Jun 7, 2014 8:04 PM by AP
BATON ROUGE, La. (AP) - About a third of the savings identified by a private analyst looking for ways to cut down costs in state government are tied to changes to health insurance used by about 230,000 state workers, retirees and their families.
Susan West, head of the state Office of Group Benefits, told The Advocate that the $1 billion savings figure over the next five years should not alarm members. She said savings won't harm their access to health care.
"It's a delicate balancing act between plan design and rates," West said.
Alvarez and Marsal, the New York City-based firm that the Jindal administration hired for $5 million, allocated about $1 billion of the $2.7 billion in needed savings to the plan.
Policy changes could include preauthorization for hospital stays and imaging, as well as a priority on generic drugs. The savings are also keyed to pushing lower-cost health insurance options with higher deductibles and medical savings accounts.
"It's possible there will be some future premium increases," West said. "It's going to depend on our claims and actuarial projections."
Retired State Employees Association Executive Director Frank Jobert said he is considering asking the retiree board for guidance on whether to seek legal advice over some of the changes going into effect this year.
"They are changing the rules in the middle of the game," said Jobert. "I'm asking myself now if they can in fact change the rules and benefits in the middle of the plan year ... even the rate increase."
The health plans run from Jan. 1 to Dec. 31 with enrollments in October of each year, Jobert said.
Jobert said the Office of Group Benefits would not need the rate increase or the benefit changes "if they had not depleted the reserve fund."
The health plan has been dipping more and more into its reserves to pay claims. Just over two years ago, the agency had reserves in excess of $500 million. Without changes, the program's reserve has been projected to hit $55 million by year's end.
Initial changes start July 1 with a 5 percent premium rate increase expected to generate $57.9 million in the new fiscal year.
Group Benefits is projected to save another $149.8 million by June 30, 2015, largely by changes in medical and pharmacy benefits going into effect Aug. 1.
On Jan. 1, Group Benefits will offer new health plan options, including partially funded medical savings accounts.
West said there will be two traditional insurance plans offered through Blue Cross and Blue Shield of Louisiana.
The firm will also offer two "consumer-driven" health plans, which will have lower premiums in exchange for higher deductibles, West said. Fewer than 10 percent of enrollees use the current consumer-driver plan, which began in July 2010.