BATON ROUGE, La. (AP) — The Louisiana attorney general’s office said Gov. Bobby Jindal’s plan to hire a private company to manage a state employee health insurance plan requires legislative approval, a position that is at odds with the administration.
In a legal opinion issued Friday, Assistant Attorney General Michael Vallan said the contract between the Office of Group Benefits and Blue Cross/Blue Shield needs the backing of the House and Senate budget committees before it can take effect.
“The Legislature has expressed its desire that contracts governing the provision of basic health care services, as well as certain other related contracts, be subject to review and final approval by the Legislature,” Vallan wrote, citing a law that requires certain OGB contracts to get legislative approval.
The governor’s Division of Administration had said the outsourcing plan at issue didn’t fall under that requirement. The office didn’t immediately respond to a request for comment Friday.
Jindal plans to hire 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 is set to take effect Jan. 1.
The cost-cutting move will eliminate 177 full-time government jobs.
The attorney general’s opinion, which does not have the force of law, was issued in response to a request from Rep. Katrina Jackson, D-Monroe, who sits on the House Appropriations Committee and disagrees with the privatization plan.
In a statement, Jackson said she hopes “all of my fellow members will join with me and others in not approving this proposal.”
The Office of Group Benefits provides health insurance and life insurance to about 255,000 current state workers, retirees and their dependents.
The state’s Civil Service Commission narrowly agreed in August to the new contractual arrangement with Blue Cross/Blue Shield, which already runs a larger insurance plan for state workers in a contract with the group benefits office. The administration said that was the final approval needed.
Blue Cross will manage claims reviews and processing, disease management, substance abuse and mental health services for people who are covered under the insurance plan, called a PPO. The company will be paid more than $11 million for the first year of the new outsourcing arrangement.
The Jindal administration estimates 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.
Opponents of the Blue Cross contract questioned the savings estimates, objected to the layoffs and said the current group benefits leadership runs the health plan efficiently.
