Tell our leaders: Don't privatize state health insurance

Privatizing the Office of Group Benefits would hurt public employees without savings for the state

As part of his plan to balance the state budget, Governor Bobby Jindal wants to privatize the State Office of Group Benefits. OGB, as it is known, handles health insurance coverage for about 250,000 current and retired state employees. That includes teachers and school employees in more than half of the state's school systems.

The office, one of the best run and scandal-free operations in state government, has built up a $530 million surplus over the past few years. If the office is sold to a private company, insiders say the surplus could become available for appropriation into the state general fund.

Opponents say that privatizing OGB would hike insurance premiums for state employees and retirees. The office currently spends about three percent of its income on management costs. The same costs for a private company could be in the 10% to 15% range. Officials of the Legislative Fiscal Office say that it would be impossible to contract with a private company and receive the same low administrative costs currently enjoyed by the state-run Preferred Provider Organization.

The governor's spokesmen say they will not allow a sharp spike in premiums for employees. But over a period of a few years, there is little doubt that privatizers would dramatically increase premiums in order to make a profit. 

The governor's office says that about 200 current OGB employees would be laid off.  Those employees could be replaced by call centers outside of Louisiana.

Governor Jindal has the authority to privatize OGB without legislative approval; however, the request for proposals that would precede a sale must be approved by the legislature’s joint budget committee.

State Sen. Butch Gautreaux (D-Morgan City), who chairs the Senate Retirement Committee, has held hearings on the issue, and is concerend that privatizing the OGB is not in the best interests of public employees or the state.

Please act now. Ask your senator and representative to tell Gov. Jindal that the Office of Group Benefits is a well-run state agency that provides a valuable service. The interests of public employees, retirees and their dependents are best served by an office that has a record of efficiency and fairness in providing medical coverage.