Wednesday, 27 April 2011 05:02

The Selling of Louisiana Government

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  John Maginnis Conservative critics of state government, who for years have called for it to be run like a business, are starting to see their wishes come true. More and more, this government is being run like a business, though not always a successful one, for it is planning a fire sale.

   On the block for this legislative session are three state prisons the Jindal administration wants to unload in order to plug nearly all the cash into the yawning budget deficit, and then, out of future revenue, to contract to pay the new owners to house and feed the state's prisoners. Some business plan.

   The board of directors, otherwise known as the Legislature, which is normally deferential to the schemes of management, is having a harder time swallowing this one. Lawmakers might block the sale of the three facilities, but the administration, on its own, can contract with companies to operate them, which it does already with two of the prisons.

   Prisons may be a hot item, but they are only part of the state's portfolio of government functions up for sale or privatization. A bigger deal brewing, only publicly discussed in detail this week, is the sale of the state health insurance plan, administered by the Office of Group Benefits and covering 150,000 current and retired state employees.

   The state is working up a contract with investment banking firm Goldman Sachs to value and find a buyer. Gov. Bobby Jindal has estimated the sale could bring in $150 million to $200 million.

   Group Benefits appears to be a well-run operation, praised by both enrollees and providers for its prompt claims service. But it's not customer satisfaction that makes it so attractive to potential buyers as much as its $530 million cash reserve.

   Much of the credit for OGB's good reputation and fat surplus goes to its director, Tommy Teague, who was fired last week by Commissioner of Administration Paul Rainwater, six months short of his retirement. Rainwater cited an issue of "leadership," though Teague's real deficiency seems to have been his followship of the sale agenda.

   Despite that OGB seems well run, the Division of Administration casts it as an inefficient, job-heavy burden to taxpayers, with more employees than it takes for other states to run similar services. On top of revenue from a sale, the division estimates it can eliminate 149 positions and annual expenses of $10.2 million.

   Rainwater has assured state employees and retirees that their rates will not go up and service won't go down, but many don't believe him.

   Yet, Group Benefits is small potatoes compared to the administration's long-term plan to privatize the Medicaid program, starting in January with 830,000 recipients, mostly children, to be enrolled in coordinated care networks run by private insurance companies. The role of the private market will grow when the new federal healthcare law expands the state's Medicaid population to nearly 2 million by 2014.

   The drive by this government to get out of the government business presses on. The state Office of Risk Management is in the process of being dismantled and outsourced.

   Key to the business model of the planned University Medical Center in New Orleans is that, as a quasi-state entity, it can operate more like the private hospitals it will compete with, and not like current public hospitals under Civil Service rules.

   The Flagship Agenda legislation the governor supports would give participating universities more autonomy to raise tuition and to operate outside of current state procurement and employment rules, that is, to run those campuses more like businesses.

   Yet to be determined is will the privatization movement result in better care for patients, more educational opportunities for students and overall greater value for taxpayers, or not. By the time we find out, it will be too late or too hard to go back.

   At a recent House Appropriations Committee hearing, former state Rep. Raymond Laborde, protesting the sale of prisons in central Louisiana, half-joked that the rumor was the next to go on the market would be the historic Pentagon Barracks next to the Capitol.

   Replied Chairman Jim Fannin, "It might be all that's left."

by John Maginnis

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