Posted in Charters, Education, Governor's Office, House, Senate, Legislature, Legislators, Notable Quotables, Retirement on July 4, 2011| 2 Comments »
“Unabashed power trip without a road map. Where he’ll throw us off the bus, no one knows.”
—State Sen. D.A. “Butch” Gautreaux, on Gov. Bobby Jindal’s veto that protects charter schools that leave the Teachers Retirement System of Louisiana from being required to repay the state for their pro rata shares.
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.
Posted in Governor's Office, House, Senate, Legislature, Legislators, OGB, Office of Group Benefits, Retirement, Teague, Transparency on May 10, 2011| 6 Comments »
The Senate Retirement Committee held its third consecutive week of public hearings on the Jindal administration’s proposed privatization of the Office of Group Benefits (OGB). The only things missing were witnesses and a second request for proposals (RFP) that was substantially different from the first.
Commissioner of Administration Paul Rainwater, Deputy Commissioner Mark Brady, and new OGB CEO Scott Kipper all were no-shows for the hearing, choosing instead to snub their noses at legislators.
Rainwater, who already has been grilled by legislators during the first hearing two weeks ago, vowed to staff members that he would not attend another of the hearings being conducted by committee Chairman Sen. Butch Gautreaux (D-Morgan City), according to sources within the Division of Administration (DOA).
Mark Brady has not attended any of the hearings and Kipper reportedly has been told to stay away from Gautreaux’s committee meetings.
Only DOA Chief of Staff Dirk Thibodeaux bothered to show up for the administration. The only other witness was former OGB CEO Tommy Teague, who testified at length on the history of OGB, the latest RFP which appears to conflict with testimony by Rainwater last week, and of the disadvantages of privatizing the agency or contracting with a third party administrator (TPA).
Teague also disputed administration claims that privatization of OGB would save the state some $10 million per year be reducing the number of OGB employees by half.
The latest RFP was released late last Friday and if anything, appears to reinforce the administration’s determination to sell OGB outright despite claims to the contrary by Rainwater a week ago who said the state would retain control of OGB. “At the end of the day,” he told the committee last week, “we will still have the Office of Group Benefits with 149 employees.”
Teague’s testimony, however, shed considerable light on the language of the RFP that he indicated was misleading and which he said provides insights into the administration’s not-so-well-hidden agenda to keep certain information from the public as well as possibly forestalling any financial audits for a period of three years after signing of a contract with a financial advisor.
He said OGB was created in 1969 by executive order of then-Gov. John McKeithen. “Up to then, each agency more or less shopped for its own health coverage,” he said.
Nine years later, in 1978, OGB was sold. “Overnight, state employees became employees of AdServ Corp., a California software company,” Teague said. “One day they worked for the state and the next day for an out-of-state company.”
The following year OGB was brought back in-house and placed within the Department of the State Treasury and in late 1979, an executive director was hired.
In a scenario that has become all too familiar of late, an employee of the California company testified before the Appropriations Committee and the next day was fired, he said. “Of course he was immediately re-hired by OGB,” Teague said.
Teague’s wife, Melody, was fired in October of 2009 one day after testifying before the Commission for Streamlining Government but it took her six months to get her job back. Then, less than a month ago, on April 15, Teague himself was fired as OGB CEO by Brady. Rainwater attributed the decision to Teague’s lack of leadership even though the agency flourished under his six years as director.
Teague said in late 1980, the decision was made for OGB to go self-funded. “That means that OGB was on risk for all claims,” he said. “With a TPA, you simply pay a third party to answer the phones. The state is still on the hook for risks.”
He said it has taken OGB 30 years to build a network that now includes contracts with every hospital in the state except one. “The most critical component of a TPA is to assess the value of their discounts with medical providers. But all discounts come back to OGB. The TPA is simply paid an administrative fee,” Teague said. “OGB pays the TPA a per employee fee each month, in this case, we pay Blue Cross/Blue Shield $26 per month per employee member.
“With OGB, there are no taxes and no profit and there is no need for a TPA because we have already built our network,” he said.
Teague said he first to OGB in 1980 as an OGB attorney. “I was with the department for eight years and was acting director for one-and-a-half years,” he said. “In early 1990 I was named special counsel for the board and helped set up the PPO network. I left in 1995 to run the Pennsylvania state plan.”
