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Jindal’s OGB Privatization Push Deserves Investigation
Written by  // Thursday, 14 July 2011 11:57 //

BATON ROUGE (CNS)—Most of what has been written here in recent months about the proposed privatization of the Louisiana Office of Group Benefits (OGB) has been in the nature of political discourse laced with emotional banter.

Such is the nature of the beast when people’s lives are being toyed with by elected and appointed officials insulated in their detached bubble of infallibility—even in the face of growing evidence that their grandiose plans are skewed with false data.

 This time, though, Gov. Bobby Jindal may well have overplayed his hand. It’s one thing when the rank and file employees, helpless to fight back, are opposed to his proposed sale of OGB. It’s quite another when you raise the hackles of the state district judges who voted unanimously to approve a resolution in opposition to the sale.

 Perhaps it’s time for the State Inspector General, the East Baton Rouge District Attorney, and the Legislative Auditor to begin investigating the very real possibility of the existence of two separate reports by Chaffe & Associates of New Orleans.

That’s the report, in case you don’t recall, that Commissioner of Administration Paul Rainwater and Division of Administration (DOA) attorney Paul Holmes both said on separate occasions was received by DOA on May 25. When Rainwater first balked on his promise to make the report available to legislators, it was subsequently “leaked” to the Baton Rouge Advocate. The only problem with that was the “leaked” report was signed by its authors on June 3—ten days after Rainwater and Holmes said it was received by DOA.

Lending even greater credence to the theory of the existence of two reports is the fact that all documents are date stamped when they are received at DOA. The “leaked” report contained not a single date stamp on any of its 42 pages.

Did the original report, received on May 25, not say what Jindal wanted to hear?

That’s a question for investigators to ask.

In the meantime, DOA and Jindal are moving forward—but oh, so quietly. A second request for proposals (RFP) was issued when the first one fell through after LouisianaVoice broke the story about the administration’s intent to sell the agency that presently carries a $500 million surplus.

That story said that Goldman Sachs was brought in October of 2010 to help draft the RFP and then was the only company to submit a proposal to conduct a financial analysis of OGB and then market the agency to a private sector buyer. Goldman Sachs subsequently withdrew when negotiations over legal indemnification broke down.

Rainwater and Brady were called before the Senate Retirement and Senate and Governmental Affairs committees. It was before the Retirement Committee that Rainwater said the state would maintain control over OGB because it was not selling the agency despite the first RFP that clearly said otherwise.

Rainwater said the administration was seeking a third party administrator to run the PPO, thus necessitating a second RFP seeking a firm to conduct a financial analysis and find a buyer.

A strange sense of déjà vu set in when it was learned that Goldman Sachs again submitted a proposal, one of three firms to do so. DOA, in that second RFP, said a contractor likely would be named on June 15—nearly a month ago—but as yet, no one has been awarded a contract.

Meanwhile, LouisianaVoice has been doing a little research of its own since the Division of Administration has chosen to operate secretively, in violation of the state’s public records law by ignoring numerous inquiries from us.


 Even as Jindal, Rainwater, and Deputy Commissioner of Administration Mark Brady plunge ahead with their privatization plans for the OGB Preferred Provider Organization (PPO), perhaps it is time to take a look at national trends in the health insurance industry, something this administration, like a spoiled child who prefers tantrums as a means of getting its way, has refused to do.

Self-funded health insurance plans continue to grow in popularity in the U.S., according to the Society for Human Resource Management which said that 64 percent of workers in PPOs are in a self-funded plan, compared to those in conventional “fully insured” plans in 2008. That compared to only 5 percent in 1974.

With major incentives that include exemption from state taxes on insurance premiums, the ability to design their own plans, and invest money previously paid as premiums until it is needed to pay health expenses, it’s no wonder that Fortune 500 corporations have long been self-insured.


“The largest insurer in America is not Blue Cross/Blue Shield, but the nation’s employers,” said Jon R. Gabel, associate director of research and statistics at the Health Insurance Association of America. Gabel called the self-insurance trend “a quiet revolution in health care.”

Just who are some of the Fortune 500—and other companies—that have opted for self-insured health plans? Well two dozen of those have contributed $224,000 to Jindal’s political campaign and two have nine contracts with the state totaling $46.4 million.

Here is a partial list with contributions to Jindal in parenthesis:

• Johnson Controls—six contracts totaling $37.4 million;

• CH2M Hill ($8,500), plus three contracts with the state totaling $9 million;

• Pinnacle Entertainment ($8,000);

• Wal-Mart ($24,000);

• Delta Airlines ($1,000);

• Walgreen’s ($5,000);

• U.S. Marine, Inc. ($14,100);

• United Parcel Service ($15,000);

• Eli Lilly & Co. ($18,000);

• Citigroup ($15,000);

• McKesson Pharmaceuticals ($15,000);

• Georgia Pacific ($11,700);

• Hospital Corp. of America ($10,000);

• United Health Care ($10,000);

• Comcast ($3,500);

• Waste Management ($10,000);

• ExxonMobil ($6,330);

• Chevron ($5,000);

• Coca Cola ($5,000);

• Hewlett Packard ($5,000);

• Pepsico ($5,000);

• GMRI Food & Beverage ($2,500);

• Microsoft ($2,500);

• Amgen Pharmaceuticals ($2,000);

• Occidental Chemical ($2,000);

• Target;

• AT&T;

• Bank of America;

• Starbucks.

So, just what is that Jindal, Rainwater, and Brady know that the CEOs of these corporations are not smart enough to know–many of whom had sufficient wisdom to contribute to his campaign and two of whom are apparently intelligent enough to have multiple contracts with the state? That’s the question that the administration should answer, and soon.

Oh, we almost forgot. There was one more Fortune 500 corporation that has chosen to go the self-insured route as the most financially desirable method of providing health insurance for its employees.

The company?

Goldman Sachs.

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