Posted in Governor's Office, Notable Quotables, OGB, Office of Group Benefits, Privatization, Transparency on July 16, 2011| 3 Comments »
“This is an important first step in what will be a lengthy, careful and thorough evaluation process to arrive at the best possible policy for plan members and taxpayers alike.”
—Commissioner of Administration Paul Rainwater, on announcing the hiring of troubled Morgan Keegan, recently fined $210 million for fraud by the SEC, to advise the Jindal administration on the disposition of the Office of Group Benefits and its $500 million surplus.
Posted in Campaign Contributions, Contract, Contracts, Governor's Office, Health Care, Privatization, Transparency on July 13, 2011| 4 Comments »
Most of what has been written here in recent months about the proposed privatization of the Louisiana Office of Group Benefits (OGB) has been in the nature of political discourse laced with emotional banter.
Such is the nature of the beast when people’s lives are being toyed with by elected and appointed officials insulated in their detached bubble of infallibility—even in the face of growing evidence that their grandiose plans are skewed with false data.
This time, though, Gov. Bobby Jindal may well have overplayed his hand. It’s one thing when the rank and file employees, helpless to fight back, are opposed to his proposed sale of OGB. It’s quite another when you raise the hackles of the state district judges who voted unanimously to approve a resolution in opposition to the sale.
Perhaps it’s time for the State Inspector General, the East Baton Rouge District Attorney, and the Legislative Auditor to begin investigating the very real possibility of the existence of two separate reports by Chaffe & Associates of New Orleans.
That’s the report, in case you don’t recall, that Commissioner of Administration Paul Rainwater and Division of Administration (DOA) attorney Paul Holmes both said on separate occasions was received by DOA on May 25. When Rainwater first balked on his promise to make the report available to legislators, it was subsequently “leaked” to the Baton Rouge Advocate. The only problem with that was the “leaked” report was signed by its authors on June 3—ten days after Rainwater and Holmes said it was received by DOA.
Lending even greater credence to the theory of the existence of two reports is the fact that all documents are date stamped when they are received at DOA. The “leaked” report contained not a single date stamp on any of its 42 pages.
Did the original report, received on May 25, not say what Jindal wanted to hear?
That’s a question for investigators to ask.
In the meantime, DOA and Jindal are moving forward—but oh, so quietly. A second request for proposals (RFP) was issued when the first one fell through after LouisianaVoice broke the story about the administration’s intent to sell the agency that presently carries a $500 million surplus.
That story said that Goldman Sachs was recruited in October of 2010 to help draft the RFP and then was the only company to submit a proposal to conduct a financial analysis of OGB and then market the agency to a private sector buyer. Goldman Sachs subsequently withdrew when negotiations over legal indemnification broke down.
Rainwater and Brady were called before the Senate Retirement and Senate and Governmental Affairs committees. It was before the Retirement Committee that Rainwater said the state would maintain control over OGB because it was not selling the agency despite the first RFP that clearly said otherwise.
Rainwater said the administration was seeking a third party administrator to run the PPO, thus necessitating a second RFP seeking a firm to conduct a financial analysis and find a buyer.
A strange sense of déjà vu set in when it was learned that Goldman Sachs again submitted a proposal, one of three firms to do so. DOA, in that second RFP, said a contractor likely would be named on June 15—nearly a month ago—but as yet, no one has been awarded a contract.
Meanwhile, LouisianaVoice has been doing a little research of its own since the Division of Administration has chosen to operate secretively, in violation of the state’s public records law by ignoring numerous inquiries from us.
Even as Jindal, Rainwater, and Deputy Commissioner of Administration Mark Brady plunge ahead with their privatization plans for the OGB Preferred Provider Organization (PPO), perhaps it is time to take a look at national trends in the health insurance industry, something this administration, like a spoiled child who prefers tantrums as a means of getting its way, has refused to do.
Self-funded health insurance plans continue to grow in popularity in the U.S., according to the Society for Human Resource Management which said that 64 percent of workers in PPOs are in a self-funded plan, compared to those in conventional “fully insured” plans in 2008. That compared to only 5 percent in 1974.
