BATON ROUGE, La. (AP) — Gov. Bobby Jindal received legislative approval Friday to outsource a state employee health insurance plan, after a recent shake-up on the House budget committee that ousted two critics of the idea before the latest vote.
Under the contract with the Office of Group Benefits, Blue Cross/Blue Shield will manage a health plan that covers 62,000 state and public school employees, retirees and their dependents. The contract will begin Jan. 1.
The Senate Finance Committee backed the contract in a 10-3 decision, while the House Appropriations Committee agreed in a 16-10 vote, giving the deal final passage.
"There was a considerable savings in privatization and in approving this contract here today," said Rep. Jim Fannin, D-Jonesboro, chairman of the Appropriations Committee. He added, "It's certainly a savings that we need."
Commissioner of Administration Kristy Nichols, the governor's top budget adviser, said the outsourcing plan will save money by cutting duplicative administrative costs. Blue Cross/Blue Shield already runs a larger insurance plan for state workers in a contract with the office.
"We think this is a very good way to simply save money for the taxpayer by consolidating administrative services," Nichols said.
She also said employees and retirees will have more doctors available to them with Blue Cross.
As many as 88 employees in the Office of Group Benefits will be laid off, as the agency eliminates 111 jobs with the outsourcing.
Critics doubted the savings estimates and worried the change will harm health benefits for workers. They said they were concerned that to achieve savings long-term, insurance rates will have to be raised or benefits decreased.
They said the Office of Group Benefits runs the health plan efficiently, processing claims quickly.
"I'm thinking this is an agency we should be looking to replicate, not dismantle," said Julie Cherry, with the Louisiana AFL-CIO.
Nichols shelved a vote on the contract last week when it became clear she was short the votes needed. A day later, two Republican opponents of the contract were removed from the House committee.
The ousted lawmakers, Reps. Cameron Henry and Joe Harrison, said they believe they were replaced because they questioned the Jindal administration and disagreed with his budget decisions.
Their two replacements voted Friday for the outsourcing plan.
Nichols said the contract with Blue Cross will save $20 million annually, with about $9 million of that for state agencies and the rest split among local school boards and state employees. The Legislative Fiscal Office instead pegged the savings at anywhere from $11 million to $18 million.
"We think there is going to be cost savings. We just cannot predict what that cost savings is going to be," said Travis McIlwain, who analyzed the contract for the Legislative Fiscal Office.
Rep. Katrina Jackson, D-Monroe, a vocal critic of the outsourcing plan, said additional budget documents only raised further questions about the Blue Cross contract. She questioned whether it will cost the state more money.
The governor hadn't intended to seek budget committee approval, but the attorney general's office said the contract required it.
When she asked to delay the legislative decision last week, Nichols said she wanted more time to address lawmakers' questions about savings and other aspects of the contract. Over the last week, the Jindal administration sent letters to public school boards about the money they could save with the change and tweaked the Blue Cross contract to add more legislative oversight.
"We did take your feedback very seriously," Nichols told lawmakers.