Panel thwarts Jindal's privatization scheme

Thanks in part to the thousands of signatures gathered by the Louisiana Federation of Teachers, a legislative committee refused on Thursday to approve the privatization of health care services provided by the State Office of Group Benefits.


At the end of a four-hour meeting, Gov. Bobby Jindal’s staff realized that they did not have enough support on the Legislative Joint Committee on the Budget to approve selling OGB’s Preferred Provider Network to Blue Cross-Blue Shield of Louisiana.

Acting on behalf of the governor, Commissioner of Administration Kristi Nichols asked the committee, which comprises the House Appropriations and Senate Finance Committees, to pull the item from its agenda.

LFT Legislative Director Mary-Patricia Wray has won well-deserved credit for her testimony opposing privatization of the health plan, which serves some 60,000 current and retired public employees. Included in that number are teachers and school employees in a number of school systems.

After presenting the committee with nearly 4,500 signed petitions opposing the sale, Wray told the committee, “Policy makers keep finding more and more creative ways and more and more sorry excuses to support corporate tax avoidance over public good, privatizing over restoration and feel-good initiatives over real solutions for our very, very valuable public institutions.”

Nichols pulled the item from the agenda following a contentious hearing that revealed a deep lack of trust in the Jindal administration’s motives for privatizing OGB’s PPO. While she cited a study claiming that selling the PPO could save money for local school systems, several lawmakers said they can see no benefit to privatizing the office.

Most of the savings would come from the firing of some 177 employees who handle claims for the office. Opponents feared that the state workers might be replaced by telephone call centers anywhere in the world.

Testimony has shown that the Office of Group Benefits, which has amassed a $500 million surplus that is available to pay claims, spends only about three percent of its income on management costs. The industry average for management costs ranges from 10 to 15 percent, experts say.

The governor is not expected to give up n his plan to privatize the insurance plan. In a prepared statement, Nichols said the issue will come before the committee again.

“We asked to come back to the committee because there were questions about school board savings and some confusion about voting procedure. We feel confident about the support for the measure,” her statement said.

If you have not yet signed the LFT petition opposing privatization of the health plan, please click here.