With major incentives that include exemption from state taxes on insurance premiums, the ability to design their own plans, and invest money previously paid as premiums until it is needed to pay health expenses, it’s no wonder that Fortune 500 corporations have long been self-insured.
“The largest insurer in America is not Blue Cross/Blue Shield, but the nation’s employers,” said Jon R. Gabel, associate director of research and statistics at the Health Insurance Association of America. Gabel called the self-insurance trend “a quiet revolution in health care.”
Just who are some of the Fortune 500—and other companies—that have opted for self-insured health plans? Well two dozen of those have contributed $224,000 to Jindal’s political campaign and two have nine contracts with the state totaling $46.4 million.
Here is a partial list with contributions to Jindal in parenthesis:
• Johnson Controls—six contracts totaling $37.4 million;
• CH2M Hill ($8,500), plus three contracts with the state totaling $9 million;
• Pinnacle Entertainment ($8,000);
• Wal-Mart ($24,000);
• Delta Airlines ($1,000);
• Walgreen’s ($5,000);
• U.S. Marine, Inc. ($14,100);
• United Parcel Service ($15,000);
• Eli Lilly & Co. ($18,000);
• Citigroup ($15,000);
• McKesson Pharmaceuticals ($15,000);
• Georgia Pacific ($11,700);
• Hospital Corp. of America ($10,000);
• United Health Care ($10,000);
• Comcast ($3,500);
• Waste Management ($10,000);
• ExxonMobil ($6,330);
• Chevron ($5,000);
• Coca Cola ($5,000);
• Hewlett Packard ($5,000);
• Pepsico ($5,000);
• GMRI Food & Beverage ($2,500);
• Microsoft ($2,500);
• Amgen Pharmaceuticals ($2,000);
• Occidental Chemical ($2,000);
• Target;
• AT&T;
• Bank of America;
• Starbucks.
So, just what is that Jindal, Rainwater, and Brady know that the CEOs of these corporations are not smart enough to know–many of whom had sufficient wisdom to contribute to his campaign and two of whom are apparently intelligent enough to have multiple contracts with the state? That’s the question that the administration should answer, and soon.
Oh, we almost forgot. There was one more Fortune 500 corporation that has chosen to go the self-insured route as the most financially desirable method of providing health insurance for its employees.
The company?
Goldman Sachs.
Posted in Governor's Office, Health Care, House, Senate, Legislature, Legislators, Privatization, Transparency, Veto on July 4, 2011| 7 Comments »
George Orwell, writing in Chapter 10 of his literary classic Animal Farm, said, “All animals are equal but some animals are more equal than others.”
Never was that well-worn quote more obvious than when, on July 1, 2011, Gov. Bobby Jindal cast aside the civics class principal of the three equal branches of government by exercising his veto power over legislative oversight of one of his pet projects—privatization.
The vote was 36-0 in the Senate and 100-0 in the House but Jindal still pulled rank on the Louisiana Legislature and vetoed SB-207 by Sen. Willie Mount (D-Lake Charles), as well as three provisions of HB-1 that would have given the legislature some say into the governor’s privatization of the state’s Medicaid program.
The vetoes left no doubt as to the determination of the governor to move forward with his sweeping privatization of several state government programs even though one report said that the proposed privatization of the Office of Group Benefits it dead—at least for this year.
Jindal has already privatized one agency a year ago, the Office of Risk Management, but failed in his efforts to sell three state prisons earlier this year.
He was less than specific in giving his reasons for the vetoes, saying only that the three provisions that he stripped from HB-1would delay implementation of one program while eliminating the flexibility of the Department of Health and Hospitals (DHH) to initiate changes in two other.
In one case, he said that legislative involvement could delay implementation of a program that provides care for youth who have behavioral health problems that put them at risk of being institutionalized.
