Archive for June 15th, 2011

Why bother pretending privatization would be cheaper?

Jun 15, 2011 in Politics

Because otherwise nobody in their right mind could be convinced to let hedge fund managers gamble away their retirement at the racetrack:

A confidential report at the center of the debate over Louisiana Gov. Bobby Jindal’s push to privatize state employees’ health insurance has been leaked. The so-called “Chaffe report,” published Tuesday by the Baton Rouge Advocate, seeks to “establish the fair market value of the operations” of the state’s Office of Group Benefits (OGB), which provides health care insurance for around 250,000 state workers, retirees and their dependents.

The Advocate reported that the Chaffe report “concluded that premiums would increase under privatization.” The paper also published the complete report online.

The administration has said that privatizing OGB will net a big upfront payment, perhaps as much as $150 million, and save millions of dollars a year. Officials have further argued that privatization would only really affect the 62,000 OGB members who participate in the agency’s self-funded and self-administered preferred provider organization (PPO) program. But critics have countered that OGB is well-run overall, and have worried that a private company would raise premiums for members of the PPO. Some have raised questions about the fate of OGB’s $500 million surplus fund.

Governor Jindal had seen the Chaffe report but still continued to insist that privatization would save money and then went on to attempt to have the report scuttled. Whatever the reasons for his devotion to the free market fairies it is safe to conclude that costs savings wasn’t one of them.