The market value of a state worker health insurance program that Gov. Bobby Jindal is proposing to privatize has been pegged between $133 million and $217 million, according to an audit released today. The assessment by New Orleans-based Chaffe & Associates Inc., a firm hired by the Jindal administration earlier this year, had been kept secret from the public and had only been released to senators and the legislative auditor’s office after senators voted to subpoena it. Legislative Auditor Daryl Purpera included the information in his review of issues that should be considered by lawmakers before the insurance program in the Office of Group Benefits is privatized or sold outright to a private company, according to the audit.
The privatization effort has generated strong criticism from lawmakers and state employees and retirees who worry their health benefits might be cut, their premiums increased and a health insurance trust fund raided. Purpera’s review says the sale or lease of the group benefits office or plans could indeed cause higher insurance premiums because a private company would have marketing costs, premium taxes, profit margins and reinsurance costs that OGB doesn’t have. The review also says the sale of group benefits could diminish legislative and state control over costs, benefits and insurance plan changes.
Commissioner of Administration Paul Rainwater says no decision has been made about whether to proceed with the privatization or sale of group benefits. “The possibility of providing quality service in a manner that’s also more efficient is precisely why we have begun this evaluation of OGB, and we owe it to taxpayers to evaluate it fully,” Rainwater wrote in a response to Purpera’s review.
