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Did Rainwater simply forget to mention those “other” states with fully-funded health insurance programs?

May 2, 2011 by tomaswell

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, Health Care, House, Senate, Jobs, Legislature, Legislators, OGB, Office of Group Benefits, Retirement | 5 Comments »

Jindal finds way to motivate workers: State Employee Recognition Day is Wednesday, May 4 (2010?)

May 1, 2011 by tomaswell

You have to give it to Gov. Bobby Jindal: he never runs short of ways to insult state employees.

Time and again, he has shown his disdain, his utter contempt for state employees. His mantra of privatization of everything that moves in state government gives little or no consideration as to how it adversely affects state workers.

When he privatized the Office of Risk Management, there were employees with 20 or more years of service who are too young to qualify for retirement benefits and with the current job market so depressed, their prospects of finding meaningful employment are slim. Others who have worked only for the state and are of retirement age, do not qualify for social security or Medicare and are now faced with no medical coverage. Some of those have life-threatening illnesses.

Accordingly, when they lose their jobs, they not only lose their salaries, but their medical coverage as well. Of course they qualify to keep coverage under COBRA but the responsibility for 100 percent of the premiums falls to them and with no job, it’s rather difficult to keep the coverage.

But not to worry: Jindal has found yet one more way to display the extent of his hostility for Civil Service employees and the low esteem in which he holds state workers. It comes in the form of cruel irony that were the circumstances not so dire, it might be laughable.

Apparently it wasn’t enough to publish that nauseating campaign pamphlet four years ago in which he gushed on and on about his love for the state civil service workers. He was so kind as to remind us then that he had worked for the state and that his mother still did (and still does).

Now comes General Circular No. 2011-008 in which he designates May 4, 2011, as “State Employee Recognition Day.” The circular was actually issued by the Department of Civil Service, apparently because Jindal was too busy attending out of state fundraisers.

Turns out he couldn’t even do that right: While the heading correctly says May 4, 2011, the text of the edict proclaims May 4, 2010, as “State Employee Recognition Day in Louisiana.”

The circular is addressed to Heads of State Agencies and Human Resources Directors and reads thusly:

As a part of the nationwide celebration of Public Service Recognition Week (May 2-6), Governor Bobby Jindal has proclaimed Wednesday, May 4, 2010, as State Employee Recognition Day in Louisiana.

We encourage you to use this opportunity to recognize your employees and educate the public about the work state employees are doing to keep our citizens safe, protect our drinking water, provide medical care to the indigent, help abused children, maintain our roads and bridges, and so much more.

Don’t forget to ask your Human Resources Directors and Communications Directors to partner to effectively educate the public on the many quality services your employees deliver to our citizens. Tell the story of how they are making a difference in our communities.

For ideas on activities and community and media outreach projects, there are helpful resources for your review, such as NASPE’s “2010 NASPE (National Association of State Personnel Executives) Guide to State Employee Recognition Day” found at http://www.naspe.net.

One would think they would at least update last year’s circular to reference the 2011 NASPE guide.

Posted in Governor's Office, Health Care, ORM, Office of Risk Management, Politics, Transparency | 6 Comments »

Of water slides and state health plan comparisons

April 29, 2011 by tomaswell

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

Posted in Governor's Office, House, Senate, Legislature, Legislators, OGB, Office of Group Benefits, Politicians, Retirement, Transparency | 22 Comments »

New OGB game plan: placate but don’t help callers

April 28, 2011 by tomaswell

Representatives of the Office of Group Benefits (OGB) Customer Service Department have been instructed by the Division of Administration to be patronizing but not necessarily helpful or even supportive to callers concerned about the proposed sale of the agency.

An official memorandum, quoted verbatim below, instructs the OGB Customer Service reps to inform callers that “they have reached the right place,” and further directs them to repeat the same general promises that Commissioner of Administration Paul Rainwater made to the Senate Retirement Committee during Tuesday’s hearings.

Among those promises are pledges that would seem difficult, if not impossible to make with any certainty once OGB is taken over by a private entity. Those include assurances that members will continue to receive “quality service and coverage regardless of any potential sale,” the continuance of HMO and PPO health plans that will be “the same or better” than those presently offered, and that OGB’s reserve fund (the $500 million surplus) will continue to be used for its “dedicated purpose” to provide health coverage to state employees.

The memo instructs customer service personnel to allow callers to vent “briefly and reasonably,” but personnel are not to “suggest or recommend” that callers contact other agencies or people to voice their concerns.

Callers are to be referred to OGB’s “Latest News” section on the agency’s web page where, the memo says, OGB “will post additional info as it becomes available.”

We can only hope that the web updates will be more informative and forthcoming than was Rainwater at Tuesday’s Retirement Committee hearing.

Finally, calls from reporters or bloggers are to be referred to OGB communications.

Below is the full text of the memorandum:

O.G.B. Response to Calls from Plan Members about Privatization

The Division of Administration (DOA) wants OGB Customer Service to relay this info to plan members who call or write:

Commissioner of Administration Paul Rainwater wants OGB plan members to know that:

Plan members will continue to receive quality service and coverage regardless of any potential sale and privatization of OGB.