Language in HB-1 would have required DHH to submit a report providing details of the programs structure, service delivery provisions, population served, and estimated costs for budget committee review at least 30 days prior to awarding a contract.
The administration is presently evaluating a dozen private companies that have submitted proposals to establish networks of health-care providers, including physicians and hospitals with which Medicaid recipients would enroll in an effort to cut costs and better coordinate health care. Ten of those companies are insurance companies.
Jindal’s “coordinated care networks” would use state revenue to pay private insurance companies and other private entities to provide the medical needs for two-thirds of the state’s 1.2 million Medicaid recipients.
Mount, chairperson of the Senate Health Committee, said she was disappointed in the governor’s veto.
“This (Jindal’s privatization) is a significant change in the way we are offering health care,” she said, adding that the legislature should be an “active and engaged” partner to ensure that health care outcomes are both improved and cost-effective.
Jindal also cited “contingencies” in vetoing the proposals but legislators earlier this year complained that Jindal himself included “contingencies,” in his original budget proposal, including the proposed sale of three state prisons that would have required legislative approval before the funds could be appropriated.
Rep. Eddie Lambert (R-Prairieville) said Jindal apparently had a different perspective on contingencies when considering vetoes as opposed to drafting his budget.
“I’m somewhat surprised he would veto those things because the more oversight you have in government, the better taxpayer interests are going to be served,” said Lambert, vice chairman of the House Appropriations Committee.
“The governor is not too keen on legislative oversight,” said Sen. Lydia Jackson (D-Shreveport), who said she has long been a proponent of the idea that the Legislature should exercise more independence in budgeting. She is vice chairperson of the Senate Finance Committee. “Maybe these vetoes will be the kick in the pants for us to exert ourselves a little more,” she said.
Not only did SB-207 receive unanimous support in both the Senate and House, it also was endorsed by the Louisiana Hospital Association, the Louisiana State Medical society, and the New Orleans Metropolitan Hospital Council.
Jindal, in his veto message, said Mount’s bill “terminates Louisiana’s Medicaid reform initiative, Coordinated Care Networks, as well as the Community Care Program on Dec. 31, 2014.
“Coordinated Care Networks will provide a medical home for 800,000 Medicaid recipients, providing better access to primary and preventative care, improved health outcomes, with an anticipated savings of $24 million in the upcoming fiscal year and $135.9 million in state fiscal year 2013.
“Inserting a termination date for this important reform and preventing Louisiana from improving the performance of outcomes in our current Medicaid system sends the wrong message, that we are incapable of providing better care to our people, and we can do no better than our ranking of 49th in the nation for health outcomes. I am not content with the outcomes of our current Medicaid program and am committed to reforming our Louisiana health care system.”
Now that’s making a case for being more equal than others.
Posted in Governor's Office, Health Care, Legislature, Legislators, OGB, Office of Group Benefits, Prison, Privatization, Teague, Transparency on June 16, 2011| 3 Comments »
Consistent: Unchanging in achievement or effect over a period of time; showing steady conformity to character, profession, belief, or custom; dependable, unswerving.
It’s an adjective that’s not been used very frequently in describing Gov. Bobby Jindal. It should be. The governor has been a veritable model of consistency. As ol’ Casey Stengel would say, you can look it up.
Jindal has consistently tried to unemploy state civil service workers in his repeated attempts to privatize their agencies from under them. He started with the Office of Risk Management, a relative small agency ($100 million budget) in the overall scheme of things.
Flushed at the ease with which that was accomplished, he next turned his eyes on state prisons, the Office of Group Benefits (OGB), and Medicaid.
Those weren’t as easy. The prison plan fell through, at least for this year. OGB has met with considerable resistance from judges, state employees, retirees, and legislators. And the Medicaid plan ran into an unexpected hurdle during confirmation hearings for the secretary of the Department of Health and Hospitals.
He consistently has been out-of-state on fundraisers, book promotion tours, or campaign appearances on behalf of other Republican candidates when he should have been home minding the store that was fast going broke.
