Jindal continues with plan to privatize state employee insurance plan; report shows it would increase costs
Well, duh. Of course it would increase cost. The following is taken from a press release issued by the Retired State Employees Association of Louisiana, which opposes the plan. Their assessment of the situation is right on target.
This agency operates on a “break-even” status, requiring a 3.2% in administrative costs, much lower than the estimated 4.5% to 7% operating margin that would result if the program is privatized.
This plan would not save the state one red cent.
This is in response to the recent release of the “confidential” Chaffe and Associates, Inc., Fair Market Valuation of the Operations of the Office of Group Benefits (Insurance), reported throughout various Louisiana media sources.
The Chaffe report concludes that a private insurance company would raise premiums tto maintain a 4.5 to 7 percent pre-tax operating margin. The current OGB self-insurance business model’s goal is to manage a “break-even” status. It stands to reason and common sense that any private insurer would have to recoup income taxes, cover their business overhead, make a profit for their shareholders and possibly pay dividends to those shareholders. The end result is higher insurance premiums for the State of Louisiana taxpayers (that pay a portion of the employees’/retirees’ premiums), as well as, higher insurance premiums for the members and their dependents of OGB insurance program.
The Retired State Employees Association of Louisiana (RSEA) Board of Directors is genuinely concerned about the future of the Office of Group Benefits (OGB) Program. It has been widely reported that there is an effort on the part of the Jindal administration to sell and/or privatize all or a portion of OGB, particularly the Preferred Provider Organization (PPO). This is of grave concern to our state employees and state retirees!
The RSEA has joined the retired teachers association, the judges association and the OGB Board in resolving to oppose the sale or privatization of the Office of Group Benefits.
OGB currently administers the health insurance program for over 250,000 state employees/retirees, retired and active teachers, judges, other governmental employees and their dependents. OGB operates with a 3.2% administrative cost, employs about 300 employees with “self-generated” funds, and has accumulated over $510 million in plan reserves due to sound administrative practices. Additionally, OGB has exhibited a 2-3 day claims processing time for member claims. Furthermore, many current and former state employees and retirees are not eligible for Medicare coverage, since they do not participate in the Social Security Program. They rely exclusively on OGB plans for their coverage and are possibly to be left out of any private health care plan due to their high risk and medical condition. Are they to become Medicaid patients?