The state’s Civil Service Commission narrowly agreed Wednesday to the Jindal administration’s hiring of a private company to manage a Louisiana state employee health insurance plan, a cost-cutting move that will eliminate 177 full-time government jobs.
The panel voted 3-2 to allow Blue Cross/Blue Shield to run an insurance plan in the Office of Group Benefits that covers more than 62,000 employees, retirees and their dependents. The outsourcing will take effect Jan. 1.
Under the contracting arrangement, Blue Cross will manage claims reviews and processing, disease management, substance abuse and mental health services for the people who are covered under the insurance plan, called a PPO.
Gov. Bobby Jindal’s administration said the move will save as much as $20 million annually, about $9 million in state savings and the rest split among local school boards and state employees.
The savings are largely tied to job cuts that will eliminate more than half the group benefits office staff and the closure of satellite offices around the state.
Of the 177 jobs slated to disappear, 121 are currently filled, though half of those employees are eligible to retire, according to Charles Calvi, CEO of the Office of Group Benefits. Another 59 part-time positions also will be eliminated.
Ray Stockstill, deputy commissioner of Jindal’s Division of Administration, called the contracting arrangement a “more economical way to do the services.” He said people in the insurance plan will get new, discounted services offered by Blue Cross and more customer service locations.
The Office of Group Benefits provides health insurance and life insurance to about 255,000 current state workers, retirees and their dependents.
Blue Cross will be paid more than $11 million for the first year of the new outsourcing arrangement. It already runs a larger insurance plan for state workers in a contract with the group benefits office.
Opponents of the Blue Cross contract Wednesday questioned the savings estimates, objected to the layoffs and said the current administration runs the health plan efficiently.
“This office will be dismantled. There will be no safety net,” said Frank Jobert, executive director of the Retired State Employees Association of Louisiana.
Jobert said group benefits’ administrative costs for the insurance plan to be run by Blue Cross are less than 5 percent and claims are processed in an average of two to three days. He said the private company couldn’t improve upon that, and he said employees likely will face rate increases in later years because Blue Cross will need to make a profit.
A lawyer representing dozens of group benefits’ workers, J. Arthur Smith III, said the Jindal administration gave too little background information to support the savings estimates presented to the Civil Service Commission.
“These numbers are basically way out of kilter. They’ve not been arrived at through any accounting processes,” he said.
Smith said the proposal was politically motivated, because Louisiana’s Republican governor has been a strong national critic of government-run health insurance.
Civil Service Commission member Scott Hughes said Blue Cross appears to effectively run another insurance plan for state workers and retirees.
“I’ve not heard any complaints about it,” he said.
Hughes, commission member John McLure and commission chairman David Duplantier voted to allow the outsourcing. Commission members Curtis “Pete” Fremin and Sidney Tobias opposed it. Two members were absent.