He returned to OGB as CEO in 2006 when former Gov. Mike Foster moved OGB back under DOA. DOA took all power from the OGB board and now it only serves in a planning and policy capacity and the CEO served at the pleasure of the governor.
He said that prior to 2006 OGB was fully insured by Ochsner Health Plan, meaning the insurer (Ochsner) assumed all risk.
“When I was named CEO in 2006, there was a negative fund balance of $36 million,” he said. “As a result of becoming self-insured, we now have a $520 million fund balance because we beat the actuary projections every year.
“Had we stayed with the fully-insured plan in 2006, we would not have the fund balance we now have.”
Teague also debunked the $10 million in savings that Rainwater said the state would realize with the reduction in payroll that would accompany privatization. “We already pay Blue Cross $26 per member per month. A similar arrangement for a Preferred Provider Organization (PPO) with its 41,825 actual employees and retirees would more than offset the $10 million savings realized by cutting staff,” he said.
Sen. Ben Nevers (D-Bogalusa) asked about the other states cited by Rainwater as being more efficient than Louisiana by providing benefits to more people with lower costs and fewer staff but Teague was quick to say it is impossible to fairly compare Louisiana to other states “because we don’t know what the other states are providing. We’re not really seeing what it costs other states. OGB, for instance insures levee boards 50 school systems.”
He said OGB deals with 110 different payroll systems and various commissions. “OGB does a big part of the TPA work because only OGB can. A fully-insured plan is always going to cost more and OGB has some of the best contracts out there right now because of the network we’ve established over three decades.”
Teague questioned the intent of the administration when he said, “If you’re going to remain self-administered and the $520 million fund balance is staying as Mr. Rainwater claimed last week and if you’re looking for a TPA to administer the program, then why do we need an RFP to assess the benefits of OGB? It’s irrelevant. If you need a TPA, why do you need to know the net worth?
“The RFP attachments are all OGB financial statements. A TPA doesn’t need to know the financial statement. A TPA needs to know the monthly call volume, the monthly claim volume, monthly correspondence volume, how eligibility is transmitted, and the vendor payment schedule. The net worth is immaterial.”
“You would want to provide that if you were looking for a buyer,” Gautreaux interjected. “I asked Mr. Teague here today because I don’t understand why we need to hire a financial advisor to contract with a TPA.”
Teague also said one part of the RFP grading system for bidders said cost of services would be worth 25 points but in another section it said the lowest cost proposal would be awarded 30 points. “Which is it?” he asked.
He said the current RFP also left unanswered several questions about when proposals would or would not become public record and that the wording of the RFP would appear to prevent the legislative auditor from examining records for a period of three years following the signing of a contract with a financial advisor.
“It’s really not clear just when the legislative auditor would have immediate access to records,” he said.
Legislative Auditor Darryl Purpera last week testified that Rainwater had refused to provide documents that Purpera’s office is constitutionally entitled to have in order to conduct proper assessments.
The latest version of the RFP was written completely in-house with no assistance from outside as was the first version when Goldman Sachs was heavily involved in the drafting of that document.
The new RFP, however, contains no fewer than four separate references to the sale of OGB and bidders’ experience in sales.
It also provides that OGB’s acting actuary, personnel in the governor’s office, DOA, and the Office of Contractual Review may review any of the proposals and that if contract negotiations exceed 15 days, OGB may cancel the award and award the contract to the next-highest-ranked proposer. Extension of this and other deadlines may be extended at the discretion of OGB.
Conceivably, if the administration does not want the contract to go to the highest-ranked bidder, it could draw out negotiations beyond the 15-day limit as a ploy to awarding the contract to the next-highest-ranked bidder.
Posted in Governor's Office, Health Care, House, Senate, Jobs, Legislature, Legislators, OGB, Office of Group Benefits, Retirement on May 2, 2011| 5 Comments »
Commissioner of Administration Paul Rainwater told the Senate Retirement Committee at least half-a-dozen times last week that Louisiana was “one of only two states” to run a completely self-funded Preferred Provider Organization (PPO) that pays claims exclusively from premiums paid in by members who are state employees or retirees.
Rainwater also said the elimination of 149 jobs that would occur if the Office of Group Benefits (OGB) is privatized would mean a savings of about $10 million to the state.
Both comments bear closer scrutiny.
Yes, Louisiana is indeed “one of only two states” to have a fully-funded PPO. Utah is the other.
