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Lawmakers back Jindal health outsourcing contract

Associated Press Modified: November 9, 2012 at 12:16 pm •  Published: November 9, 2012

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.

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