Legislation could mean $100m windfall for cities, towns and schools
By TOM FAHEY
State House Bureau Chief
CONCORD – House and Senate members are proposing legislation this week that would return up to $100 million health insurance payments to cities, town and school districts.
Sen. Deborah Reynolds, D-Plymouth, said the plan to require the Local Government Center to return excess reserves from its non-profit HealthTrust to communities within 60 days of passage.A House version of the bill allows a larger reserve at LGC, would return closer to $70 million and would allow a longer time to calculate just how much money should go to each member community.
Lawmakers who described the legislation emphasized that the excess funds are taxpayers' money, paid into LGC to cover health insurance costs for their communities' workers, and should be returned to them.
Rep. Daniel Eaton, D-Stoddard said. "If reserves exceed what is needed to manage these accounts properly, then the funds should be returned to communities to cover gaps they currently have, or to reduce the tax rate on local citizens."
The House plans to begin hearings on the proposal tomorrow during a Finance Committee hearing on Gov. John Lynch's budget balancing plan. Jonathan G. Steiner of the LGC said the organization follows actuarial standards carefully and returns excess reserves to its members not through cash rebates, but lower rates.
He estimated LGC reserves at $69 million, and said claims this year are running 8 percent ahead of expectations.
The legislation also includes specific regulatory authority, including the right to subpoena and investigate LGC operations as well as other pooled risk management programs.
The proposals is an outgrowth of difficulties the Bureau of Securities Regulation had in trying to examine records of the LGC under a law passed last year. The bill gave review power to the Secretary of State's office, of which the BSR is a division.
Senate Majority Leader Maggie Hassan of Exeter said the $100 million figure was reached through examination of LGC reports obtained by the BSR, and by applying the same formula the state uses to set proper reserves for its self-insured health insurance fund.
LGC collects roughly $350 million a year in premiums from member cities, towns and school districts. The Professional Fire Fighters of New Hampshire have gone to court repeatedly to get LGC to open its books and share information about its finances with members.
PFFNH president David Lang said today he's glad to see the legislative action, but hopes lawmakers will continue to probe administrative fees and practices at the non-profit.
"I'm thrilled they are taking these steps," he said, noting public workers are accepting pay freezes to help their communities while they struggle through recession.
"Give the money back to them. They need it," he said.