But what Rainwater failed to say was that virtually all states self-fund at least one employee health care plan. So says the National Association of State Personnel Executives (NASPE) in its July 2010 white paper on the “Challenges and Current Practices in State Employee Healthcare.”
Researched and written by Katie Meyer, Colleen Schlect, and Betta Sherman of the University of Chicago, the publication also directly contradicted claims by Rainwater (and Jindal), that privatization would be more cost efficient than the PPO plan presently being run by OGB.
Quoting “Combined Public Employee Health Benefit Programs,” a March 2010 health care containment and efficiencies brief for the National Conference of State Legislators, the NASPE publication said self-funded plans “can typically save between five and six percent in administrative costs relative to fully-insured plans.”
Rainwater has insisted that the state’s PPO which now operates at a 3.5 percent administrative cost—not paid by the state’s General Fund, but out of premiums collected from members—could be improved upon by a private company even though he admitted in last Tuesday’s committee hearing that private companies generally experience administrative costs of 10 to 15 percent and some even as high as 20 percent.
Several members of the Retirement Committee, including Chairman D.A. “Butch” Gautreaux (D-Morgan City) had some difficulty with the math in Rainwater’s claim.
The “other” of the two states that presently have fully-funded PPOs is Utah and that state’s program has administrative costs of about 4 percent, according to agency Director Jeff Jensen.
Rainwater also did not mention that other states are moving in the direction of self-funded PPOs—a contra-flow, as it were, to the direction Jindal and Rainwater are attempting to force the state health benefits program.
So, what is it that Jindal and Rainwater know that other states do not? Or, rather, what is it the other states know that this administration refuses to acknowledge?
Here’s what some state administrators have to say about self-funded programs—programs like Louisiana’s that Jindal is trying so desperately to sell:
“In return for assuming risk, we get rewarded from favorable experienced, said Frank Johnson, Executive Director of Employee Health & Benefits for the State of Main. “Being self-funded allows us greater flexibility in terms of benefit design and collaborating with providers in partnerships.”
Debbie Cragun, Human Resource Administrative Director for the State of Utah, says, “You are potentially looking at hundreds of thousands, if not millions saved by going self-funded from fully insured.
Anne Timmons, Director, Employee Benefit Division for the State of Maryland, said cost trends have been below the national average and self-funding has been a major benefit. “If we were fully insured, our costs would be significantly higher,” she said.
Paula Fankhauser, Employee Benefits Administrator for the State of Nebraska, said her state’s plan is sufficient self-funded now that that was not always the case. When it first transitioned to self-funding, it did so with sufficient financial resources. “The state was literally waiting for employees to pay their premiums so we could pay their claims,” she said. A major legislative overhaul of the program rectified those problems and Nebraska now boasts a positive account balance that can cover all claims under virtually any circumstance, she said.
Doug Farmer, Deputy Director of the Kansas Health Policy Authority said that state re-evaluates its program on an annual basis. “Every time we re-examine it, we come to the same conclusion,” he said. “When you have the resources to manage your own pool the size of a state, it is a benefit to be self-insured.”
The NASPE study also said that among self-funded states, there is generally a higher level of satisfaction with current funding practices and claims payment. And most state officials seem to agree that self-funding health plans affords greater flexibility in terms of design and administrative cost-savings.
For example, self-funding has helped states implement wellness programs. “Being self-funded provides an incentive to implement wellness programs, since we pay the bills while someone else does the implementation and day-to-day management of the program,” said Daniel Hackler, Director of the Indiana State Personnel Department.
As for the elimination of those 149 jobs creating a $10 million savings to the state, Rainwater also forgot, or neglected to mention that those 149 salaries do not come out of the state’s General Fund. They are paid from the premiums paid by state employees and is part of the agency’s 3.5 percent administrative costs.
And any OGB surplus, by law, “shall not be used, loaned, or borrowed by the state for cash flow purposes or any other purpose inconsistent with the purposes of or the proper administration of the Office of Group Benefits.”
Posted in Governor's Office, House, Senate, Legislature, Legislators, OGB, Office of Group Benefits, Politicians, Retirement, Transparency on April 29, 2011| 22 Comments »
Last Tuesday, as testimony wound down before the Senate Retirement Committee over the proposed sale of the Louisiana Office of Group Benefits, committee Chairman A.D. “Butch” Gautreaux (D-Morgan City) commented that perhaps the Jindal administration should consider selling the State Capitol because “it would make a great waterslide.”
