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Saturday, 16 July 2011 17:53

Rainwater Announces Morgan Keegan To Evaluate Louisiana OGB Privatization

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BATON ROUGE – On Friday, Commissioner of Administration Paul Rainwater announced that Morgan Keegan has been selected through a competitive RFP process to provide financial advisory services to evaluate the Office of Group Benefits and recommend a course of action for administering the office in the best interest of both plan members and the taxpayers.


The possible privatization of OGB has been a very controversial proposal and has been opposed by various organizations. Here is the press release from Rainwater’s office:

Once a contract is agreed upon, the financial advisor will, over the coming months, conduct a comprehensive and in-depth analysis of OGB and the health care market, and provide recommendations to the administration as to the proper administrative structure of OGB. If the financial advisor recommends structural changes to OGB, such changes are not anticipated to be implemented until the start of the plan year beginning January 1, 2013.

Any changes implemented would have to comply with the following parameters:

•          Plan members will continue to receive quality service and coverage;

•          Benefits for all plan members, including retirees, will not change, and current eligibility rules for coverage will not change for any plan members as a result of possible further privatization of OGB;

•          Premiums rates, likewise, would be unaffected by such a transition and increases, when they occur, will continue to be reflective of medical market rates, as they are now; and

•          OGB’s administrative oversight will continue, securing the continued success of all the plans.

“This is an important first step in what will be a lengthy, careful, and thorough evaluation process to arrive at the best possible policy for plan members and taxpayers alike,” Commissioner Rainwater said.

OGB provides health coverage for 225,000 government employees, retirees, and dependents. OGB has long used private companies successfully to deliver various health plans, including the most popular plan, the HMO, which covers 155,000 members, and is currently administered by BlueCross BlueShield. The PPO plan, which covers 61,500 people (less than half of those covered by the HMO and 27 percent of OGB’s total), is currently self-administered. Because of this, Louisiana is one of only two states in the country (the other being Utah) whose government basically functions as a health insurance business.

The financial advisor will assist the administration to explore aligning Louisiana with other states by expanding private company delivery to include the PPO as well as the HMO, while continuing to provide high-quality coverage and service to plan members and doing what is best for the taxpayers, who contribute 75 percent toward premiums and the cost of coverage.


In addition, the OGB fund balance cannot and will not be diverted for budgetary purposes. Strong restrictions remain in place governing OGB’s fund balance, and it will continue to be utilized just as it is now – solely for the purpose of providing health coverage for plan members.

The financial advisor’s lengthy evaluation would include a competitive Solicitation for Offers from health providers. A detailed proposal would then be presented to the legislature’s appropriation and finance committees, whose members have jurisdiction over OGB, to receive approval for any contract awarded.

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