A confidential analysis commissioned by the Jindal administration on a state employee health plan concluded that premiums would increase under privatization.
The Division of Administration hired New Orleans-based Chaffe and Associates to determine the “fair market value” of the Office of Group Benefits.
Gov. Bobby Jindal is considering hiring a private company to manage one of the office’s health plans. The governor has said it would be cheaper for the private sector to oversee the plan.
The Office of Group Benefits provides health and life insurance to about a quarter-million current and retired state workers and their dependents.
Legislators critical of the privatization idea predicted premium costs would rise.
Chaffe also made that assumption, concluding that a private company would raise premiums to maintain a pretax operating margin of 4.5 to 7 percent.
The Jindal administration has said it will not support a spike in premiums.
Chaffe noted that the Office of Group Benefits’ current goal “is to manage a break-even status” and that the agency is generating surpluses through lower-than-expected expenses and cost-saving measures.
Chaffe estimated that the purchase price for OGB’s operations would range from $146 million to $217 million.
The Jindal administration gave the report to the Senate and Governmental Affairs Committee last week under the order of a legislative subpoena.
The Senate refused to publicly release the report, saying it was part of a legislative investigation into the possible privatization of the Office of Group Benefits.
A member of the Senate provided the report to The Advocate.
Commissioner of Administration Paul Rainwater is scheduled to appear before the committee Wednesday to testify about the Chaffe analysis.
Drama has surrounded the possible privatization of the office’s preferred provider organization.
A PPO is a group of doctors, hospitals and others providing health care to subscribers at reduced rates.
The agency’s PPO insures more than 60,000 people.
The Jindal administration fired the Office of Group Benefits’ CEO, Tommy Teague, earlier this year amid the privatization talk.
Teague’s successor, Scott Kipper, resigned earlier this month after a rocky confirmation hearing at the State Capitol. One of the contentious issues in that hearing was why the Jindal administration was keeping the Chaffe report confidential.