The Division of Administration plans to continue to provide HMO and PPO health plans with a benefit structure that is the same or better than the health plans OGB now offers.

OGB’s reserve fund will continue to be used for the dedicated purpose: to provide health coverage to state employees.

Refer plan members to the Latest News section of our website for more details if needed, which contains all the information now available, and tell them that’s where OGB will post additional info as it becomes available.

If they are calling to voice their concerns, let them know they have reached the right place. If they want to vent, allow them to do so (briefly and reasonably).

Plan members certainly have the right to call other agencies or people, but DOA cautions OGB employees not to suggest or recommend that they do so.

The Division of Administration (DOA) wants OGB employees to refer all media calls from reporters or bloggers to OGB Communications.

Posted in Governor's Office, Health Care, Transparency | 8 Comments »

Bobby’s boys grilled on OGB proposed sale during Senate Retirement Committee hearing

April 27, 2011 by tomaswell

Gov. Bobby Jindal’s attempt to sell the Louisiana Office of Group Benefits (OGB) appears to have been sidetracked for at least 60 days, a Senate committee was told in Baton Rouge on Tuesday.

Commissioner of Administration Paul Rainwater attributed the delay to the necessity of drafting a second request for proposal after negotiations with Wall Street banking firm Goldman Sachs bogged down.

A parade of current and former state employees, including one active and one retired state district judge made known their opposition to the proposed sale of OGB to the Senate Retirement Committee here Tuesday.

The committee, chaired by State Sen. A.D. “Butch” Gautreaux (D-Morgan City), heard testimony for more than two hours and, as Gautreaux noted on two occasions, no one present asked to speak in favor of the sale of the state agency that provides medical coverage for 220,000 active and retired state employees and their dependents.

Rainwater, Division of Administration spokesman Dirk Thibodeaux, and newly-appointed OGB CEO Scott Kipper attempted to explain the rationale behind Gov. Bobby Jindal’s desire to place OGB on the auction block in an attempt to garner up-front money to help close a projected $1.6 billion for Fiscal 2011-12.

Members of the committee, along with several state representatives who sat in on the proceedings peppered Rainwater with questions about promises that the sale would not adversely affect OGB members. Those questions were met with vague, indecisive responses that frustrated Gautreaux and at least one member of the House.

State Rep. Rogers Pope (R-Denham Springs) at one point referenced a popular television show to express his frustration at Rainwater’s evasive answers.

Pope, a retired school administrator, is a member of OGB, and asked at one point, “Did I not hear it said here this morning by Mr. Kipper that OGB has a very low administrative cost, like 3.5 percent?”

“That does not mean a private provider cannot do it better,” Rainwater said, adding that the purchase contract would likely stipulate a limit on premiums for five years.

“What happens after five years?” Pope asked. “You and I won’t be here and we both know that. I also heard you say that this has never been done before. Is this (the proposed sale) a trial balloon?”

“We won’t know that until we sit down to negotiate a contract,” Rainwater said.

“Well, if there is no supporting data, how did you analyze this to reach your conclusions?”

“We just think it makes sense to look at something different and more efficient,” Rainwater said.

“You need to be on Dancing With the Stars,” Pope quipped.

State Rep. Hollis Downs also sat in on the proceedings and asked a number of insurance-related, technical questions.

Both Rainwater and Thibodeaux conceded that a private provider would probably have administrative costs of at least 10 to 15 percent because of the need to realize a profit on its investment as well as tax liabilities not faced by OGB.

Rainwater said on at least three separate occasions that there would be “no negative impact on those covered” by OGB but made no mention of any possible impact on any future state employees not now covered.

He said that Louisiana and Utah are the only two states in the U.S. that have their own state administered PPO.

Rainwater said there has been much misinformation bantered about in recent weeks that reports took on the flavor of “a John Grisham novel.” He said the confusion may have cost the administration its opportunity to sale OGB and to involve smaller companies in the process. He denied that Wall Street banking firm Goldman Sachs had any input in the drafting of the recent request for proposals for a financial advisor to do an assessment of OGB and to market the agency to potential buyers.

“Unfortunately, we did not finalize the contract with Goldman Sachs. We have since notified Goldman Sachs that we will not issue a contract because we could not agree on terms,” he said.

Capitol News Service reported last week that it was Goldman Sachs that pulled out of negotiations after the state refused to indemnify Goldman Sachs from any litigation stemming from the sale of OGB.

Gautreaux and fellow Retirement Committee member Sen. Ben Nevers (D-Bogalusa) tag-teamed Rainwater in attempts to learn how the administration could guarantee that state workers would be protected from increased premiums and reduced benefits.

Efforts to elicit guarantees met with only general, vague responses. “We would only negotiate a contract that would favor state employees,” Rainwater said at one point. “We’re not going to create a plan that causes a spike in premiums.”

Rainwater also said there was a “high probability” for reduced claim costs. He said that while 149 OGB jobs would be eliminated, the administration was trying to be creative in its efforts to protect employees.

“There’s nothing creative about selling something,” Gautreaux said. “The state is in the education business and we’re in the hospital business.”