He consistently visits Protestant churches, mainly in north Louisiana, to pass around clipboards with forms for church members to fill out, giving their names, phone numbers, mailing and email addresses for future fundraising solicitation efforts.
The only reason his out-of-state trips and church visits have stopped in recent weeks is because of a law that prohibits fundraising activities during the legislative session.
Jindal also has been consistent in withholding information from legislators, reporters, and even the state auditor. His Office of Economic Development refused to provide records requested by auditors who were attempting to perform a routine state audit of the agency. And the Division of Administration (DOA) simply refuses to disclose anything more than the time of day and more often than not, even that’s a half-hour late.
Then there was the infamous Chaffe Report. Without rehashing old news, Jindal hired Chaffe & Associates of New Orleans to perform a financial overview of OGB with the idea in mind to plug the data into his executive budget. When the budget contained nothing relative to the report, it soon became evident that the report’s analysis indicated privatization of OGB was not a good idea.
The public, press, auditors, and even legislators would never have known that, however, had Rep. Jim Fannin and Sens. Ed Murray, Karen Peterson, and Butch Gautreaux not pressed for the report. Even then, DOA attempted to withhold the document.
Jindal has been consistent in that he brooks no dissenting opinion.
During public hearings on governmental streamlining in October of 2009, Melody Teague, a contract grants reviewer for the Department of Social Services, testified against the administration’s streamlining proposals and was fired the next day. She appealed, but it took about six months for her to get her job back.
Then, on April 15 of this year, her husband, Tommy Teague, was fired as CEO of OGB—and he had not even publicly opposed privatization of his agency. He did, however, take OGB from a $50 million deficit to a $520 million surplus in a period of only five years.
His successor, Scott Kipper, had the temerity to tell the Senate Retirement Committee that if nothing changed at OGB, if there was no sale, no privatization, no third party administrator, there was not a single employee he would lay off at the agency. In fact, he told the committee, he had inherited a staff of excellent, dedicated employees. From that moment forward, his days were numbered.
His boss, Commissioner of Administration Paul Rainwater, had only a few minutes earlier testified that OGB staff needed to be reduced by 149 persons.
Finally, there are the confirmation hearings for Jindal appointees which thus far have been an unqualified—but consistent—disaster for the governor.
First, Rainwater sat at the witness table texting as Kipper was grilled by Murray and Peterson, never offering to come to his rescue by clarifying an answer or volunteering to rescue Kipper who twisted slowly in the wind.
Then, when Rainwater reversed himself on his promise to the Senate and Governmental Affairs (S&GA) Committee, made during that same hearing, to make copies of the Chaffe report available to them, Kipper was caught in the middle. His fate sealed, he resigned, effective June 24. At his final board meeting on Wednesday of this week, he received extended laudatory praise from the board.
The confirmation hearings have been the number one entertainment attraction this session.
That’s because of Jindal’s consistent persistence in trotting out nominees with baggage and expecting them to slip by Murray and Peterson. Invariably, the senators ambush the unsuspecting appointees with pointed questions about conflicts of interest or a lack of that now overused word, transparency.
With Rainwater and Deputy Commissioner of Administration Mark Brady, it was the refusal to come forward with the Chaffe report. With Bruce Greenstein, things took a little nastier turn when he refused to reveal the name of the winner of a 10-year, $34 million-per-year contract for DHH.
As secretary of the agency, he assured S&GA Committee members that he took a decidedly hands-off approach in the selection process for the contractor to install and operate the Medicaid Management Information System for DHH.
Despite that, he refused for more than an hour under withering demands to reveal the name of the contractor. When he finally relented, he revealed that the contractor was CNSI of Gaithersburg, MD., a company for whom he once worked.
Then, on Wednesday of this week, Ed Antie of Carencro, a Jindal appointee to the Board of Regents for Higher Education, took his seat in the witness chair to begin his confirmation process before the S&GA Committee.
Things got ugly early.
Murray started the carnage by asking an apparently innocuous question: “Do you have any outstanding contracts with the State of Louisiana?”
