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Politics, not facts, lie behind opposing plan privatization

Never walk into an ambush, which Gov. Bobby Jindal astutely avoided yesterday when a biased political organization convened a kangaroo court to convict the Jindal Administration’s potential plan to privatize all state employee health insurance operations. Predictably, the session was short on truth and bereft of reasoned analysis, and all about politics.

Clearly, the sponsoring organization, the League of Women Voters of Baton Rouge – a group that long ago followed its national office in abandoning any pretense of nonpartisanship and since has sung vigorously in the left’s choir – meant to embarrass Jindal in any way possible. It invited a panel so full of their own interests against the idea – a state senator so partisan that if Jindal said 2+2=4 he would insist the equation really equaled 5, an ex-state worker with an axe to grind as Jindal fired him for protecting his power and privilege as opposed to serving employees, retires, and taxpayers, the head of an organization of state retirees that tries to scare them into thinking any move to get the state out of the business resembles the apocalypse, and the head of a state teachers’ union who opposes any government privatization of functions – that it was clear that a Jindal Administration representative simply would serve as a propaganda device to try to legitimize this dog-and-pony show and be ganged up on by the others. There wasn’t even any pretense of fairness, as the head of the sponsor herself had written critically of the idea, and showed entire lack of seriousness by the goofy move of setting an empty space for Jindal Administration representation and the engaging in dramatics to call attention to the fact of its absence.

Denied a hostage to beat, these bullies turned to spouting hot air instead of cold, hard facts.
State Sen. Butch Gautreaux, term-limited and erstwhile humiliated lieutenant governor candidate by voters, repeated the lie that privatization would allow the state to give away the roughly $500 million reserve that the state uses in its self-administered plan to a buyer, when the law clearly states that cannot be done; R.S. 49:802 et seq. mandates that monies from contributions and to be paid out by claims must be held for those purposes in a fund that is “guaranteed.”

Fired former director of the Office of Group Benefits Tommy Teague also hinted at this, and made the bizarre claim that it was because the office worked too efficiently that it was to be dismantled. So, let’s get this straight, if we could buy the argument that there’s actually a government agency out there that does better what is done almost exclusively in state governments by the private sector and well, so the response by government to this is deliberately to switch to something less efficient? Teague, of course, has floated illogical and fact-impaired conspiracy theories before; he once claimed he was fired because he resisted allowing a certain contract to be given to a provider that gave (relatively small) campaign contributions to Jindal, when in fact to prevent offering the contract violated a state law passed before Jindal’s time.

Nor can the claim of efficiency be sustained. In fact, rates for the state administered plan, the Preferred Provider Organization, have averaged for years over 5 percent higher than the plan chosen by almost three-quarters of Louisiana state employees and retirees, the Health Maintenance Organization, for essentially the same benefits (required by law). They would have had higher gaps as for most of the years Teague ran the office he asked for, with the agreement of the Policy and Planning Board of the OGB, much higher rates but the Division of Administration most of those years turned increases down or pared them back. (This confusion in what rate increases to use when also produced a report that used the wrong figures that erroneously claimed selling the PPO book of business to make it operate like the HMO would actually raise rates, even as it showed the state could earn $146 to $217 million on the transaction.)

Retired State Employees Association President Frank Jobert also employed some scare tactics by asserting privatization could have retirees denied health insurance, when in fact not only does state law prohibit this, so does Obamacare. And Louisiana Federation of Teachers President Steve Monaghan opined that Administration officials who had talked of the merits of the idea did not do so in a “satisfactory” way. OK, I’ll try again, using a series of questions based upon only public information and right reason:

  • Louisiana is only one of two states that even has part of these benefits provision run by the state. If this model is so good and so cost-effective, why don’t more states follow it?

  • Repeating that question, why is it that most Louisiana employees and retirees choose the HMO and similar smaller plans rather than the PPO? If the PPO plan is so good, why even have the others?

  • Because of the pricing differential born of the inefficiency in government operations, the PPO costs contributors an estimated extra $21.2 million yearly, which is fine if they want to pay more for the same service. But the problem is, because of the taxpayer match, this costs non-state households an extra $33.3 million annually, and the extra employees the state is forced to carry to run its own plan is another $10.2 million a year. Why should the state absorb these extra, unnecessary costs?

This is not the first time I have posed these questions, and I’m sure it won’t be the last, because opponents never address them, continuing on their blind path of bringing up non-issues and dangling red herrings. (As an aside, I have known a member of the OGB Board for many years, in other times a staunch advocate of right-sized government, but who joined with the Board in voting unanimously to oppose any privatization efforts of the PPO. I posed similar questions to him; he never responded to them). That’s because they have no response that does not validate that the privatization option is something to be looked at, and the evidence for its acceptance (which the Jindal Administration says would happen only if rates did not go up as a result) is, by the historical and fiscal record, compelling.

So why all of this ruckus, why does the LWV even stage this stunt when any decision (which cannot be done unilaterally but would have to meet with Joint Legislative Committee on the Budget approval) on this won’t happen for at least a half year from now? Because of election-year politics, in that trying to make this look bad is an attempt to attack Jindal and his chances reelection chances. If that’s the best these special interests and their allies can do, Jindal might as well throw his victory party now.


Anonymous said...

Wow - total Jindal talking points!

Do you really pretend to be fair and unbiased?

Jeff Sadow said...

The only promise I make with these posts is to present the facts, and then let logic guide the conclusions to bring us superior public policy. Of which this column is, as usual in this space, a fine example, as inconvenient as it may be to your prejudices.