“We’re addressing education with charter schools in New Orleans,” Rainwater said.

“Your belief is not universal as to any improvement in education with your charter schools,” Gautreaux interrupted.

Gautreaux also revealed his growing irritation at his inability to elicit answers to specific questions when Brady, Rainwater, and Kipper repeatedly said they did not have information at their fingertips but would get back to him with it.

“Each of you has a letter from me that I sent notifying you of this hearing. In that letter, I instructed each of you to have this information available today and to have someone here who could address these questions,” he said. “Did you bring anyone with you who has this information?

When told no one was there, he then told Brady, “I want you to get up, go out in that hallway, and call someone who has the answers to these questions. And I want you to get them over here now.”

At one point in the questioning, Rainwater told the committee, “It’s clear in the statute that the Division of Administration has the authority to move forward.”

The law creating OGB does provide that the agency may be sold by the governor without legislative concurrence. But to execute the sale, DOA would need to contract with a financial advisor to assess the value of OGB in order to attract an accurate bid on its purchase.

Any contract with a financial advisor, however, would need legislative concurrence, a point not lost on committee members.

Also testifying before the committee were Judge Bob Morrison of the 21st Judicial District (Livingston, St. Helena, and Tangipahoa), representing the State District Judges Association, retired Judge Ronnie Cox, vice president of the Retired Judges Association, Fred Foret or the Retired State Employees Association of Louisiana, former OGB CEO Tommy Teague, his wife, Melody Teague, and James Taylor, president of the Retired Teachers Association.

Cox said the retired judges were unanimous in their opposition to the sale of OGB because OGB pays claims within 48 hours and the judges are satisfied with the service provided by the agency.

Foret pointed out that Teague took over OGB when it had a $100 million deficit and took it to its current $520 million surplus. “He must have been doing something right,” he said, “so they fired him.”

Teague was fired from his position on April 15. He said no reason was given him by Brady when he was terminated.

Taylor, whose organization has 22,000 members, said he first became aware of the intentions of the administration to sell OGB last fall “before it was even an issue when I began getting phone calls from Ruston retirees.”

He said his membership “is satisfied that this effort is not based on sound judgment. My members are not interested in efficiency if it’s not effective.”

He said a private company would necessarily be driven by profit. “Why change on of the most effective operations in state government? Some of us are too old to buy hope,” he said. “They tell us they’re going to take care of by ‘writing it into the contract.’ I know better than that. I’m also an attorney and I’ve read too many contracts to fall for that line.”

“What’s the rush?” asked Morrison. “The money from the sale is not even in the administration’s proposed budget, so it’s not going to help this year. Title 42.854(C) says in clear terms that money from OGB may not be used for the general fund. That’s the law.

“Now comes HB-32 which would direct the state treasurer to divert any OGB surplus into the general fund. If you amend HB-32 to delete those four lines, we will have time to study this more thoroughly.”

As testimony wound down, Nevers said he hoped there would be “full legislative debate” before executing the proposed sale.

Nevers asked Rainwater when a new RFP would be issued.

Brady said a final draft was expected “within a few days.”

“Did you have any consultants working on the draft?”

“No, it’s being done in-house,” Rainwater said.

“When will it be available?”

“Next week.”

At that point, Gautreaux jumped into the discussion. “What part of this process don’t you want known?” he asked. “What are you keeping from us? What’s the secret?”

“We will do this under Office of Group Benefits rules,” Rainwater answered.

“What part of this RFP will have legislative oversight?” Gautreaux then asked.

“What RFP has ever had legislative oversight?” Rainwater said.

“Thank you,” said Gautreaux.

When Rainwater tried to say that he did not know of a single state that does not provide benefits, Rep. Jack Montoucet (D-Crowley) shot back, “Wisconsin. Ohio,” in apparent reference to controversies that have swirled around employee benefits in those states in recent months.

“You’re going to do a study after you do the RFP? Maybe you don’t need an RFP to see that you have $500 million in the bank. You don’t need an RFP to know that OGB has been doing a good job,” Montoucet added.

Gautreaux expressed his skepticism of Rainwater’s promise to protect OGB members in any contract negotiated. “I’ve looked at a few contracts in my day. The state’s contract with the Saints is a good example of the state’s ability to negotiate,” he said of the contract that obligates the state to pay the Saints millions of dollars per year to keep them in New Orleans and the state’s questionable contract to lease office space from Saints owner Tom Benson at rentals considerably higher than agencies had been paying.

“The way I see it,” Gautreaux said, “we’re gonna take the best run agency in the state and sell it and fire the man who made it the best run agency. We’re moving forward with moving forward, as near as I can see it.

‘I find it curious that the CEO who did such a great job is now on the street. I am at a lever of extreme dissatisfaction. This is not our last meeting on this,” he said.

“You talk about transparency but I haven’t seen that. The public is not satisfied with this proposal. There is no public support for what you’re doing. We are going to turn the fire up even more until we get to the bottom of this,” he said.

Posted in Governor's Office, House, Senate, Legislature, Legislators, OGB, Office of Group Benefits, Teague | 8 Comments »

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