Besides Commissioner of Administration Paul Rainwater’s describing published accounts about the administration’s shenanigans as reading “like a John Grisham novel” and Rep. Rogers Pope, reacting to Rainwater’s annoying habit of consistently giving evasive answers to his questions, saying that Rainwater “should be on Dancing With the Stars,” the committee hearing produced precious little levity.
But some comparisons of what was said earlier and what was said later might shed some light on the inconsistencies of statements by Gov. Bobby Jindal and Rainwater. Comparisons between Louisiana’s Preferred Provider Organization (PPO) and that of the state of Utah also are somewhat revealing. The state’s PPO plan is that part of the Office of Group Benefits (OGB) that contracts with doctors and hospitals for services to members and which Jindal is so desperate to privatize over the objections of plan members and legislators.
Jindal at first was pragmatic about his proposed auction of OGB, saying that it just made good financial sense for the state to rid itself of the burden of serving as a health insurance agency. Besides giving him a couple of hundred million dollars to plow into the $1.6 billion budget abyss, it would eliminate 149 state jobs, something he seems determined to do.
But in Friday’s Baton Rouge Business Report, Jindal shifted gears oh so subtly when he said his reasons for wanting to divest the state of OGB was rooted as much in his philosophical opposition to government-run health care–he equated it to his opposition to President Barack Obama’s health care plan–as any other reason.
As Archie Bunker might have said, he switched from pragmatic to philosophical in the blink of a hat.
Likewise, consider the words of Rainwater. A week ago, he said the reason OGB would be attractive to buyers in the private sector was because the $500 million existing surplus would allow a new owner to pay claims out of that reserve without the buyer having to dip into its own reserves initially.
But on Friday, Rainwater sent out a two-page letter to OGB members in which he emphatically claimed that was not the case at all. These are his words, lifted directly from that letter:
“Strong restrictions remain in place governing the OGB surplus, and it will continue to be utilized just as it is now – solely for the purpose of providing health coverage for plan members.”
So, with Rainwater making such a strong promise (in boldface type, no less), why was it necessary to inject those four notorious lines into HB-32 which would have the effect of directing the state treasurer to divert any surplus funds from OGB to the state’s General Fund when current law strictly prohibits just such action by the administration?
That’s a question that only Jindal or Rainwater can answer but so far they have not addressed that provision of the bill.
Finally, there’s the comparison between Louisiana and Utah.
Why? Because no less than half-a-dozen times during last Tuesday’s Retirement Committee hearing Rainwater alluded to the fact that Louisiana is one of only two states in the U.S.—Utah being the other—that has a completely self-administered system. Put another way, the two states are the only ones that pay PPO claims exclusively in-house.
Each time Rainwater made the statement that Louisiana was one of only two such systems, he said it like it was a bad thing. And he said it so often that Gautreaux, apparently weary of hearing the line repeated as if by rote, finally interrupted Rainwater to say that after hearing it said repeatedly, everyone present was now aware the fact and there was no further need to dwell on that point.
But perhaps the point needs to be scrutinized more closely.
So, with that in mind, CNS contacted Jeff Jensen in Salt Lake City. He is Director of the “other” program in Utah.
Strangely enough, he said when asked the direct question that the Republican administration of that state had introduced HB-404 which seeks to privatize the Utah group benefits program. What a coincidence.
“Our program has worked well for 30 years,” he said in a telephone interview with CNS.
How well? Well, the Louisiana OGB has an administrative cost of roughly 3.5 percent compared to about 4 percent for Utah. Among private insurance companies, administrative costs run, on average, between 10 and 15 percent–some even higher.
“We don’t have quite the surplus, or escrow, that Louisiana does,” Jensen said. “When we accumulate a surplus at a certain level, we refund that to our members by reducing premiums.”
In Louisiana, members are happy with OGB because it averages no more than 48 hours on claims payments. In Utah, Jensen, said, the average is about 14 days, “but improving.”
In Louisiana, privatization of OGB would cut the number of employees in that agency by half, Rainwater has been quoted as saying. Later, the number was given as 149, meaning that the agency now employs about 300 people to service the health insurance needs of approximately 220,000 active members, retirees, and dependents. That’s one OGB representative for every 733 members.
Jindal said that number is far too many and is wasteful.
