Just how did the state’s health insurance program get into its current shaky financial condition?

Mismanagement by Gov. Bobby Jindal’s administration is a recurring theme among critics. They repeatedly note that a healthy $500 million-plus reserve fund not quite three years ago now sits at just over $200 million and it’s eroding more each month.

Jindal’s Commissioner of Administration Kristy Nichols and the state Office of Group Benefits officials blame the situation, in large part, on rising medical and pharmacy claims of the program’s 230,000 state employees, teachers, retirees and their dependents. Annual revenues simply don’t cover those costs, leading to the erosion of reserves.

At the same time, the administration lowered insurance premiums for two consecutive years — by a total of nearly 9 percent — so less money was coming in to pay those escalating claims.

Nichols said actuaries advised that the reserve account had too much money. So, the Jindal folks decided to reduce premiums. It gave Group Benefits members a break, but it also helped the administration, since the state pays 75 percent of the premium for state employees and most of the retirees. That freed up money in the state budget for other purposes.

Now, the administration is moving to “stabilize” the situation since reserves are evaporating.

Effective July 1, insurance premiums went up 5 percent. There have been recent changes, such as prior authorization of certain procedures, and a stronger push toward use of generic drugs. And the Group Benefits program is getting an overhaul, which brings more out-of-pocket expenses for members who want to keep insurance policies equivalent to what they have today. If the changes aren’t made, the situation will become more dire, Nichols warns.

The outcry from policyholders is not surprising, neither is the finger pointing at Jindal.

But it’s what happens when decision-making is vested in one entity — the governor’s commissioner of administration — and there’s been no transparency or legitimate oversight — legislative or otherwise — of the goings-on.

Sure, there’s a Group Benefits advisory board comprised of Jindal appointees and state employee, teacher and retiree representatives. But it did not meet for nearly 18 months as key decisions were being made. Board vacancies caused problems in getting a majority to show up — quorums are required to conduct business — and Jindal’s executive department heads were slow in getting replacements.

Legislators just recently picked up on the magnitude of what’s happened and questioning how the administration made its decisions. They didn’t question when Group Benefits decreased premiums and freed up budget dollars, never questioning the decision or its wisdom.

“You have to have someone watching,” said former state Rep. V.J. Bella, who headed a Group Benefits legislative task force years ago.

Back then, Bella’s group recommended, and the Legislature approved, formation of a panel that included a cross-section of Group Benefits enrollees, governor’s appointees and legislators that had a hand in the decisions made. “They had a fiduciary responsibility to represent the people just like (state) retirement boards,” said Bella. He said that led to better decision-making, devoid of politics.

That panel today is advisory.

“Certainly, if you have a 13-member board or thereabout and a number elected by the members in the group, then certainly all parties are going to be represented. There’s going to be open discussion about rates, about benefit structure ... It’s never a rubber stamp,” said Tommy Teague, the fired Group Benefits chief under whose leadership the reserves grew.

State Treasurer John Kennedy underscored the problem that has led to the current situation at Group Benefits.

“We have got to get this agency out of the smoke-filled room where decisions are made into the limelight ... into the sunlight where decisions are transparent,” Kennedy said.

Transparency could have altered the course of events significantly in the Group Benefits case.

Marsha Shuler covers state employee policies for The Advocate Capitol news bureau. Her email address is mshuler@theadvocate.com. Follow her on Twitter, @MarshaShulerCNB. For more coverage of the State Capitol, follow Louisiana Politics at http://blogs.theadvocate.com/politicsblog.