The Jindal administration is blaming the higher cost of claims and declining premiums.
It was only slightly more than two years ago that there had been about a $500 million in the health plan reserves for the state employee program in Louisiana, but that has changed considerably over that short period of time.
The balance within the insurance fund has now dwindled to an amount that is about half that size.
This reserve balance for the health plans is meant to help to cover the medical claims that are made by the employees of the state. Though there is a considerable amount of controversy regarding the reasons that this massive decline has occurred, it has been pointed out that this shrinking of the funds has happened as the Jindal administration decreased the insurance premiums being paid. At the same time, the size and number of the claims payments were growing, effectively gnawing away at the reserves.
Over 250,000 people in Louisiana are dependent on the Group Benefits health plan program.
These individuals are employees of the state, dependents of those workers, and retirees. It also includes some of the people who work for the school system in the state. The Group Benefits program is serving a very large number of people, but if it continues in this direction, it may start to fall short of its required capital.
The Retired State Employees Association executive director, Frank Jobert, expressed that “My fear is, if (the reserves) go too low, there will have to be a big rate increase to get it back up, or higher co-pays or reduced benefits hitting retirees and employees in their pocketbook.”
Moreover, it isn’t only the members of this health insurance program that will find themselves facing increased expenses. The state also pays 75 percent of the premiums for its employees and its retirees. School boards are also paying that amount. The fiscal advisers for the Legislature are now labeling this situation to be “a major budget issue.”
Kristy Nichols, the Commissioner of Administration, has said that the actuaries for this insurance program feel that between $120 and $150 million is an appropriate reserve balance “for our particular health plan”.