Group Benefits will soon go broke if changes to its health insurance offerings aren’t made, Commissioner of Administration Kristy Nichols warned legislators Thursday.
“If we do not make the changes now the Office of Group Benefits will not have the money to pay for the health care of its members,” Nichols said.
But some legislators and insurance plan members said other options are available that won’t be as financially devastating to the 230,000 state employees, teachers, retirees and their dependents who are members of Group Benefits, especially retirees on fixed incomes, and time should be given to pursue those options.
“It’s an economic catastrophe for thousands of citizens of Louisiana who do not deserve this,” said Peggy Schwarz of Braithwaite.
Some blamed the Jindal administration for creating the crisis because of poor management and “reckless decisions.”
“We have created a problem we have put on the backs of our state workers” to solve, said state Rep. Kenny Havard, R-Jackson. “I don’t support Obamacare, but I don’t support Jindalcare either,” he said, referring to the federal health insurance overhaul.
He predicted there would be lawsuits because the changes were made without going through the approval process called for in state law.
The House Appropriations Committee took testimony all day Thursday about the pending changes in the health insurance packages and heard pleas for them to get involved.
“Please, please give us some help. We cannot continue in this vein,” said Diane Guillot of West Monroe, president of the Retired State Employees Association. “We have people who live on less than $500 a month.”
After the meeting, Nichols said through a spokeswoman that the administration would consider options suggested during the meeting, including a delay.
Under current plans, Group Benefits members will be offered more of a variety of health plans, and premium costs will remain the same. But members will be facing increased out-of-pocket expenses plus higher deductibles, co-pays, co-insurance and the like. The state and school boards pay 75 percent of the premiums for their employees and retirees. The change shifts some health plan costs to enrollees.
Group Benefits members must make a decision in October about what plan they want to go with. The policies would go into effect in January.
A little more than three years ago, Group Benefits’ reserves stood at more than $500 million. The account today stands at about $200 million, a drop that the administration and legislative fiscal advisors attribute to increased medical and pharmaceutical claims payments and an administration decision to reduce premiums as claims increased.
“If these changes are not made in January, we will have a fund balance of approximately $8 million” come the end of June 2015, Nichols told a crowded committee room.
“$8 million will last us approximately two weeks into July 2015,” she said.
Nichols painted the dire looming financial picture to a packed House committee hearing room crowd that included at least 60 legislators who are hearing from irate constituents about the Group Benefits overhaul, along with dozens of people who carry the insurance. Former Gov. Edwin W. Edwards sat with the public.
Nichols said if the changes aren’t used, the program will be left with either raising premiums by 37 percent for all members or immediately raising premiums by 25 percent then making changes in benefits worth $145 million.
Besides meeting Group Benefit member opposition, another factor arose this week complicating imposition of the changes. Attorney General Buddy Caldwell’s office issued an opinion concluding that Group Benefits did not go through the procedures required by state law to implement them.
Nichols said that the administration would soon advance emergency rule-making then follow up with the longer approval process outlined in the Administrative Procedures Act.
“This is a self-manufactured crisis you are now saying is an emergency,” said state Rep. John Bel Edwards, D-Amite, who sought Caldwell’s legal advice earlier this month. He suggested that the administration drop plans to adopt the rules on an emergency basis and go through the longer process, which requires public input and raises the potential for a legislative hearing. “The plan that comes out at the end is going to be better,” Edwards said.
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