Louisiana Governor Bobby Jindal’s plan to privatize state workers’ health insurance continues to hit snags as the end of their legislative session draws closer. The administration’s initially quiet efforts have attracted national attention and heavy criticism in the past few months.
The controversy began making headlines in April, when the CEO of the Office of Group Benefits that manages state workers’ health insurance, Tommy Teague, was ousted for not going along with the privatization push. Then, Jindal’s handpicked replacement Scott Kipper resigned days after a stormy confirmation hearing, in which state senators accused Kipper of withholding information. Kipper had tiptoed around the existence of the “Chaffe report”, a financial analysis of OGB that critics say would indicate the privatization effort to be unfavorable. Last week, a Louisiana State Senate panel issued a rare legislative subpoena, giving the Jindal administration 24 hours to turn over the report. The administration did hand it over the night before the subpoena was issued, but asked for the document to be kept secret, and refused to provide a copy to the Associated Press. The Louisiana Senate also called it confidential after the governor’s office expressed concerns about its release.
Jindal’s plans to privatize the OGB would affect about 250,000 state public employees, retirees, and their dependents. His administration says hiring an outside contractor to run the program would save taxpayers money by eliminating about 150 jobs and generating a recurring savings of over $10 million, in addition to $150 million in up front cash. However, opponents say the OGB does not need fixing, especially since it already has a surplus of a half billion dollars, and that long-term, it would cost more taxpayers money in the form of reduced benefits and increased premiums. Critics, including Louisiana democrats, also accuse Jindal of attempting to raid the $500 million surplus money, to help plug the state’s $1.6 billion budget hole.
“Bobby Jindal’s plan to sell the Office of Group Benefits could jeopardize the quality of health care received by more than 250,000 active and retired Louisiana workers and their dependents… OGB does not cost taxpayers a dime to run and selling it will not save the state of Louisiana any money.” Louisiana Democratic Party Chairman Claude “Buddy” Leach, Jr. said in a statement. “The only folks likely to benefit from the sale of OGB are the big Wall Street corporations like Goldman Sachs who want to turn it into a profit making venture and Bobby Jindal, who would love to get his hands on the office’s half billion dollar reserve fund.”
Indeed, an employee of the state’s Office of Risk Management reported that Goldman Sachs helped write the OGB’s Request for Proposals, and offered the only bid for the advisory role. The employee also said that the surplus would be reportedly split between the state and the purchaser. A new state bill also seems to override Louisiana law that would prohibit the OGB’s surplus from being used by another department in the administration.
Kipper’s resignation is effective June 24, a day after Louisiana’s regular legislative session ends, circumventing the need for a confirmation vote in the state Senate. His resignation also falls after June 15, when the OGB is scheduled to choose the third-party that would help with privatization.