Under legislative pressure, the Jindal administration Friday revamped its plan to stabilize the finances of the state health insurance program that covers a quarter million government workers and their families.
The new plan outlined to the Louisiana Legislature’s money committees reduces out-of-pocket expenses in exchange for higher premiums. But the premiums could go up nearly 11 percent beginning July 1.
The Office of Group Benefits has about 230,000 members who are state employees, teachers, retirees, and their dependents.
The revisions come with the annual insurance enrollment period underway and as members are choosing among a variety of new plan options that shifted more of the program costs to them. A new administrative approval process, which requires public comments and hearings, is beginning for the changes. The enrollment period will be extended a week until Dec. 7.
Retirees will see the greatest boon from the changes, but active employees, who were facing potentially major increases in out-of-pocket costs for their health care, also will receive some relief. In addition, there’s a new coverage level for an individual plus one, such as a husband and wife, with a premium less costly than a family plan.
The new plan also means extra costs for state government and local school boards, which generally pay 75 percent of premiums. Some legislators were particularly concerned about the $38.3 million extra that financially strapped school boards would have to come up with.
Louisiana House Appropriations Committee Chairman Jim Fannin, R-Jonesboro, said the changes address problems legislators heard from their constituents. Fannin said many told legislators they would prefer a premium increase instead of shifting more program costs to members through deductibles and the like.
“This is the compromise that gets us there,” Fannin said.
“I am very impressed with the administration this time,” said state Rep. Katrina Jackson, D-Monroe, a frequent administration critic.
The administration pursued the revamp of the insurance plan offerings to help shore up Group Benefits finances. A $500 million-plus reserve just over two years ago now stands at less than half as medical claims outpaced revenues coming in. During the time period, the administration reduced premiums. The plan shifted more of the program costs to OGB members by increasing — sometimes substantially — deductibles, co-pays and out-of-pocket maximums.
Legislators’ offices were slammed with phone calls and emails from irate employees who blamed the Jindal administration for the program’s financial situation.
On Friday, Commissioner of Administration Kristy Nichols thanked legislators who she said “educated us about the impact of changes on OGB members and pushed us to continue to make decisions in the best interest of your constituents.”
The changes explained by Nichols include:
- Rolling back deductibles and out-of-pocket maximums to 2014 levels for retirees on three health insurance plans.
- Reducing deductibles and out-of-pocket maximums by 10 to 20 percent on three of the plans for active employees.
- Adding a new coverage level for an individual plus one to all plans at a premium less costly than a family plan.
“The bulk of the concerns we have heard will be addressed,” Nichols said.
The 10.8 percent premium increase translates into $36 million for members, $55.7 million for state government and $38.3 million for school boards.
State Rep. J. Rogers Pope, R-Denham Springs, said he wanted a breakdown of costs by school district. He and others said the Minimum Foundation Program that governs public school funding needs to be adjusted to include funds for the increased premium.
Nichols said the administration would have to look at the situation as the new state budget for the fiscal year that starts July 1, 2015, is developed.
The Group Benefits revisions marked the second time in a week the administration altered its plans for improving the program finances. Earlier in the week, Group Benefits announced it was refunding $4.8 million in out-of-pocket expenses its members had incurred as a result of changes that had not gone through the legal approval process. Now, the medical and pharmacy plan alterations go into effect Sept. 30 — the date emergency rules were published implementing them.
After the meeting, Louisiana Federation of Teachers lobbyist Mary Patricia Wray said if the money isn’t appropriated it would be “another unfunded mandate.”
Retired State Employees Association Executive Director Frank Jobert said Senate Retirement Committee Chairman Elbert Guillory, R-Opelousas, has said he will file legislation providing retirees $50 more a month in their retirement checks to cover the extra insurance expense. Members of all four statewide retirement systems would be covered.