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Senate Committee Drills Down on Risk Pools
There is growing concern over how public insurance risk pools are managed. In a lengthy and sometimes heated hearing last week, Senators challenged pool officials to prove they are operating in the taxpayers’ best interests. New Hampshire Public Radio’s Dan Gorenstein reports that some lawmakers see a real need to regulate these organizations.
Not many people in New Hampshire- or really anywhere else- know what a public insurance risk pool is.
So here’s a quick primer.
Cities, towns, school districts or other public bodies get together and purchase insurance for their employees.
In this state, three organizations the Local Government Center, Primex and SchoolCare are the major players.
Primex and the Local Government Center- or LGC- offer three types of insurance; health, property liability and worker’s compensation.
And every year, with property tax money in hand county officials, school districts or towns shop around to find the lowest insurance rate.
These public risk pools were created back in 1987 to offer a cheaper alternative to private insurance.
By and large, municipalities and others have been pleased with the results over the last twenty-plus years.
But Senators on the Commerce Committee- like Jackie Cilley- were anything but pleased during last week’s hearing.
“The Legislature created an entity that its sole purpose was to allow communities to bring down the cost of insurance, so when I see something that operates far more like a lucrative corporation and it is being subsidized by the taxpayers of this state, that troubles me.”
While the subject of the hearing was all three pools, the Local Government Center is the one drawing all the attention.
LGC’s medical insurance pool HealthTrust is the third largest risk pool in the country.
The organization expects to take in $400 million dollars in premiums next year alone.
The Senators’ are concerned that LGC may be charging cities and town more than it needs to and creating a surplus.
And then- as Senator Deb Reynolds asked- using that surplus for things other than insurance.
“Do the communities know, were they informed ahead of time that this very expensive real estate was purchased with taxpayer dollars? And I would like to know if the HealthTrust paid for that.”
Over the six hour hearing, Senators frequently asked aggressive, probing questions.
And often pushed back, skeptical of LGC’s answers.
This hard-line stems from the Committee’s fear the firm has ignored the law.
That law requires risk pools to return all earnings and surplus in excess of what it costs to run the pool.
One example that came up last Thursday is that LGC has taken money out of HealthTrust and used it to underwrite losses on its Worker’s Compensation insurance plan.
Another has to do with taking money from HealthTrust and the Property Liability Trust to build an office in Concord.
The Local Government Center strongly believes it has complied with the letter and the spirit of the law.
However, reasonable people can and are arguing over whether those actions are consistent with the state statute.
The law’s ambiguity convinces Senator Maggie Hassan, chair of the Committee, that greater scrutiny is needed.
“My issue is whether they are thinking of themselves as a business or are they thinking of themselves as people who are supposed to run insurance...as an alternative to commercial insurance so they can give every spare dime back.”
As a result of the testimony last week, Hassan says Senators have agreed to strip language that would have capped risk pool surplus.
But she remains convinced greater oversight from the Secretary of State is needed.
“I think what we are really talking about is a culture that seemed to exist at the Local Government Center that they were, b/c they were created in the taxpayer interest, by definition always operated in the taxpayer interest. And I think history tells us, as well intended as any of us are; oversight and scrutiny and transparency is enormously important.”
The Committee is scheduled to vote on the bill Tuesday, with the full Senate set to weigh in Wednesday.