The Jindal administration and the Louisiana Legislature’s fiscal advisers reported Wednesday that rising health insurance claims and a 9 percent reduction in premiums were responsible for the Office of Group Benefits reserves dropping nearly $300 million over a three-year period.
The reports were released to counter allegations in blogs and among some state workers that Gov. Bobby Jindal and his staff balanced the state budget by raiding state insurance program reserves.
Opponents of the Group Benefits overhaul contend the administration created the financial problem that it is now using to justify changes that will increase costs — some substantially — for the roughly 230,000 state employees, teachers, retirees and their dependents who receive their health coverage from the Office of Group Benefits.
While insurance premiums remain the same, deductibles, co-pays, coinsurance and other out-of-pocket expenses might increase.
The changes are expected to come up during a legislative committee hearing Thursday, which is expected to be stormy.
Louisiana Attorney General Buddy Caldwell wrote Tuesday that the Jindal administration erred by not going through procedures set out in law for approval of the new plans and benefits.
Commissioner of Administration Kristy Nichols said the administration disagreed with the attorney general’s opinion but has begun announcing the schedule of benefits through the procedures Caldwell cited.
Nichols office released a “Fact vs. Myth” sheet Wednesday that said health and pharmacy claims payments were responsible for 81 percent of the decline in what once was a healthy $500 million-plus reserve.
The rest occurred because of a nearly 9 percent reduction in premiums benefiting Group Benefits members and of which state government pays 75 percent of cost for employees. The reduction in state expenses provided some budget relief.
“No money from OGB’s budget has ever been used to fund anything but OGB expenses,” according to the fact sheet.
The administration wrote that Group Benefits had too much money in the reserve account: 325 percent more money than actuarially necessary. So, “It used the excess funds to offset the rising cost of care for members and shield them from much of the increase in cost they would have otherwise seen.
“Only $18.4 million was saved by state agencies within the state general fund from what they had previously contributed to the fund balance simply by reducing the premiums members and employers pay,” according to the “Fact vs. Myth” sheet.
The Fiscal Office report, drafted by analyst Travis McIlwain, said the reserves dropped by $292.4 million from the end of fiscal year 2011 to the end of fiscal year 2014.
McIlwain attributed $183.9 million, or 63 percent, of the reduction to medical and pharmacy claims, and $100.9 million, or 34 percent, to the premium decreases. The other $7.6 million, or 3 percent, was in a general category of “other expenditures.”