- Associated Press - Monday, May 26, 2014

BATON ROUGE, La. (AP) - A new audit finds Gov. Bobby Jindal’s plan for stabilizing the finances of Louisiana’s health insurance program for about 250,000 state employees and retirees will only slow the drain on its savings.

The Advocate reports (https://bit.ly/1tH6ce7) that the informational audit, released Monday, examined Jindal’s plan. It would increase the amount employees and their government agency employers pay in monthly premiums, as well as encouraging the use of generic drugs, requiring pre-authorization for some services, and standardizing benefit limits.

Legislative Auditor Daryl Purpera said the group benefits program will continue to siphon reserves at $10 million a month even with planned premium increase and benefit changes reducing costs. That’s down from the current $17-million-a-month drain.

Purpera wrote the finding is based on information provided by Office of Group Benefits officials, including an estimated $131.8 million in savings tied to benefit ad structural changes proposed by Group Benefits and Alvarez & Marcel, a New York firm hired by the Jindal administration to look for cost-savings.

Purpera’s report follows one by the Legislature’s fiscal adviser that concluded the $500 million-plus in reserves Group Benefits two years ago when run by state employees, now under privatized management could fall to $55 million by the end of 2014 without changes.



The legislative auditor agreed with the Fiscal Office that barring change, the reserve account would be down to $56 million. He said the fund would be totally dry by April 2015.

“If no benefit or structural changes are made by OGB, we estimated that a premium increase of 17 percent would be necessary to prevent continued losses through December 2014,” Purpera wrote.

Purpera attributed the steep decline in reserves to a nearly 9 percent reduction in premiums over two years and rising costs due to medical inflation.

Commissioner of Administration Kristy Nichols said the administration’s planned 5 percent premium increase effective July 1 and changes to benefits such as promoting less costly generic drugs and pre-authorization of certain medical services starting Aug. 1 would stabilize the situation.

Nichols said the program is not going broke.

In response to Purpera’s report, Group Benefits Chief Executive Officer Susan West said the agency projects having a $103.3 million reserve fund balance by the end of state fiscal year 2015. She said the fund balance is “only slightly below the recommended target range of between $115 million and $230 million” recommended by Group Benefits actuarial firm.

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Information from: The Advocate, https://theadvocate.com

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