In response to fears voiced earlier this week by several Louisiana legislators, the Jindal administration’s top money manager insists the state’s health insurance program won’t go broke.
Commissioner of Administration Kristy Nichols said a planned increase in premiums, a new employee wellness program and benefit changes will help stabilize Office of Group Benefits finances by year’s end. The plan pays for the health needs of about 250,000 state employees and retirees as well as their dependents.
“There is absolutely no way that we would not do everything we need to do to ensure not only the solvency but the success of OGB (the Office of Group Benefits) for its members,” Nichols said.
Legislators have grown increasingly concerned about Group Benefits finances as costs keep eating into more and more of its reserves. Many of the complaints have arisen since the Jindal administration privatized the management of a program that largely was run by state government employees.
The Legislature’s fiscal advisors say a reserve fund, which stood at more than $500 million a little more than two years ago when privatization began, could drop to $55 million based on current spending and revenues.
A cut in the premiums is responsible for some of the decline of reserves.
In an interview, Nichols said a 5 percent increase in premium costs would begin July 1 causing the fund balance to be $113.9 million by year’s end.
The fund balance is expected to grow to $163 million by year’s end when anticipated savings from Group Benefits program changes are included, she said.
Insurance plans are: being rewritten to require pre-authorization for such services as MRIs and CAT scans; standardizing benefit limits; and encouraging the use of generic drugs. Part of that savings will help boost the 2014 year-end bottom line.
Nichols said the Office of Group Benefits working with the contracted administrator, Blue Cross and Blue Shield of Louisiana, to analyze higher claims costs and what can be done to curb those costs.
Nearly two-thirds of the members in the state health insurance plan are over age 50.
“That population is more prone to chronic diseases in general,” Nichols said. “There’s a higher level of obesity and twice the level of diabetes than the general population.”