Letter: State government health plan changes improve service, save money

Dear Editor,

For years, state government’s Office of Group Benefits has utilized private health insurance companies to serve as a third-party administrator for various health plans offered to state employees and retirees.

For instance, Blue Cross/Blue Shield of Louisiana currently serves as the third-party administrator of the HMO, the most popular plan that covers 164,765 people, but the PPO plan that covers 62,010 people is directly self-administered by OGB. In fact, the PPO plan has been the only plan directly administered by the state for the last 10 years, making Louisiana one of only two states in the country whose state government administers a health insurance plan.

As a result of a competitive bid process, beginning Jan. 1, 2013, Blue Cross will continue to administer the HMO while also beginning to administer the PPO, as well as the Consumer Driven Health Plan-HSA. These changes will save taxpayers more than $20 million per year from economies of scale, technology cost reductions, and administrative cost savings. As part of a reorganization plan, OGB will also be able to reduce 177 filled and unfilled positions from its current level of 327 positions, beginning to align its size with other states, as the same office in Florida employs 23 people, while Mississippi employs 20.

These changes will also pay dividends for plan members as well. There will be no change in benefits, while OGB and the Division of Administration will maintain control over benefits and premiums for any plan administered by a TPA, including the PPO.

In fact, starting in July 2012, all OGB plan members began paying 7 percent less in monthly premiums for health coverage. As a result, for the second half of 2012, state employees and retirees are saving almost $10 million. These lower premium levels will continue for calendar year 2013, resulting in state employees and retirees receiving additional savings of $19.5 million.

Moreover, customer service centers will increase from 7 to 8, while PPO plan members will now gain access to a nationwide healthcare provider network, a benefit HMO members already have but PPO members do not. This is particularly important for retirees, who make up the majority of PPO plan members. PPO members will also gain access to other benefits now available to HMO plan members, including discounts on gym memberships, hearing aids, and diet programs.

In short, this initiative represents a win-win situation, improving the quality of care and service to plan members, reducing their out-of-pocket expenses, while also saving taxpayers more than $20 million per year. We hope members of the legislature will agree when we seek committee approval this week.

Kristy Nichols,


Commissioner of Administration