The financial operations of the Louisiana Office of Group Benefits would get independent oversight under legislation that cleared its first legislative hurdle Monday.
The legislation comes in reaction to the Jindal administration’s handling of the health insurance program for about 230,000 state employees, teachers, retirees and their dependents. The administration has been hit with a state district court lawsuit alleging mismanagement.
A $500 million-plus reserve shrunk to less than half in just over two years. During the time period, the administration reduced premiums by nearly 10 percent as medical claims outpaced revenues coming in. The premium reduction cut the amount of money state government had to appropriate as its share of costs as the Jindal administration struggled with state budget balancing.
With fiscal disaster looming, the administration revamped the program, shifting more costs to Office of Group Benefits members. Now double-digit premium increases are hitting plan members.
The House Appropriations Committee approved legislation that would create a three-person panel that would evaluate actuarial recommendations for OGB insurance plan rate adjustments. The panel’s membership would be the commissioner of insurance, the state treasurer and the legislative auditor or their designees. The insurance commissioner’s office has an health care actuary. The panel could approve or reject the recommendation under House Bill 370.
“It’s to ensure that the rate we are setting, that rate would be one that does not undercharge nor overcharge in order to generate unnecessary revenues,” said the bill’s lead sponsor, state Rep. Chris Broadwater, R-Hammond.
Rep. Rob Shadoin, R-Ruston, said the aim of the measure is to “minimize the chance” of what’s happened occurring in the future.
The solvency and sound financial operation of the program is important to the OGB members as well as the state. State government and local school boards, in the case of teachers, pay up to 75 percent of the premium costs.
The legislation provides a mechanism where OGB enrollees and the public can be assured that actions are occurring based on actuarial recommendations, said Rep. John Bel Edwards, D-Amite. Edwards said the administration assured that its actions were based on actuarial guidance but legislators never got proof.
Commissioner of Administration Kristy Nichols said she understands the intent of the legislation is to have a qualified actuary validate the premium rate.
“I’m not opposed to that,” she said. “I question the way it’s structured.”
Nichols said she did not see how the three-person panel is qualified to make actuarial decisions. She suggested instead that the OGB’s actuary come to the legislative money panels with a recommendation before any rate increase is approved by the administration.
HB370 had the support of the Public Affairs Research Council and the Retired State Employees Association.
“We are creating a more open government,” said PAR President Robert Travis Scott.
“This gives us another level of oversight, someone looking at it from an independent perspective that gives us a comfort level,” said RSEA legislative director Frank Jobert.