“No,” Antie assured Murray.
“Do you know of a company called Sun America?”
Antie shifted uncomfortably before answering. “I own a company, a holding company that’s dormant, that owns a company that owns a company that owns maybe 10 percent of Sun America. I’m inactive.”
“Have you ever heard of LONI?” Murray asked. LONI is an acronym for the Louisiana Optical Network Initiative, a state-of-the-art fiber optics network that connects eight major research universities—LSU, Louisiana Tech, LSU Health Sciences Centers in New Orleans and Shreveport, Southern University, Tulane University, the University of Louisiana at Lafayette, and the University of New Orleans.
“I politicked Sun America to give them a discounted rate for our fiber optics,” Antie said.
“I thought you said you were inactive,” Murray said. “Does Sun America have a contract with the Board of Regents?”
“They may. I was not involved in the negotiations and I have no idea what the contract value is,” Antie said.
“You were given a questionnaire and that question was left blank,” Murray said.
Antie, who heads up Central Telephone, replied, “I didn’t realize that a company from which I was so far removed was relevant.”
“Sun America has a contract with the Board of Regents in the amount of $531,000,” Murray said. “You first said there was no contractual relationship and now there is. Don’t you think that’s relevant?”
“I asked Sexton Gray (Gray Sexton, a Baton Rouge attorney who once headed up the State Ethics Board) and he said to recuse myself from any votes,” Antie said. “I’m not trying to hide anything. I took retirement from the telecommunications industry to serve on this board.”
“Which one of those companies that you mentioned owns Sun America?” asked Murray.
“Central Telephone is my company. It’s just a holding company. Central Telephone owns Network USA, about 30 percent, and Network USA owns Delta Media which owns 10 or 15 percent of Sun America.”
He said Charles Chatelain is the registered agent for Network USA, Delta Media, and Sun America.
“First you said you had no contractual relationship with the state and now we find that your company has a $531,000 contract with the Board of Regents,” Murray said. “You said you didn’t know, but you said you approached Gray Sexton for advice on your apparent conflict.
“In terms of ethics, you may be breaking the law,” Murray said.
Sen. Lynda Jackson (D-Shreveport) observed that Antie claimed that Central Telephone was dormant. “Yet, when you check corporate records with the Secretary of State’s web page, it shows that Central Telephone is in good standing, which means it has filed annual reports,” she said. “Its last report was November of 2010 and it shows that you are the registered agent.”
She said that ethics and conflicts of interest have become a recurring problem of the Jindal administration.
A check by LouisianaVoice also revealed that Antie made three contributions to Jindal’s campaign totaling $5,000. The contributions were made in August of 2007 and in August and September of 2010. His associate, Charles Chatelain gave $5,000 to the Jindal campaign in December of 2009; Network USA gave $5,000 in separate $2,500 contributions in August of 2009 and March of 2010, and Sun America contributed $3,500 to the governor’s campaign in november of 2010.
Jindal appointed Antie to the Board of Regents in January of this year.
At least that’s consistent with Jindal’s legacy of consistency.
Posted in Governor's Office, House, Senate, Legislature, Legislators, OGB, Office of Group Benefits, Privatization, Transparency on June 14, 2011| 4 Comments »
Commissioner of Administration Paul Rainwater holds a bachelor’s degree in government, a master’s in international relations, and is certified as a local government manager. But there are still things he needs to learn.
For example, keeping a secret at any level of government is about as easy as trying to whisper in a sawmill.
Rainwater, under considerable duress from legislators, including Sen. Butch Gautreaux (D-Morgan City), Sen. Karen Peterson (D-New Orleans) and Sen. Ed Murray (D-New Orleans) finally provided Senate President Joel T. Chaisson, II (D-Destrehan) with a copy of the long sought report on the Office of Group Benefits (OGB) provided by Chaffe & Associates of New Orleans.