Utah currently employs 230 people to service the health needs of 140,000 members, or one representative for every 609 employees.
The comparisons, however, end there. Utah’s State Capitol is not conducive to use as a water slide.
Below is the blurb from the Business Report followed by Rainwater’s letter in its entirety:
Jindal says La. shouldn’t run health insurance program
Gov. Bobby Jindal is pitching his bid to privatize a health insurance program for state workers as a fight against government-run health care, equating it to his opposition to President Barack Obama’s health overhaul. Jindal says that he doesn’t think Louisiana should be in the business of running a health insurance program, as he tries to gain support for his plan to hire an outside company to run the program currently run by the Office of Group Benefits. The idea faces significant opposition from some lawmakers and current and retired state employees. Jindal says privatization would cut in half the 300-employee group benefits office workforce and generate $10 million in annual savings for the state, in addition to an up-front, lump-sum payment that could top $150 million. “In a time of serious fiscal challenges, these funds, in future years, could go a long way toward protecting critical taxpayer-supported services that benefit all our citizens,” says Paul Rainwater, commissioner of administration and Jindal’s budget chief. Rainwater made the statement in a letter to Office of Group Benefits plan members. He assured members that potential privatization would not affect service, coverage, benefits or premium rates.
Rainwater’s letter:
April 29, 2011
Dear Plan Member,
I write to you regarding the possible further privatization of the Office of Group Benefits (OGB). In the past few weeks, numerous rumors about this proposal have caused concern, among government employees and retirees alike, over what it might mean for their future health coverage. I certainly sympathize with those concerns, and I would share them too, if the rumors were true – but they are not.
As Commissioner of Administration, with responsibility for overseeing OGB, I believe strongly in the need to provide you with the facts, to separate rumors from reality, and hopefully alleviate any concerns you may have.
As you know, OGB has long used private companies to deliver various health plans, including the most popular plan, the HMO. These plans operate successfully and provide quality service, with administrative oversight by OGB. Only the PPO plan – which provides coverage for 61,469, or 27 percent, out of a total of 225,870 government employees, retirees, and dependents covered through OGB – is self-administered by state government, and it is only this plan, under the proposal, that would change in that regard.
My pledge to all plan members is this:
• You will continue to receive quality service and coverage regardless of the potential further privatization of OGB.
• Premiums rates, likewise, would be unaffected by this transition, and increases, when they occur, will continue to be reflective of medical market rates, as they are now.
• Benefits for all plan members, including retirees, will NOT change. We will continue to provide an HMO, PPO, and other plans with a benefit structure that is the same or better than the health plans OGB now offers.
• Current eligibility rules for coverage will not change for all plan members, active and retired alike.
• And OGB’s administrative oversight will continue, securing the continued success of all the plans.
As for the allegation that OGB’s surplus will somehow be “stolen” and diverted for other budgetary purposes, let me be absolutely clear: This claim is categorically untrue. Strong restrictions remain in place governing the OGB surplus, and it will continue to be utilized just as it is now – solely for the purpose of providing health coverage for plan members.
So why, then, explore such a proposal? Well, the simple fact of the matter is that taxpayers, who pay 75 percent toward plan member premiums and the cost of providing coverage, also have a stake in this discussion. A preliminary estimate suggests that a financial transaction with a commercial health provider involving the HMO and PPO plans could generate for the state at least $150 million. In a time of serious fiscal challenges, these funds, in future years, could go a long way toward protecting critical taxpayer-supported services that benefit all our citizens.
Our research of best practices shows that every other state besides Louisiana that offers a PPO plan does so through private companies, so we know it can be done with positive results. In the coming weeks we will engage an expert financial advisor to assist us in a thorough evaluation of this proposal, and to help us make a careful determination to proceed on a course of action that’s in best interest of both plan members and taxpayers.
This lengthy evaluation will also prepare us to present a detailed presentation of the proposal to you, as well as to the Legislature’s appropriation and finance committees, whose members have jurisdiction over OGB and whose approval would be needed for any contract involved.
In closing, I hope that expressing to you the reality of the situation, which runs so counter to the rumors you have may have heard, has helped to dispel concerns these rumors have caused. As we gather more information, I will see to it that you are given updates as they develop. More importantly, I will make sure that you continue to receive the quality service and coverage from your health plan that you expect and deserve.
Sincerely,
Paul Rainwater
Commissioner of Administration
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