Hospital after it was closed by the governor? Is it even legal for the state to fund a private business at all, much less without legislation? In a cash-strapped administration, where did $18 million magically and immediately appear from? http://theadvocate.com/news/10108601-123/br-general-jindal-administration-reach We’re just sayin’…

And keep in mind, the state has already had to borrow $24 million from this fiscal year’s (2014-15) budget to balance last year’s budget, meaning we’ve already started the new fiscal year, which began on July 1, $24 million in the hole.

And yet he found $18 million for a private hospital to keep its ER open for one year.

The question now must be asked: What happens next year when it threatens to close again?

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