Chaffe had been retained in March to produce a financial overview of OGB in time for Gov. Bobby Jindal to plug his anticipated sale of the agency into his executive budget. The budget was submitted on March 19 but with no mention of OGB or the study, leading observers to believe Chaffe’s findings did not support Jindal’s agenda to sell OGB and cut OGB staff by 149 employees.
After negotiations with Goldman Sachs on an initial request for proposals (RFP) fell through (Goldman Sachs submitted the only proposal), a second RFP was issued and proposals were taken from three firms last week. Goldman Sachs again submitted a proposal, one of three firms to do so.
Both RFPs invited proposals from financial analysts to conduct a full-blown financial assessment of OGB and then to assist in marketing the agency on the private sector market.
When Rainwater finally did submit the Chaffe report, after first going back on his word to produce it, he did so with an unusual caveat: that senators refrain from making the report public.
“A critical part of this effort will entail issuing a competitive Solicitation for Offers (SFOs) from health insurance companies, which the financial advisor will help devise,” Rainwater wrote. “It’s essential that we protect the taxpayers’ interest by not prejudicing the outcomes of the SFO process and contract negotiations by giving the Chaff’s preliminary analysis to potential bidders. In other words, we want the best offer we can get.”
Oops. Too late. Remember: you can’t whisper in a sawmill.
An unknown senator released the report late Monday. The Baton Rouge Advocate published the full report on its website on Tuesday.
“Again, we have significant concerns that premature disclosure of the report will prejudice the SFO and negotiation process,” Rainwater said in his letter to Chaisson. “This is not a matter of secrecy, but a basic component of our ability to make decisions that are within our purview, to protect the integrity of a successful procurement, while providing the legislature full details at the appropriate time.”
Not a matter of secrecy? Protect integrity?
What part of integrity does Mr. Rainwater not understand after first promising Sen. Peterson a copy of the report and two days later instructing OGB CEO Scott Kipper not to make the report available to anyone?
What part of integrity does he not get after letting Kipper suffer under the withering questioning of Senate and Governmental Affairs Committee members while he, Rainwater, sat at the same table texting?
Kipper did the only honorable thing he could under the circumstances. He resigned, effective June 24, giving him tenure of just over two months.
Chaisson, for his part, tried to play along. He forwarded the report to Sen. Robert W. “Bob” Kostelka (R-Monroe), chairman of the Senate and Governmental Affairs Committee. Along with the report, he attached a three-paragraph letter saying the delivery of the report eliminated the need for a subpoena which had been requested by Murray and approved unanimously by the committee.
He also attached a copy of the statute he said protected the document from disclosure. To the layman’s eye, however, the statute seemed to do nothing of the sort.
Both Rainwater’s letter to Chaisson and Chaisson’s letter to Kostelka were initially posted on the Advocate web page along with a copy of the Chaffe report. The letters, however, were quickly removed from the Advocate website.
The report, just as had been speculated, said premiums paid by the state and by state employees would increase should the agency be privatized.
That conclusion flies in the face of Rainwater’s oft-repeated claims that the privatization of OGB would have “no negative effect” on services now provided. Some would consider premium increases at a time when state employee salaries have been frozen for two consecutive years a negative effect.
The report noted that under the current format, the state does not seek to make a profit and OGB does not have shareholders. A private company’s number one objective would be to make a profit for its shareholders.
Another point brought out in the report said that the state does not pay any taxes on its premium income but a private company would be subjected to taxes, forcing it to raise premiums even higher in order to make a pre-tax profit of 4.5 to 7 percent.
Rainwater testified before the Retirement Committee that he would not support a spike in premiums.
The report’s conclusions also appeared to answer a key question: Why would the administration be so determined to prevent the release of the report if its contents supported the position of the administration?
Much of the 42-page report, which was done under a $49,999.99 contract, appeared superfluous. Besides biographical information on Chaffe associates who compiled the report, it contained boilerplate data that could easily be downloaded from the internet. Those included stock market performances, public, industry and statistical information, consumer spending, consumer prices and inflation, business and manufacturing inventory, housing market and affordability, industrial production, unemployment and personal income, and health care industry statistics.
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