The Gov. Bobby Jindal administration and Blue Cross-Blue Shield are putting a classic spin job on upcoming changes in the way 230,000 state workers, retirees and their families are going to receive health care. What those insured people are really going to get are higher premiums or higher deductibles and more restrictions on medical procedures they might need.
Blue Cross-Blue Shield took over complete administration of the Office of Group Benefits on Jan. 1, 2013. It is another one of Jindal’s privatization plans. The company inherited reserves that in 2011 totaled $500 million, but that is expected to be down to $55 million by the end of the year. The money was used to pay medical claims.
The Jindal administration raised health care premiums twice in 2011, which the OGB board said wasn’t necessary because of the reserve funds. Critics called it an effort to make privatization look more attractive to potential buyers, which was being considered at the time. Then, the administration surprisingly cut premiums by 7 percent on July 1, 2012 . That move was considered an effort to make privatization more acceptable to those 230,000 people served by OGB.
The administration eventually decided to hire someone to manage OGB, and Blue Cross-Blue Shield got the job at the beginning of last year. Just over 17 months later, that reserve fund is almost gone.
Meanwhile, the governor paid a company $5 million to find ways for the state to save money. The company came up with $2.7 billion in suggested savings, and $1 billion (nearly one-third) of that is supposed to come from changes in OGB health care benefits.
A 5 percent premium rate increase that will take effect July 1 is expected to raise nearly $58 million. Changes in medical and pharmacy benefits beginning Aug. 1 will raise nearly $150 million by June 30, 2015.
The Advocate reports that prior authorization will be required for things like inpatient hospital admission, cardiac rehabilitation, genetic testing, CT scans, home health care, hospice care, MRIs, outpatient pain rehabilitation and physical and occupational therapy. There will be limits on the number of days for care in a skilled nursing facility and limitations on home health and hospice care. There will also be incentives for using generic drugs.
Size all of that up any way you want, but it still adds up to a private company rather than a doctor deciding what kind of health care you will receive.
Susan West, who heads the OGB office, calls it “a delicate balancing act between plan design and rates.” She also touts the benefits of a consumer-driven health plan that offers lower premiums in exchange for higher deductibles. However, she admits that a consumer-driven plan that began in July of 2010 has fewer than 10 percent enrolled.
“I don’t think people understand the benefit of those plans,” she told The Advocate. “It’s not as popular as we think it will be.”
Notice the optimistic tone, which characterizes the Jindal administration’s approach to anything controversial. In other words, we think you are going to love this plan. Time will tell how that actually works out, but the almost-depleted reserve fund speaks volumes for the company’s lack of financial success so far.
Frank Jobert, executive director of the Retired State Employees Association, touched on that very point. He said OGB wouldn’t need a rate increase or benefit changes “if they had not depleted the reserve fund.”
The Jindal administration’s goal in giving Blue Cross-Blue Shield control of OGB was to cut the 300-employee workforce and save the state $10 million a year. Both are worthwhile pursuits, but the tougher rules and higher premiums are falling on the backs of the 230,000 state workers, retirees and their families. The money to shore up OGB is going to come out of their pockets, and it will be much more than the $10 million in annual savings to the state.
In the Public Interest, a resource center on privatization and responsible contracting, said poorly conceived and constructed contracts have resulted in cost increases, diminished service quality and reduced access to vital services. The experience at OGB appears to fit that description perfectly.
The resource center in February talked about Louisiana being one of 12 states that were moving to reign in reckless outsourcing of government work. Unfortunately, the Jindal administration killed the effort in this state, according to the author of a bill aimed at evaluating privatization efforts.
Rep. Kenny Havard, R-Jackson, filed House Bill 128 and Rep. Brett Geymann, R-Moss Bluff, was one of 19 co-sponsors. Here was the goal of the legislation:
“The legislature hereby finds and declares that the using of private contractors to provide public services formerly provided by state employees needs to be extensively reviewed to ensure that it promotes best practices, ensures that citizens of the state receive high-quality public services at low cost, and is in the overall best interest of the state and its citizens,” the bill said.
Havard’s measure was approved 20-0 by the House Appropriations Committee and 5-0 by the House Governmental Affairs Committee. It passed the full House 85-0, but was never heard by the Jindal-controlled Senate Finance Committee.
If privatization is so great, why can’t it stand up to public scrutiny?